A back of the envelope forecast for "long-COVID" impact on IP claims: 

Start with cases - about 1,950 if we are considering current known cases, or whatever number your modelling predicts for whole of pandemic. Assuming very good containment, not much more, let's hope it stays that way. The apply your estimate for "long-COVID" I am using 20% at the moment which gives us about 400 cases in New Zealand. But not all of these will be in employment and own income protection. In fact as 42% of cases are 'imported' we can assume that most of those do not own income cover issued by New Zealand insurers. That leaves us with roughly 240 cases. FSC underinsurance research showed income protection cover at about 20% of the market - or a possible 48 cases of 'long-COVID' where a claim may be possible.

Well, well, within the capability of the industry to manage. Economic impacts on people that have claims from other causes are likely to be more problematic. 

28 Oct 2020 – Financial Services Council media release at the time of the AGM advised of a solid year of member growth and increased revenues. https://www.fsc.org.nz/site/fsc1/Media%20Releases/Financial%20Services%20Council%20-%20Annual%20General%20Meeting%20-%20Media%20Release.pdf

30 Oct 2020 – RBNZ signed the ‘IBOR (Inter-bank offer rates) Fallbacks Protocol’ published by the International Swaps and Derivatives Association (ISDA). https://www.rbnz.govt.nz/news/2020/10/rbnz-signs-isdas-ibor-fallbacks-protocol

30 Oct 2020 - The Commerce Commission published a statement of preliminary issues relating to an application from Aon plc seeking clearance to acquire Willis Towers Watson Public Limited Company as part of a global transaction. https://comcom.govt.nz/case-register/case-register-entries/aon-plc-and-willis-towers-watson-public-limited-company

30 Oct 2020 – AMP announced the receipt of an indicative, non-binding, conditional proposal from Ares Management Corporation, a US-based company, to acquire 100 per cent of the shares in AMP Limited by way of scheme of arrangement. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AMP/362281/333930.pdf

Fidelity Life has announced the appointment of Melissa Cantell as the new CEO. Cantell is set to come into the role on 25 January 2021. Cantell will leave her current role as Chief Operating Officer at IAG NZ. Cantell has held various managerial roles and has experience in different areas of business. Until Cantell’s appointment, Simon Pennington and Adrian Riminton will continue as acting CEOs.

“Melissa Cantell has been appointed chief executive at Fidelity Life, replacing Nadine Tereora who left in May 2020.

Cantell has strong executive leadership experience running successful commercial operations across a range of industries. She joins us from IAG NZ where she held the role of Chief Operating Officer, and prior to that was the Executive General Manager Transformation.

She has accumulated a broad range of experiences over her career, from mergers and acquisitions strategy and business transformations to senior general management roles with Fonterra and Coca-Cola Amatil. She loves building great customer, adviser and people experiences, especially in times of change, and is passionate about the role insurance plays in the New Zealand community.” Click here to read more

In other news:

FSC: Understanding conflicts of interest and managing gifts and incentives webinar

Southern Cross: Travel Insurance: Are your clients failing to understand this insurance policy?

The role of a CEO in driving diversity and change

Fidelity Life has announced the appointment of Melissa Cantell as their new CEO: 

While Melissa doesn’t officially start with us until 25 January 2021 I wanted to let you know a bit about her and her background.

Melissa has strong executive leadership experience running successful commercial operations across a range of industries. She joins us from IAG NZ where she held the role of Chief Operating Officer, and prior to that was the Executive General Manager Transformation.

Melissa has accumulated a broad range of experiences over her career, from mergers and acquisitions strategy and business transformations to senior general management roles with Fonterra and Coca-Cola Amatil. She loves building great customer, adviser and people experiences, especially in times of change, and is passionate about the role insurance plays in the New Zealand community.

We’re making great progress with our customer-focused transformation and remain firmly focused on achieving our 2025 goals and delivering sustainable growth. Melissa will look to build on that momentum, even as we continue to deal with COVID-19 and the economic uncertainty ahead.

