The FMA is looking into an adviser that recommended clients move savings into more conservative accounts during Level 4 lockdown. The FMA has stated that this advice could cause great damage to clients. Clients that accepted the advice provided in a mass email would have locked in the losses caused by the market volatility. As a result of the adviser’s actions, the FMA has reminded the public that they should consider all options before making any changes.

"The AFA sent a bulk email in March 2020 to clients urgently recommending they move their savings in KiwiSaver and other funds to less risky options.

The FMA was alerted to the communication after receiving a complaint from one of the adviser’s clients.

FMA head of supervision James Greig said the advice was inappropriate and had the potential for significant harm.

"The FMA has a low tolerance for poor conduct that poses risk to customers as a result of the Covid-19 crisis, especially because New Zealanders are looking for financial guidance at this time.” Click here to read more

In other news:

FMA: Providers working to help panicked switchers

PartnerRe: PartnerRe announces two new CEOs

Partners Life: New independent director at Partners Life

Is a brokerage no longer a “lifestyle” business?

Reserve Bank: Reserve Bank governor believes rates can go lower

My latest piece, on income protection underwriting, is at goodreturns: https://www.goodreturns.co.nz/article/976516899/ip-underwriting-is-complicated-improving-but-complicated.html 

Fidelity Life announces departure of CEO

Life insurer Fidelity Life has announced the resignation of CEO Nadine Tereora. Nadine has indicated she wants to spend more time with her family and this will be her final week at Fidelity Life.

Fidelity Life Chair Brian Blake says he’s disappointed to lose Nadine after three and a half years.

“During Nadine’s tenure as CEO Fidelity Life secured a $100 million cornerstone investment from the NZ Super Fund, won the ANZIIF New Zealand Life Insurance Company of the Year Award for three consecutive years and maintained our position as New Zealand’s largest locally owned life insurer.

“I’d like to thank Nadine for her service and wish her and her family all the very best for the future.”

Mr Blake emphasised Fidelity Life is in good shape: “We have a strong team, we’re in a strong financial position and we’re well-placed moving forwards.”

The challenges posed by Covid-19 have been navigated well so far, and the company’s transformation strategy is tracking well, with the recent launches of a refreshed brand and new wellbeing app, Sharecare, being great examples.

Fidelity Life’s Board will commence the search for a new CEO immediately. In the meantime, Chief Distribution Officer Adrian Riminton and Chief Financial Officer Simon Pennington have been appointed as joint acting CEOs to provide continuity for Fidelity Life’s people, as well as for customers, advisers and partners.

“We remain firmly focused on a successful and sustainable future with our customers at the heart of everything we do,” said Mr Blake.

Ends

Adrian Orr has highlighted that the financial system is sound enough to overcome the economic impacts of COVID-19. Although banks have coped well with the pandemic, the Reserve Bank has stated that insurers and non-bank lenders are more vulnerable.

“The Reserve Bank said in the central bank's annual report on financial stability published on Wednesday that banks had coped well with the coronavirus pandemic so far.

But under "severe enough scenarios, the viability of banks would come into question", it warned.

In the event of its worst-case lockdown scenario "initial modelling suggests that, without significant and timely mitigating actions, banks would fall below minimum capital requirements under this scenario," it said.

The Reserve Bank has also cautioned that some other financial institutions that take deposits from the public, and some life insurers, are already more vulnerable.” Click here to read

In other news:

FSC: Advisers more important than ever

COVID-19 exposing New Zealanders’ financial vulnerability

Retirement Commissioner: Collective effort from advisers needed

Take care before jumping on insurance relief, FMA warns

AIA: Fitch runs Covid-19 ruler over industry

EQC apologises for leakage of claims info

Cigna has made price changes to a number of products. The range of the changes are detailed in the table below. You can tell from the variety of changes that this is a complete repricing exercise - not merely an increase or decrease of a blanket percentage. Some prices will be much more competitive. Some segments are being increased. The only way to know for certain, is to do a comparison for each life. That's why a price comparison across the market is vital if you wish to offer help to clients seeking the most competitive products. Quotemonster still offers free price comparisons for financial advisers with an FSP number and an email account. 

