moneyblog

AIA update

Since acquiring Sovereign, AIA have been working to market existing AIA and Sovereign products under the AIA brand. It has been announced that AIA/ Sovereign is going to start communicating important brand and product information directly to customers from 20 June. 

Fidelity announcement

Katherine Johnson has been appointed as Chief Operating Officer.  Johnson’s appointment comes after the departure of Neale Watling. She will join Fidelity in August. Johnson has many years’ experience working in financial services industry. At Fidelity, Johnson will be responsible for the Offer, Underwriting, New Business, Customer Services and Claims teams.

Partners Life nominated for this year’s Diversity Works New Zealand Awards

Paul O'Brien from Partners Life has been announced as a finalist in the Walk the Talk category at this years Diversity Works NZ Awards for exemplifying excellence in promoting and managing a diverse workforce. The awards are being held at the Cordis in Auckland on the 28th of August. Click here to read more. 

There is a media disconnect, reporting creates a crazy impression of risk

Does the news reflect what we die from? In short, the answer is 'no'. The chart below shows US news media, but once you've had a smile at that one, you can check out the performance of media in the UK too (at this link). Reflection on the last year or two will tell you the same applies to us too, so no room for being smug.

If you're struggling to find terrorism in the chart showing actual causes of death, that's because it is less than 0.01% of the total of deaths in the United States. So with 35% of the reporting, it is over-reported by a rate of 3500 to 1 incidence. 

I understand the need to report what is shocking and unusual, but I also think that at the end of every article about terrorism and homicide there should be some context. Sooner or later, media has to accept some responsibility for skewing the priorities of their readers. 

Breaking through the mental and figurative glass ceiling

Regardless of the industry, the glass ceiling remains a prominent issue here in New Zealand. Despite the glass ceiling, women often refrain from applying for executive roles in fear of being inadequate.

This was the case for Nadine Tereora, current CEO of Fidelity Life. Regardless of her many years’ experience in the industry, when the role of CEO at Asteron Life opened up, she didn’t feel that she could take the opportunity. It took convincing to apply for the role, which she describes as “the biggest turning point” in her career.

To succeed in a male-dominated, such as the insurance industry here in New Zealand, Tereora believes that women need high levels of courage and self-belief. Furthermore, Tereora emphasizes the importance of flexitime and work-life balance for both men and women.

Click here to read more.

The need for constant change and evaluation

We are constantly seeking to improve aspects of our personal and professional lives. Although some argue the need for constant self-improvement is based on self-actualization, it is arguable that the need for change stems from the need to fulfill societal expectations. Regardless of the reason for change, it seems that society, corporations, and individuals are always seeking to modify processes and experience growth.

Being in the constant mindset of change leaves us with little to no time to step back, take in and appreciate our surroundings, our professional and personal achievements, as well as our financial standing. This constant change also means that we can improve the efficiency of our ways, advance our credentials, enhance our thinking and further both our soft and hard skills. Understanding our limitations and challenging our current methodologies ensures that we can learn. Through the analysis of past actions and processes, we are able to understand our shortcomings, better our techniques and educate ourselves and those around us. That feedback loop is underestimated as a tool of innovation. Unlike the much sought-after 'light-bulb' moment, or the illusion of a single leap to a known 'best practice,' real innovation usually comes from taking the time to evaluate changes that occur in our lives allows to better our techniques while remaining compliant to regulatory standards.In that sense we are constantly, but gradually, moving towards a goal of best practice.

nib: Health Comes First Seminars

nib have announced a number of seminars titled 'Health Comes First' to be held from the 1st of July.

The seminars will be covering the following:

• Dedicated adviser team - meet their new Adviser Partner Managers
• Preview nib's new electronic application - making it easier for you and your clients 
• Streamlined processes - making it easier to write nib health cover alongside life cover from your preferred risk providers
• Extra support for you and your clients
• New, simplified agency setup process for new advisers

Click here to read more and to register. 

Poor eating habits more deadly than smoking

A video posted on Instagram by World Economic Forum states that poor daily diet result in more deaths than smoking.  Publications in The Lancet have stated that one in five deaths globally is now caused by the growing trend of poor diets, this means 11 million people die as a result of poor eating habits. Other than death, poor eating habits result in heart complications, and cancer.