The year ahead is really important for you and us: evolving our customer and adviser experiences, helping you transition to the new licensing regime, successfully completing our digital transformation project and moving to brand new offices are just some of the challenges awaiting us in 2021.

Until Melissa joins us, our CFO Simon Pennington and myself will continue as joint acting CEOs.

Thanks for your continued support and I look forward to introducing Melissa to you.

Cheers,

Adrian Riminton
Chief Distribution Officer
Joint acting CEO

Partners Life has been awarded a 5 star rating from the Lewers Life Insurance Benchmarks Study for the 10^thconsecutive year. This award is symbolic for Partners Life as it has been awarded a 5 star rating every year since first beginning operations. The Lewers Life Insurance Benchmarks Study works to evaluate the satisfaction of independent financial advisers.

“For the 10th year in a row, we’re very excited to announce we have received a 5-star rating from the Lewers Life Insurance Benchmarks Study.  What makes this extra special is that we have achieved this rating every year since we first opened our doors 10 years ago; the only Life Insurer to achieve a consistent 5-star rating over this entire time.

The Lewers Life Insurance Benchmarks Study measures the satisfaction of independent financial advisers in New Zealand, and this achievement reaffirms for us that we are servicing our financial advisers and as a result their customers, to the highest industry standard.”

More than 300 advisers from across the country participated in the study. Partners Life anticipated a lot of feedback as a result of many changes and amendments being introduced during the past year. Partners Life has acknowledged that the response from other insurers and has said that it is essential for sustainability.

“The Lewers Life Insurance Benchmarks Study was completed by over 300 independent advisers across the country who provided their views on the delivery of all insurance providers in the New Zealand market. In 2020 they spoke to a larger cross section of advisers who deal with Partners Life than in previous years; a critical element in gaining greater depth of feedback on the initiatives we introduced over the past 12 months. We knew that some of the changes we had introduced in the past 12 months would garner significant feedback. Specifically we anticipated there would be a strong reaction to our leadership position in introducing DI product and pricing changes in early 2020 to address the sustainability of the product in the New Zealand market long-term, and we really do appreciate your feedback on how we were placed competitively because of this.  It is heartening to us to see that since the study was completed, there has been significant competitor movement to follow our lead – something we believe is essential for the sustainability of this product line.”

In other news:

Fidelity Life: Senior Marketing Manager role is currently being advertised

FSC: New disclosure regulations: practical implementation webinar

Partners Life: New Adviser Training Course Registration

Partners Life: Ross’s Story

27 Oct 2020 – Takeovers Panel extended COVID-19 class exemptions for capital raising from 31 Oct to 31 Dec 2020. https://www.takeovers.govt.nz/about-the-panel/news/covid-19-class-exemptions-for-capital-raising-extended/

27 Oct 2020 – Privacy Commissioner posted information on the website that, from 1 December, businesses and organisations that send personal information overseas will need to comply with new privacy Principle 12 in the Privacy Act 2020, which adds new controls on the disclosure of personal information to overseas organisations and businesses. https://www.privacy.org.nz/news-and-publications/statements-media-releases/new-principle-for-disclosing-personal-information-overseas/

Recently we reported that Income Protection prices are on the rise as a result of the Australian market and COVID-19. New Zealander insurers are now being urged to amend processes and premiums before regulators intervene and introduction mandatory guides. Partners Life begun the conversation when revealing that it has increased IP premiums by 12% and made policy changes. Kris Ballantyne, chief marketing officer, has said that Partners wishes to offer affordable policies that customers can maintain for as long as they need. AIA and Cigna have both noted that they aren’t looking to introduce significant premium increases.  

“It took insurer Partners Life to break the silence last month when it revealed a brave plan to start publishing the content of discussions with the Financial Markets Authority.

 

In doing so, it revealed it lifted its income protection premiums by 12 per cent in the past year, and had made policy changes, including not allowing self-employed people to any longer select an “agreed value” of income to be covered, instead limiting cover to actual loss of earnings.

 

Partner’s Life’s chief marketing officer Kris Ballantyne said the company was a “first mover” on income protection, driven by wanting to provide policies they [consumers] could afford to keep as long as they needed it.