In other news:

AIA: Mentemia, a mental wellbeing app, is now part of the AIA Vitality program.

AIA: Clients can get one month’s premium free when they apply for a new eligible AIA policy between 5 March 2020 and 31 May 2020 and have the policy issued by 31 July 2020.

Partners Life: The automatic COVID-19 Mental Health exclusion that was applied to disability and business risk benefits has been replaced with more targeted and specific underwriting processes.

Partners Life: Clients who had the automatic mental health exclusion applied will have it replaced with an emergent mental health exclusion.

Partners Life: Underwriting restrictions 2020

Duncan Grieve writes about the media situation in New Zealand after the incredible news of Stuff being sold for $1 to management. The article is well worth a read. In an economic sense I felt it was awesome advocacy for Schumpeter's creative destruction - a celebration of how new ideas emerge in surprising places, and times. Innovation does occur in large companies, but not usually in very comfortable and monopolistic ones. Disturbance, challenge, and necessity - these drive change. What changes shall we see in the insurance sector as a result of the great shove that 202 has given everything? Well, finally digital moved to the top of the queue for many companies, after languishing for a long time. Product design is definitely under pressure. FSLAA and COFI are going to deliver additional shocks - on top of the economic ones to distribution. 

A study carried out by Coredata and commissioned by the FSC has revealed the immediate impacts of COVID-19 on New Zealanders. While we have been lucky with the low number of confirmed cases and deaths, COVID-19 has imposed uncertainty into all our lives. The study revealed that 50% New Zealanders felt that COVID-19 was impacting job security. Similarly, the study found that the interest in low-risk investments has increased by 20% from March to April 2020.

“The first survey in a major new series commissioned by the Financial Services Council has revealed that COVID-19 has delivered an unprecedented hit to New Zealanders’ financial resilience and well-being.

The Financial Resilience Index tracks how Kiwis feel on five key financial indicators from March 2020 onwards and provides a unique perspective on how we feel and think about financial issues over this unprecedented time.”

A similar study in Australia was carried out by Coredata, in this study it was reported that 51.7% of participants relied on personal savings as a safety net while 29% of participants didn’t have any safety net set in place. The same study found that only one in five have had discussions about their mortality with friends and family. Click here to read more

In other news:

nib: nib have partnered with Clearhead, a mental health technology company to help expand its service offering.

Fidelity Life: Fidelity Life to move to new office building in Auckland CBD after selling Fidelity House

Fidelity Life: Craig Winterburn, GM Retail Sales and Key Partnerships, is set to leave Fidelity Life

Coronavirus: Elective surgery catch-up could take years

Tower: Tower Insurance embarks on digital customer engagement push

nib: Insurer says online application platform has had “fantastic feedback”

Warning association numbers could fall

We have an unparalleled opportunity to try new things. 

My daughter loves to skate - mainly roller skating, which she also teaches - and so wanted to go ice-skating for her birthday. At the rink in between helping my youngest son who is rather wobbly I saw some truly impressive skating. There were a few skaters who were amazing: leaps, spins, and tricks. They could skate fast, elegantly, and do some amazing things. 

They also fell over a lot. 

Talking about skating with my daughter afterwards I said that the person I saw fall over the most was also the best skater on the rink that day. She explained to me that her coach talks about the need to fall over more often when they meet. Mistakes in the coaching context mean attempts to learn - and the biggest obstacle to achievement isn't mistakes, it's fear of failure - because we don't make 100% of the moves we never try. It's obvious really. 

In an insurance context there are, of course, things we should not screw up. We can't be careless with clients trusting us to be reliable. But we also cannot use that as an excuse for inaction on all fronts. Our training sessions can include new ideas. Our new policies and procedures should include some attempts to create new standards. Our marketing development meetings demand several more concepts than we are going to use - I have long since overcome reluctance to pay for things that might not work. All new ideas can be carefully reviewed before using them in the field - but I like it when I budget for failure now. I like it when I can delete draft blog posts - good quality work comes from trying many things, and discarding those that don't make the grade. I aim to create some work that I will not use.