Although eating habits vary around the world, minimal consumption of whole grains and fruit and excessive consumption of salt is considered to be a poor diet. It has been found than Japanese and those living in Mediterranean countries are of good heath, with Japan having the lowest level of mortality in the world. In comparison, other Asian countries have higher levels of mortality.

Interesting to see in the comments the attention drawn to eating high levels of animal fats in meat and dairy, and the narrowing of the range of foods as contributing factors. They especially link back to high levels of heart disease and cancer. 

Pinnacle Life new advertising

The new Pinnacle Life ad has been crafted in a manner that illustrates the consequences of being unprepared for unforeseen life events. The devastating effects of being unprotected is intended to appeal to the emotions of viewers. The turn in events of the main character's life works to highlight the ups and downs in life and places emphasis on the importance of preparing for unfortunate events while in a good place.

 

The value of the price signal, versus the challenge of affordability

Arguably the most interesting question and answer at the FSC's breakfast event 'Risking Everything' was the last one. A member of the audience (who works at a bank, incidentally) highlighted the problem of affordability. Tim Grafton from the insurance council highlighted the value of the price signal. Both raised important issues. It felt like questioner and responder talked past each other a bit, yet progress in our insurance market relies on some degree of acceptance and change on both sides of this divide. A price signal isn't a price signal unless it changes behaviour. That means, by definition, some people have to find insurance cover un-affordable in order to change their behaviour: like not buying our building property in areas increasingly likely to be flooded, and choosing a smaller, better built property in an earthquake zone. But there are parts of the picture missing in this. Insurers must accept the need to be more efficient. Government can help too - zoning and planning permission has to do some work too, not just leave it all to the insurance industry to bring the bad news. 

We have a similar, but largely uncovered example in the life and health insurance sector. Rates must reflect risks otherwise there is no price signal. The essence of programmes like AIA's vitality is that changes in diet and exercise create changes in health that pay dividends to both insurer and client - and result in lower premiums. That fact means acceptance that some people who are more likely to claim, and therefore more expensive to insure, must get charged more. If this seems obvious to my insurance readership, it is worth pausing to wonder: why isn't it obvious to some clients, politicians, and media? Perhaps we need to take a leaf out of Tim Grafton's book and talk about the price signal, and then extend the argument to acknowledge our need to become more efficient, and describe the future. Where we are going, I hope, is a world where more people take better care of themselves and health services and insurers helps them to do so. There is plenty of room for improvement. 

Which advisers should attend the FSC conference in September?

Always there are pressures on time and money and choices have to be made. Most advisers should probably think of the Financial Advice New Zealand conference in August first, and then decide whether to add the Financial Services Council conference in September. These people in particular should all take a good look at the FSC programme and add that in to your diary: dealer group heads, advisers business owners with ten plus staff, adviser business compliance leaders, and national sales managers.

The content that makes the difference in your decision-making is on both main stage and in the communities of interest workshops.

Main stage we have an extensive panel of ministers in government and opposition, the heads of RBNZ and FMA, and regulators - as well as some amazing personal stories.

In the communities of interest there is the dealer group lunch, with exclusive access to FMA and MBIE leaders. I would also recommend the session on reconciling competing client goals and objectives, which features leading advisers and technologists. Consider adding in a session from the underwriting stream, and of course, ensure you return to the main stage for the close of the day.

There are more speakers being announced all the time, but over thirty are listed at this link. 

The entire conference is worthwhile attending, but if it helps to reconcile your time pressure you can pack the content above into just one day if you like, and just pay the single day rate.

Check out the programme at this link. Register at this link. 

Risking everything: how New Zealanders view risk, what they are doing about it

The FSC launched "Risking Everything" this morning 

There is relatively little insurance consumer research done in New Zealand. Much of it is of a low quality. The Massey work on underinsurance, by messrs Matthews, Birks, and Naylor, commissioned by the FSC, and this new research, also commissioned by the FSC have to rate as perhaps two of the most important studies. About three years ago we had some really useful work done in income protection - also done under the auspices of the FSC. 

But back to this work. In this case the research is entirely consumer focused, and draws on attitudes towards risk, and the extent of preparedness to face an event. It feels more relevant to me, as the answers to these questions are firmly rooted in the consumer's own perception, rather than concepts that the industry thinks about - like measuring under-insurance against our own models of what people 'should' have. 