 

It was a big challenge as there were a lot of agreed value policies covering self-employed people, and owners of small businesses.

 

Neither of its two big rivals, AIA nor Cigna, was expecting to make such large premium increases, though AIA had stopped selling new policies in which the income covered automatically increased by 5 per cent a year.

 

AIA chief product officer Len Elikhis said that over time, “the insured’s benefits would creep up and approach the insured’s income”.

Shane Burdack, senior underwriting consultant as Swiss Re Australia highlighted that customers with significant wealth had very little incentive to return to work when on claim, resulting in increased premium prices.

“Swiss Re senior underwriting consultant in Australia, Shane Burdack, said that in New Zealand insurers gave little thought to the net wealth of policyholders.

 

Yet people with significant wealth – sometimes through investments, sometimes because of payouts from other insurance policies – had a low incentive to go back to work, and stayed “on claim” for longer driving up costs.” Click here to read more

In other news

nib: nib takes place among top 100 most diverse firms worldwide

Southern Cross: Southern Cross is offering members a $149 voucher when they join Snap Fitness on a minimum 12-month term

Southern Cross: Southern Cross is offering members 10% off the retail price of a monthly LES MILLS On Demand subscription

Current economic conditions are accelerating a recent trend in banking - a focus on core services - as evidence, we offer this series of announcements:

• Some of the banks have sold or are selling other insurance operations. For example, see this story from yesterday https://www.afr.com/street-talk/nab-life-insurance-retreat-set-to-claim-kiwi-arm-bnz-life-20201021-p56724
• And this story from last month about General Insurance https://www.insurancebusinessmag.com/nz/news/breaking-news/westpac-racing-against-cba-in-sale-of-general-insurance-unit--report-233779.aspx
• Then the probable sale of Westpac’s Wealth unit to Forsyth Barr https://investmentnews.co.nz/investment-news/westpac-nz-flags-retail-advice-sale-to-forsyth-barr/
• ANZ selling its finance company arm, UDC. https://www.interest.co.nz/banking/105317/anz-announces-sale-asset-financier-udc-japans-shinsei-bank-which-says-udc-will

Alongside this, traditional branch services are being cut or slimmed down. This shift to digital was given a further shove by lockdowns so the time is right to re-appraise the value of each branch in the network. In addition to that, the value of each service in the branch is being reconsidered as well. With the decision by ANZ to withdraw from offering cash foreign exchange services being announced: https://www.stuff.co.nz/business/123131192/anz-to-stop-offering-foreign-currency-citing-drop-in-demand-due-to-covid19 

Although perhaps this is not just about economic conditions, but also competitive ones. Digital disruption is coming to the world of banking. A slew of online and consumer lenders has been grabbing attention (and high valuations) on the ASX. More challengers are likely to come. This is prompting a strategic rethink by several banks. The regulatory environment is shifting as well, creating more space for the change:

• And the Westpac/Afterpay collaboration allowing Afterpay to offer transaction and savings accounts http://www.sharechat.co.nz/article/4ad7e8d5/westpac-and-afterpay-announce-partnership.html
• We have already referenced between us the Australian change to responsible lending laws being considered and reported on Good Returns. https://www.goodreturns.co.nz/article/976517550/australia-scraps-responsible-lending-laws.html

21 Oct 2020 – Department of Internal Affairs published a new webinar on the AML/CFT enhanced customer due diligence obligation on its website. https://www.dia.govt.nz/Enhanced-Customer-Due-Diligence-Webinar

22 Oct 2020 - Simone Robbers, RBNZ Assistant Governor & General Manager of Governance, Strategy and Corporate Relations, delivered a speech to the 16th Annual Financial Markets Law Conference titled “Working together to support economic recovery, strengthen resilience, and develop culture”. https://www.rbnz.govt.nz/news/2020/10/working-together-to-support-economic-recovery-strengthen-resilience-and-develop-culture