After the weekend's ice skating, I'm emboldened to try more new things. 

Is it time you tried something new? 

In light of the past two months, Martin Stokes, MAS CEO, has said that the insurer is open to the idea of remote working. Stokes highlights the slow adoption of flexible work options in past years has been accelerated by the lockdown. MAS will use events during the lockdown to inform future working arrangements.

“Medical Assurance Society (MAS) chief executive Martin Stokes (pictured) says that the past six weeks have been a kind of mass social experiment, and, as a result, the workplace flexibility trends that were already emerging have been accelerated massively. He says the level of productivity in some areas has been surprisingly high in a remote environment, and, as a result, a much higher level of flexibility will become the norm.

“This situation has identified for us the opportunities that would otherwise likely have emerged over a much longer period of time,” Stokes told Insurance Business.

“Social trends would have influenced people’s thoughts around where they wanted to work, flexibility, different working arrangements, etc. But that’s really been concentrated into a six week-long social experiment where everybody’s had a taste of what that’s like enforced upon them.” Click here to read more

In other news:

Will corporates embrace remote working? - will this moment change everything, or will they slip back into old ways of working?

TAP: are offering to help advisers with claims

FMA: FMA urges public to pay attention to terms of insurance relief

Pepper Money: Pepper writes 600 NZ loans in first year

Financial Advice New Zealand have compiled an easy to follow guide to hardship response of all major insurers and banks.  

COVID-19 hardship offerings by insurers

COVID-19 hardship offerings by banks

The New Zealand Government may be the latest entrant in the trend of holistic health apps which digitise healthcare in the age of Covid-19, Marc Daalder reports here. Although one aspect of the story is yet to be proven - the official COVID-19 contract tracing app does not have holistic health care features.

Should they decide to do so careful consideration of the feature set is critical. This is a difficult game to play, requiring a delicate balance on several dimensions. Motivation can be seen as nagging. Measurement could be seen as prying. Rewards can, from another point of view, be seen as penalties. Insurers at least can point to the freedom they allow clients: pick up the app if you like, if you prefer not, no problem. That's why government should avoid copying Vitality, Fitbit, and Sharecare. They should focus on doing the things that the market is not, such as online delivery of primary care. Digital delivery of some healthcare functions looks like an obvious way to save time, money, and deliver care to more people. It is certain to come. I've have online consultations myself in Northern Ireland for a sore throat. It saved loads of time and reduces exposure of other people to infection. More of this can happen to spread precious public health dollars further. 

The Australian financial advice industry has declined by almost 18% when compared to the number of advisers in the market this time last year. The introduction on mandatory qualifications, the change in commission structure and monitoring of activity has pushed advisers out of the market.

“Five thousand and twenty-five advisers have left the industry in the last 12 months, while a meager 78 new authorised representatives joined the industry during this period, analysis of ASIC’s financial adviser register conducted by CoreData will show. The researcher pointed out that the number of new entrants to the industry is inflated considering at least half have joined timeshare schemes, an area that continues to be a focus for the regulator.

 

But it’s the bloodletting of advisers from the institutionally-owned licensees that will be a feature of this year’s list and subsequent analysis.” Click here to read more

In other news:

Financial advisers have a ‘key role’ during pandemic

International vaccine news excites market

$1.5 billion in claims paid, FSC says

Insurers hoping for loyalty out of Covid-19 offers

How insurers moved thousands out of the office and into their homes

Regular readers will know that I am a fan of Seth Godin's blog. His recent post on the value of experience is especially good - do take a look. 

BDH is available to a wide range of businesses (including companies, trusts and partnerships), some of which are regulated by the FMA. BDH does not extend to registered banks, licensed insurers, non-bank deposit takers, licensed derivatives issuers, operators of designated settlement systems or sole traders.

During the Financial Advice NZ webinar, Minster Faafoi spoke about his commitment to ensuring that the conduct bill progresses while also highlighting that he is conscious of the importance of having enough lead-in time. During the webinar, the Minister spoke of how the Government understands that commissions are a legitimate way of paying advisers and as a result, the Government isn’t seeking to ban commissions, instead is looking to end target-based incentives. 