These are my personal highlights: 

• "Those surveyed identified global risks, natural disasters, loss of income/increase of expenses and illness or death when they were asked to consider
  types of risk. However, when thinking about these risks, 1 in 3 of those who identified them don’t tend to think about how these risks might affect
  them and 43% of respondents often forget about them if they do." That rings true, when I think of the attitudes of people not in the industry
• "The risk of losing their income is not even considered by most New Zealanders." - Is that self-deception? Is that a purposeful decision because they are unaware that a solution exists?
• "Two-thirds of those surveyed thought that there was a moderate to high risk of major financial problems should a significant event happen such
  as serious injury or being unable to work" - which is a powerful point of self-reflection. So, if you are brave enough to stand on the street and ask questions (as the film crew below did) then two-thirds of people will admit that they probably have a problem that needs solving. There's a need, and an openness. 
• "I dislike having to think about these financial impacts" - now that's an honest response, who does like thinking about it?
• "Respondents aged 45-54 and those with a large family (three or more children at home) were less likely to think about financial risk" I bet that's just because they are so busy, but as the researchers found out, if you do ask, you get some good answers. 
• There is also a lack of knowledge about what to do: "I’m not really sure how I should manage these potential impacts" or should I say, these people are all but asking for advice
• Winder financial planning issues are identified, with 40% knowing that they do not have the financial resources to manage for three months without their income. 
• Yet with all that latent need, only 38% of respondents have an insurance policy, and only 8% looked into buying one in the last two years (this number excludes those that might have reviewed their cover.

There is a wealth of information. You can download the report from this Download Financial Services Council - Risking Everything - June 2019, the FSC's media release is Download FSCMediaRelease KiwisGambleonFinancialRiskFInalJune102019, and there are some cool vox pops below. Do check it out.

 

Insurers and government could achieve a lot more by working together

The recent government decision to boost the budget for mental health services is valuable - and perhaps counter-intuitively, is a boost for everyone who uses mental health services, including those that have private medical insurance. Medical insurers have been complaining for some time that a lack of good service providers is the main obstacle to providing more coverage for mental health issues in insurance. In the early stages of market development it is difficult to invest and create a business because of a lack of scale in demand. Substantial government expenditure can help to tempt more service providers into the market, and also help some of them reach an economically viable scale - below which the service would not exist at all.

But this is just one area, touching on a substantial issue, but there is another where everyone who buys insurance could benefit: allowing individuals better control over their medical data. The equivalent concept in financial services is open banking. The idea that the bank customer should be able to decide who receives their data, so that they can direct it, for example, to be shared with a new service provider. This erodes the great incumbency advantage of large existing businesses - ideally stimulating both new entrants and all our current banks to be more innovative in helping customers get the most out of what they do. 

The same could be done, powerfully, with health data. Not just for insurers, but the business case stacks up on that use alone. It is ironic that at the same time as MBIE includes in the insurance contract law options paper the idea that insurers should get medical information on every client, government sits on most client medical information and makes it incredibly hard to access - even when you want to access it. Imagine if you were able to long on to a government website and share all your medical data with a new service provider, your insurer, a specialist overseas, a nutritionist, the seller of your next wearable device, and your gym coach. The way this could cut costs and hassle for existing services and develop new ones could transform the health of New Zealanders. 

 

Ozymandias

A good day for this reminder. Stay close to the action, as it keeps you connected. From gapingvoid. Link. 

Rising insurance premiums

RBNZ has warned that rising insurance premiums could hit property values in their latest Financial Stability Report. RBNZ Governor Adrian Orr said, our financial system is resilient to current risks – but risks remain elevated. In the case of the risks associated with climate change, like average world temperatures, they are slowly rising. Insurance premiums could play a valuable role as a price signal in making the risks, and their costs, real to more people. Click here to view the report. 

Image from the RBNZ report.