22 Oct 2020 – FMA released a consultation titled “Recognition of Australian adviser qualifications”, relevant to the upcoming financial advice provider regime, with submissions closing on 20 Nov 2020. https://www.fma.govt.nz/compliance/consultation/consultation-recognition-of-australian-adviser-qualifications/

20 Oct 2020 – MBIE published information on its website an update on COVID-19-related business relief measures, noting that some have been extended, while others are no longer available or are soon to expire. https://www.mbie.govt.nz/about/news/update-on-covid-19-related-business-relief-measures/

21 Oct 2020 - The first statement defining the purpose of New Zealand’s retirement income system was released by the Retirement Commissioner. https://cffc.govt.nz/news-and-media/news/purpose-of-nz-retirement-income-system-defined/

The Australian Financial Review carries this report suggesting that NAB has BNZ Life up for sale: link. 

After announcing its acquisition plans in March 2020,  Aon has submitted an application to the Commerce Commission to acquire Willis Towers Watson. Aon is looking to incorporate the five Willis Towers Watson offices across the country into wholly owned subsidiaries.

“New Zealand’s Commerce Commission has received Aon’s clearance application to acquire the entirety of Willis Towers Watson, as part of a global transaction.

The step was revealed by a statement from the commission, which is New Zealand’s competition, consumer and regulatory agency.

In New Zealand, Aon and Willis Towers Watson both offer a range of insurance brokerage services, including for commercial insurance, reinsurance, group health and welfare benefits, and personal and life insurance. Both firms also provide investment consulting services to institutional investors.

Aon has 58 offices across New Zealand, while Willis Towers Watson has five – Auckland, Wellington, Christchurch, Tauranga, and Dunedin.

Under the proposed transaction, Willis Towers Watson will become a wholly owned subsidiary to Aon. According to the Commerce Commission, it gives clearance to a merger application if it is able to successfully prove that that the deal is unlikely to have the effect of substantially lessening competition in a market.” Click here to read more

In other news

AMP KiwiSaver scheme to go passive, and slash fees

Strategi: The new Privacy Act 2020 2pm webinar

RBNZ: Reserve Bank seeks to preserve benefits of cash

The New Zealand Herald have reported on Income Protection price increases. Financial advisers have credited the changes to IP to the Australian IP market although COVID-19 has played a role in the change in pricing and the underwriting process. During the FSC digital Generations 2020 Conference, Kimberley Robinson from Swiss Re Australia warned that it was important that New Zealand insurers make amendments. Robinson highlighted that in Australia the regulator had to step in after losses totaled A$3 billion in a five-year period. Robinson said that the losses were a result of an increased focus on sales volumes, cross-subsidisation, a competitive market, and in some instances, insurers providing more benefits on claims before claim time.

At an industry conference held online this week by the Financial Service Council insurance underwriter Swiss Re warned that New Zealand insurers also needed to make changes.

Kimberley Robinson, product solutions leader at Swiss Re in Australia, said Australian regulator APRA had intervened after big losses in the sector which added up to around A$3 billion over five years.

"We have suffered losses on individual income protection on an unsustainable level."

Robinson said factors contributing to those losses included an increasing focus on sales volumes over profitability, cross-subsidisation of the product and a fiercely competitive market.

"In some cases we were providing customers with more benefit on claim than they earned before claiming."”

To tackle issues relating to sustainability and customer support, the FSC recently set up a CEO life insurance forum and ran its first meeting. Although Richard Klipin didn’t comment on the pricing of IP, he noted that the sector is not growing and that it is instead expanding sideways. Klipin highlighted that the challenge for the industry to transforming insurance into something that is relevant, affordable and accessible. He continued by saying that insurers need to focus on having the ability to deliver on the promise of cover

In other news

nib: nib is sponsoring the Norwood and Miraka Limited Charity Golf Tournament for a third year

Advisers on Banks survey results revealed

19 Oct 2020 – Privacy Commissioner launched NotifyUs, a new online tool enabling businesses and organisations to easily assess whether a privacy breach is notifiable. https://www.privacy.org.nz/news-and-publications/statements-media-releases/office-of-the-privacy-commissioner-launches-privacy-breach-reporting-tool/