“In a webinar with Financial Advice NZ, Faafoi acknowledged that concern and said he did not want the conduct regime to add another layer of complexity of regulation on top for advisers.

The bill in its current form also allows regulations to dictate remuneration structures, which some industry participants have expressed concern about.

Faafoi said Government recognised that commissions were a legitimate way of paying advisers for their “important work” because consumers were generally unwilling to pay for financial advice. He said the Government was aware that commission structures were the way the sector had operated for decades.

“It is not the Government’s intention to ban all commission.” Click here to read more

It would be a great relief to advisers and insurers if it could be clearly discerned from the Bill that the power to ban commissions is reserved. At present the definition of incentives in the law can be read as including all normal commission payments, which is unnerving when long-term decisions need to be made. 

In other news:

Suncorp: Kate Armstrong joins Suncorp’s NZ boards

Suncorp: Suncorp earmarks further NZ$2 million for hardship fund

FMA: Transitional licensing continues at a “steady rate” despite COVID-19 delays – FMA

AIA: AIA new business value slips 27% after coronavirus disruption

We have seen unprecedented change occurring all around us. These changes may lead to re-evaluating our plans and considering other pathways. Regardless of your need for change, we can assist you understanding the value of your adviser business. We offer several different valuations to suit your valuation needs. We offer basic, complex and full sale valuation services. Additionally, we work with our preferred chartered accountancy vendor to offer a unique valuation service. 

Reasons why you might get a valuation:

• Sale purposes
• family buy-outs
• Succession planning
• Staff share schemes
• bank lending
• Transferring shares into a trust
• Shareholder/partnership disputes
• Divorce/separations

Click here to find out more

Lloyds of London has reported that COVID-19 will likely cost the global insurance industry over NZ$336 billion (US$200 billion). It is predicted that the industry will experience a greater loss if lockdowns around the world continue into the next quarter. 

“The pandemic will cost the insurance industry over US$200 billion (NZ$336 billion), according to Lloyds of London, who estimated that its own payouts are now on a par with the Sept. 11, 2001 attacks or the combined impact of hurricanes Harvey, Maria and Irma in 2017.

Lloyds, which as an insurance market pays out to insurers affected by disasters, said it expects to pay between $3 billion and $4.3 billion to insurance companies to help them cope with the COVID-19 pandemic.

Losses could widen if lockdowns continue into the next quarter, which would push the overall cost to the insurance industry to $203 billion. Unlike the storms, for example, the pandemic's impact is global, systemic and long term.” Click here to read more

 

While most of those impacts are for catastrophe cover, there will be impacts on life insurers, especially in those markets where control measures were less successful.

In other news:

Applications show small advice firms still see future: FMA

Leading Adviser explains why a group's actions need to speak louder than words

Association CEO joins Trustees Executors board

Financial Advice NZ welcomes Budget 2020

Advisers back wage subsidy extension

Consumer behaviour is often fluid. Trends, word of mouth as well as personal experiences play a part in changing decision-making processes and purchasing habits. Similar to other purchasing behaviours, the way people are choosing to purchase insurance is changing. There is an upward trend of people relying on their own research and not seeking advice from financial advisers. Similarly, there is an increased interest in digital insurance providers.  

"Consumers of all ages are adopting a “millennial mindset,” according to Capgemini and Efma’s World Insurance Report 2020. This means that consumers are increasingly trusting their own research to source and purchase insurance products themselves. Customers of all ages are also increasingly turning to digital channels in the face of the COVID-19 pandemic, the report found.

 

“Digital adoption is no longer a function of age; for those with access to the web and social media, researching and directly procuring insurance online has become mainstream across all generations,” Capgemini said.

 

To remain relevant, insurers must shape their existing products to meet evolving customer needs and preferences, the report said."

Furthermore, it is reported that:

“The COVID-19 lockdown will further fuel this trend as consumers are forced to use digital channels for day-to-day transactions, irrespective of age or tech know-how,” Capgemini said. 