Recent AIA Sovereign Product Enhancements

Here is a summary of some of the product enhancements AIA and Sovereign have recently released:

Sovereign Income Protection

1. Updated the 'Total Disability Income Benefit' definition
2. Enhanced the 'Partial Disability Income Benefit' definition
3. Introduced a 'Childcare Support Benefit', a 'Waiting Period Reduction Benefit', a 'Return to Home Benefit' and more

Sovereign Life Insurance

1. Introduced a 'Counselling Benefit'
2. Broadened the 'Financial and Legal Advice Benefit'
3. Increased the 'Special Events TPD / Trauma Facility'

Sovereign TPD

1. Increased the 'Partial Permanent Disablement Benefit'
2. Introduced an 'Assistance Benefit' and a 'Suspension of Premium Benefit'
3. Improved the 'Special Events Increase Facility'

Sovereign Health

1. Introduced a 'Mental Health Support Benefit', a 'Public Hospital Cancer Treatment Cash Benefit' and an 'Obstetric Care Allowance', plus more
2. Improved the 'Cancer Care Benefit'
3. Updated the 'Minor Surgery Benefit'

Sovereign Trauma

1. Introduced a 'Severe Illness or Injury Benefit'
2. Updated 40 medical definitions
3. Added a 'Medical Advancements Protection Provision'

Only days remain until the launch of Risking Everything

With just days remaining until the Risking Everything launch, let’s explore what there is to look forward to.

The event is focused on the research conducted by Horizon on behalf of the Financial Services Council. The survey that focused on understanding the views of 2000 New Zealanders on risk how they think about mitigating any given risk and how they manage the potential impacts.

Speakers include:

• Andrea Kan, Executive Director at UMR Research Limited
• Tim Grafton, Chief Executive of the Insurance Council of New Zealand (ICNZ)
• Trish Sherson, co-founder and Strategy Director of Corporate Affairs firm, Sherson Willis
• Richard Klipin, Chief Executive of the Financial Services Council New Zealand (FSC)

Registration at this link.

Location: Chapman Tripp, Level 35, 23-29 Albert Street, Auckland 1010

 

 

 

OnePath price updates

As announced earlier in the year, price changes are being implemented this month. Applications on Mortgage Repayment Cover that are submitted after June 21 will have a 10% increase in price. The price increase will take effect on all existing policies at their next anniversary. 

Thoughts on Susan Edmund’s Starting out Starting over

Susan Edmund’s Starting out Starting over is made up of different chapters that are dedicated to the different stages of a single woman’s life. Edmunds’ ability to simply relate finance to the lives of single women works to capture and hold the attention of readers. When beginning the book, I was a little worried that I would be left feeling overwhelmed, but Edmunds tackles the broad and complex topic of finance in a manner that is easy to follow, thought-provoking and entertaining. Her ability to address issues relating to debt, home purchases and other investments, love, insurance, and retirement worked well to offer readers a complete guide. Focusing on areas that are generally major events in any person’s life helped to put a lot of things into perspective.

A theme that ran throughout the book was the incorporation of case studies. All case studies worked to further illustrate a point that Edmunds was trying to get across to readers. Although the points were easy to understand, the use of cases studies made the book more personable. I found that aspects of the characters described throughout the book either related to people I know or myself. Although alarming at times, these case studies helped me to objectively assess my tendencies and experiences and to quietly evaluate the tendencies, current situations, and past experiences of women close to me. Upon completion of the book, I felt that the case studies served a dual. The first was to illustrate points made, and the second was to help readers examine their situation, experiences, and habits. I believe the use of case studies is a well-thought-out and a well-designed approach.

Another aspect that I found highly effective was the simple exercises that readers could complete. Through the integration of activities, I was able to use the material that I was reading to critically evaluate my situation and my mindset. Although difficult at times, this aspect of the book is what I found to be most helpful. Having these questions throughout the book meant that I was able to honestly answer without fear of judgment.

To conclude, Susan Edmund’s Starting out Starting over is an informative book that helped me to better understand finance and to be brutally honest with myself. I was able to better understand financial elements that are key to having a successful financial standing. Edmunds straight-forward approach worked well to get her points across in a manner that leaves readers aware and hopeful.

Review by Jerusalem Hibru. Image of Susan Edmunds, supplied.

 

 

Historical Ministerial diaries now publicly accessible

The general public is now able to search for Ministerial diaries. This is due to the completion of the historic Ministerial diary release, which allows anyone to search up content from October 2017 until April 2019. Through this feature, users can search for the diaries of different Ministers according to year.

Click here for more.