20 Oct 2020 – RBNZ released draft guidance on what regulated entities should consider when managing cyber resilience. The consultation on the draft guidance closes on 29 Jan 2021. https://www.rbnz.govt.nz/news/2020/10/reserve-bank-releases-guidance-to-help-build-cyber-resilience

The FSC has released the latest Financial Resilience Index results. The latest results indicate that New Zealanders are still resilient and confident about financial matters. The index examined views on five indicators: financial confidence, literacy and preparedness, job security and wellbeing. 72% of participants reported that they feel reasonably, very or extremely confident in their financial standing.

“The latest round from the FSC’s Financial Resilience Index shows that despite the last six months being one of the most challenging periods in recent history, New Zealanders have remained remarkably resilient and confident when it comes to financial matters.

The Financial Resilience Index is a major tracking survey of New Zealanders’ views on five key financial resilience indicators: financial confidence, literacy and preparedness, job security and wellbeing.

“The responses in early August show that after initial uncertainty Kiwis remained resilient throughout this unprecedented period, from the introduction of Covid-19, to living in lockdown, right through to the return to alert level one,” says Richard Klipin, FSC chief executive.

“Despite these dramatic changes, New Zealanders continued to have incredible financial confidence, with around 72% of respondents still feeling reasonably, very or extremely confident when it came to their finances.”

The index found that although there is underlying anxiety, New Zealanders remain resilient. The FSC’s findings differs from the key findings of Cigna’s COVID-19 Global Impact Study, which highlighted that the majority of its 20,000 participants have a pessimistic view on their financial position.

In other news

Cigna: Cigna Parenting Survey 2020 found that 36% of parents surveyed had a will but no life insurance

FMA revealed that full licence provisions would be released mid-November  during FSC conference

Financial Advice: New board members announced at Financial Advice NZ

Cigna has published its COVID-19 Global Impact Study.  The study examined the financial confidence of New Zealanders before and after the arrival of COVID-19 to New Zealand. Cigna built on data from the Cigna 360 Well-Being Index. The study is primarily based on data collected from May 2020 to August 2020 to understand the change in attitudes. The study that had over 20,000 participants found that New Zealanders are becoming more pessimistic about their financial position.

“Our Cigna COVID-19 Global Impact Study: Resilience and Well-Being through the Pandemic* shows that New Zealanders are becoming increasingly pessimistic about their financial position, which highlights the increasing importance of financial advisers in supporting our customers through this time of economic uncertainty.  

This latest study builds on the data we’ve collated since 2014 through our Cigna 360 Well-Being Index which tracks perceptions about the health and well-being of people across our international markets.

Our 2020 study includes data collected from May to June and July to August to understand people’s changing attitudes to the unfolding COVID-19 crisis.” 

The study found that the views of New Zealanders coincided with views of others around the world. The financial confidence of those surveyed in all markets was generally dim, with 49% of participants expressing that they have the worst possible outlook on the impacts of the economic environment on their financial situation. Cigna has noted that New Zealanders are in need of good advice during this time and said that it will continue to monitor attitudes.

“The impacts of COVID-19 on New Zealanders financial well-being fall broadly into line when compared to other international markets. Across all markets surveyed 49% of respondents continue to have the worst possible outlook on how the economic environment will impact their financial situation and their ability to maintain current standards of living.

Now more than ever New Zealanders need access to good advice. Together we can leverage insights such as these to build confidence, put advice front of mind, and ensure we continue to meet the changing needs of New Zealanders.