In other news:

Advisers haven't done enough to digitise their offering - expert

Air pollution dropped dramatically during lockdown

FSC webinar: Introducing the financial resilience index

FSC webinar: A global response to COVID-19

FSC: Spotlight on Insurance

Although I try to keep the content of this site exclusively connected to the life and health insurance sector, COVID-19 is inevitably connected with the sector strongly: if uncontrolled it has the potential to wreak havoc. Our scenario modelling in March suggested that whole-of-pandemic numbers of deaths for New Zealand could range from a little under 2,000 to as many as 80,000. Fortunately, government policy, combined with some inherent advantages, have meant we may beat the lowest of those forecasts. Although it is early to congratulate ourselves - there is some way to go in this challenge. The purpose of this post is to illustrate: 

1. Acknowledge how good the response has been,
2. Identify which countries are leading, and what we can learn from that
3. Provide a model for comparing epidemic response and share our preferred sites for tracking that
4. Link to the next pieces of work that are of interest to insurers

The guide for the review is the chart below. Produced by the clever folks at Our World In Data, by Max Roser and his team (link is in the top left-hand corner of the table below). A few things to note about the chart. This is showing confirmed cases, daily rates, shown in proportion to population, using days since the start of outbreak (rather than dates) as the time measurement, and a seven-day rolling average to smooth out reporting spikes. Compared to most charts reported in our media the difference is to show data in proportion to population. It makes comparisons a lot more sensible. The chart is interactive. 

Nevertheless NZ's fortunate position - due to both policy response and some advantages from being a remote island nation, is evident when you change the change the frequency of reporting from daily to total in the selector at the top of the table. NZ's position as a leader in response has been highlighted by general media. It is worth being pleased with - after all, it is one of the most expensive public policy victories in our history. It would be a damn shame if we couldn't enjoy it. It is often contrasted with the UK or the USA in media, however in pandemic response, that's a bit like celebrating a big win over Namibia in the football. They still seem to be working out how to play the game. 

Our peer group at the top of the table is Australia, Japan, South Korea, Taiwan. These are the leaders in pandemic response. South Korea and Taiwan earn special mentions because control measures there enabled them to avoid a full lock-down. Australia has done remarkably well too. Un-tick all the other countries if you want the scale to change so you can explore fine detail differences between each. 

There does not appear to be an ideological divide. Some right of centre governments have done well (Australia, Japan) some have done badly (UK, US). Some left of centre governments have done well (South Korea, ours), some have done badly (Sweden). But it is early days for all, of course. What was the difference? a willingness to take advice, and take action early. Having reasonably well organised pandemic plans helped - the UK has a scandal over PPE, but has found that it did not need the capacity of the vast Nightingale hospitals that they were able to deploy fast due to long-made plans.

Singapore, unlike the UK, the US, and much of Europe, is a cautionary tale of a different nature. It managed the crisis very well early on, but when the disease infected the dormitories of migrant construction and factory workers, it took off. It is early days, current control measures are needed to ensure that a few asymptomatic cases don't touch off a runaway outbreak among the overcrowded homes of poor families.

So what about that title? It is a direct quote from a health-care worker in Kerala, India, quoted in a BBC World article. While they were talking about how well they had managed too, they highlighted that it is early days, hence: 'we have won the quarter final'.

nib will be hosting a webinar on May 20, 2020, from 11:30 am – 12:15 pm. During the session, nib NZ CEO Rob Hennin, RMA Financial’s Shaun Vining, and nib Customer Care team leader Hannah Larking will be sharing their experiences on non-PHARMAC drugs and the importance of including them in medical policies.

"Join our webinar where we’ll be focusing on why cover for treatment with non-PHARMAC drugs is so important for your clients. We’ll be bringing you the insights of adviser, Shaun Vining, and nib Customer Care Team Leader, Hannah Larking. There will be opportunity to discuss why it’s so important your clients have health insurance with non-PHARMAC cover." Click here to register

in other news:

OUT NOW: ASSET May issue

Australia: Signature scandal puts more pressure on AMP's battle-weary management

Wealthpoint: Wealthpoint advisers ‘cautiously optimistic’

Finzo: Finzo develops 360 integrated solution

Brokers with no BCP urged to make one, ASAP