 

We’ll continue to monitor how New Zealanders’ attitudes towards our wellness measures change over the coming months and will share any significant changes with you.” Download CIGNA - RESILIENCE & WELL-BEING THROUGH THE PANDEMIC SEP 2020

16 Oct 2020 – Privacy Commissioner website provided details for the next PrivacyLive Forum to be held during Privacy Week on 5 November 2020, with the presentation focused upon the Privacy Act 2020, due to come into effect on 1 Dec 2020. https://www.privacy.org.nz/resources-2/forums-and-seminars/privacy-live-our-speaker-series/

19 Oct 2020 – FIU released the monthly AML/CFT September 2020 Suspicious Activity Report including, for example, a link to the FATF September 2020 report titled “Virtual Assets Red Flag Indicators”. https://www.police.govt.nz/sites/default/files/publications/fiu-monthly-report-sep-2020.pdf

Suncorp New Zealand has permanently appointed Jimmy Higgins as CEO. Since the departure of Paul Smeaton in July Higgins has been the acting CEO. Higgins joined Suncorp Group in 2008 and has had various roles within the company. Suncorp Group CEO Steve Johnston has said that Higgins is highly experienced and has a deep understanding of the industry.

“Suncorp New Zealand has today announced the appointment of Jimmy Higgins to the role of Chief Executive Officer, effective today.

Higgins joined Suncorp Group in 2008 and has held a range of senior and executive positions across its Australian and New Zealand insurance businesses. Prior to being appointed acting chief executive, he held roles in the New Zealand business as CFO and executive general manager, claims.

Before joining Suncorp, he was a Chartered Accountant specialising in audit and forensic accounting.

Suncorp Group chief executive Steve Johnston says Higgins is a highly experienced financial services executive with a deep understanding of the insurance industry and New Zealand insurance market.”

Higgins noted that he is proud to be part of Suncorp New Zealand and that he is excited to lead it towards the future.

“Higgins says: “Our business is uniquely positioned to make a difference in the lives of Kiwis and I’ve always felt very proud to be a part of that.

“Suncorp New Zealand has gone from strength to strength in recent years and I’m excited to lead a team of truly passionate people as we shape our business for the future and continue to deliver more for our customers and intermediary partners.”” Click here to read more

In other news

nib: Putting Health into Life and Work Seminars to be held at North Harbour Stadium on Tuesday 20^th October from 9:00am - 11:00am

nib: Putting Health into Life and Work Seminars to be held at Riccarton Park Functions Centre on Thursday 22^nd October from 12:00pm - 2:00pm

Regulator on poor processes and bad outcomes

Income protection: Lessons from over the ditch

Four out of ten life insurers report losses due to over $1.3 billion in losses relating to income protection policies. James Fernyhough reports in the Australian Financial Review. Link. 

Day 2 of the conference kicked off with the Professional Advice - Get In Shape: The Next Bite of the Apple session. This session was sponsored by Chatswood and saw Richard Kliplin lead the current and relevant regulatory discussion with Sharon Corbett, John Botica, Angus Dale-Jones, and Derek Grantham. During the session viewers had the opportunity to hear from MBIE, the FMA and the Code Working Group. The insightful session revealed key licencing stats and offered commentary on CoFI and FSLAA. The session allowed viewers the opportunity to ask the regulator questions. It was great to see many viewers utlising the ask a question feature on offer. Questions included:

·       When will the FMA release the requirements for a financial advice provider full licence, and the final standard conditions?

·       Will the FMA do anything to smooth full licence applications across the 2 year period or deal with the rush towards the end of the period?

·       What are the expectations around serving existing clients (pre-FSLAA), and how are these expectations reflected in the duties in the law or the CODE?

·       There are two places in the transitional licence application where the user experience is unintuitive. What are the FMA doing to ensure that the user experience in full licence applications is intuitive, and applicants won’t get stuck unnecessarily?

The public launch of the mark is scheduled for February 2021 to coincide with the new financial advice regime coming into effect the following month. At that time when the AFA and RFA designations disappear, qualifying Financial Advice NZ members will have this new designation to show the public that their high level of qualification, experience and ethics has been recognised by a professional body.”

Those that meet the amended requirements can now apply to have the accreditation before the new regime.

“Applications are open now so qualifying advisers can have the Trusted Adviser mark ready before the March 15 2021 new regime.

After the feedback received during the consultation phase, some of the criteria has been amended in line with your views. Please review the application details as many members are not required to apply, only register, as we already know they meet the criteria. Click here to apply