Many advisers come across clients who have cover with a major employer group scheme and would like to be able to access research to support recommendations to either retain, replace, or dispose of this cover. "Wrap-around cover" with very high excess levels so that benefits such as good non-Pharmac drugs coverage can be offered is a common component of advice - but understanding what is actually covered already is a key part of making any effective recommendation. As many of these groups have terms and conditions specific to them, or are at least based on a different 'foundation' product to current retail offers, it is not simply a matter of looking at current retail policies. Therefore, we are often asked if we compare group life and health insurance on Quotemonster as part of the quality product research service. QPR does not, although at times Chatswood does, offer bespoke comparison to larger adviser groups and insurers - this is not an economic solution for most advisers. However, we are now defining the scope of work to add group life and health comparison to the site. If you would like a say in how the new service works we would be delighted to hear from you. In particular we would like to know what the most common group schemes you come across are and which you would most like us to provide research on. Please send your comments to either Treena Jordan, Doreen Dutt, or me.
With most of the country now out of level 4 lock-down other than us living in Auckland, I hope you’ve managed to get outside and enjoy the freedom of level 2.
I am super proud of the team here at Quotemonster, even under the challenging conditions of level 4 lockdown we are excited to announce our next exciting new Quotemonster report.
The new Head-to-Head report has been designed to drill down into the detail, providing you another great tool to help educate customers about any criteria within the policy wording that could have an impact at claim time. The new report provides you the sub-item detail. Sub-items are used to determine the impact from restrictive criteria within the policy wording.
In the example used below, the criteria for the cancer condition under insurer 1 is less that insurer 2:
We love getting your feedback whether it’s good or bad. Please email or call either me, Doreen or Kelly what you think of our latest release. We have more exciting enhancements due to go live over the next month adding even more value and reasons to use Quotemonster.
The first training session is next Wednesday 22 September from 11.00am - 12.00, these sessions will cover the new detailed head to head reports, plus where to find the great Heatmap and Benefit Overview reports too.
Kia Kaha from the Quotemonster Team.
16 Sept 2021 – ASIC in Australia released additional information for advice licensees and financial advisers who are authorised representatives to help them prepare for the commencement of the design and distribution obligations on 5 October 2021. https://asic.gov.au/about-asic/news-centre/news-items/what-the-financial-advice-industry-needs-to-know-about-the-design-and-distribution-obligations/
17 Sept 2021 - Parliament's Finance and Expenditure Committee released submissions made to the inquiry into the current and future nature, impact, and risks of cryptocurrencies. https://www.parliament.nz/en/pb/sc/submissions-and-advice/all?custom=INQ_111968
Southern Cross offers a multitude of direct and adviser products. On Quotemonster we currently only offer the following products, however are looking to include more in future:
- Wellbeing 1 (WB1)
- Wellbeing 2 (by choosing WB1 and selecting Specialists and Tests as included we move to Wellbeing 2)
- Wellbeing (either 1 or 2) + Chemotherapy 100
- Wellbeing (either 1 or 2) + Chemotherapy 300
In order to include the Cancer Cover Plus upgrades - Chemo 100 and Chemo 300, you can do so by selecting the product in your "Settings" screen (as per our screenshot below)
If you wish to compare some of the benefits within a Southern Cross product, here is a Plan Comparison Chart that provides a general idea.
Investment News NZ, a service run by respected journalist David Chaplin, describes ASIC's new Design and Distribution Obligations (DDOs) as offering a bitter pre-taste of COFI" - referring to New Zealand's draft Financial Markets (Conduct of Institutions) Amendment Bill. Investment News quotes a range of sources in Australia as closing products rather than meeting the additional costs and risks of the new compliance obligations:
"ASIC lists three core obligations for the various parties involved in the financial product chain, requiring:
issuers to design products in synch with the “likely objectives, financial situation and needs” of targeted end consumers;
issuers and distributors to take “reasonable steps” to ensure products only reach the defined client market; and,
issuers to monitor “consumer outcomes” and review products in light of the DDO end game."
Only the most cynical and short-term thinking generates products that would breach the first obligation. Occasionally time can cause a product to drift from being an effective solution to being considerably less effective - and those products should, of course, be cut from any offered range. So on this point most product providers would agree with the regulator and also no incur any meaningful marginal cost if they already have a professional product management function.
But it is a rare piece of new law or regulation which comes with no trade-offs. Costs begin to emerge when you consider the possibilities under the second two obligations. A product provider could offer a product to distributors and consumers with little concern for how they used it. In practice most still preferred to offer more warnings and guidance the more exotic or risky a product became. A few did not, or were happy to play down risks. It seems that in every market cycle in the investment sector this occurs. In life and health insurance we have always known that a few (we hope, very few) clients, have treated insurance as a kind of lotto ticket. In some cases a rare 'bad apple' adviser has not tried to dissuade them much, of if they have tried, the client has simply bought online or direct.The tricky part is in knowing what 'reasonable steps' are under new regulations and how to meet them. Costs are inevitably added. Some rarely used, yet useful, products will be deemed too difficult or too risky to use.
The toughest - and perhaps the costliest - rule is to monitor consumer outcomes. This requires a lot of thought about what represents a good outcome, how the product supports that, and monitoring which may (although it does not have to) inject insurer compliance requirements deeper into intermediated adviser-client processes such as annual reviews. How frequently and how carefully this has to be done could describe a big range of possible outcomes. Different companies will take different approaches. Clients may balk at some of them - it seems inevitable that some advisers will. There is a risk that some adviser - client processes are so defined by compliance that differentiation becomes impossible. Worse, clients may simply shrug and walk away from more complex products and advised engagements in favour of less effective, direct, engagements. We believe that advice can make a difference. The more complex a client's situation the bigger that difference can be.
The crucial lesson from this point is not to try and avoid the requirements but for all parties - insurers, advisers, and regulators, especially regulators, to engage creatively, flexibly, and with an open mind on compliance technology, to try to reduce the costs and maximise the benefits. We all say we will, but it does take real effort not to slip into dreary functional norms.
Following on from our post on the release of Database V14.5 – a significant change we have made to Quotemonster is replacing Asteron's Continuous Trauma with Trauma Reinstatement for the Trauma Buyback option.
This will mean that you can no longer quote Continuous Trauma however we are exploring options on how to integrate both in future. To learn more about Asteron's Trauma product please click here. Please free to email us on email@example.com if you have any questions or comments.
A great episode in the 100 women series focused on Money. You don't have to be a woman to enjoy it and get value from it. Anyone who expects to have women as clients to finds this market important - and I definitely do - may get value from the solid run through many of the basic issues from the perspective of the three experts interviewed:
Swiss Re yesterday published the results of a survey undertaken this year to understand New Zealanders' attitudes and behaviours towards life insurance:
The inaugural report, Closing New Zealand's mortality protection gap, estimates that the mortality protection gap for New Zealand households – the gap between households' financial resources and the protection they need to maintain their living standard in the event of the death of a primary earner – at USD 435 billion (NZD 670 billion) as of 2020.
The findings show that this gap is projected to widen to more than USD 500 billion (>NZD 750 billion) within the next 10 years, in part due to rising consumption and household debt levels. As an industry, there is a need to act now.
The current COVID-19 crisis has increased the sense of risk and insecurity. More than 80% of those surveyed in New Zealand believe that losing the income of the primary earner will affect their family significantly. This is slightly higher than the 72% of all advanced Asia Pacific markets Swiss Re surveyed prior to COVID-19.
Swiss Re's findings show almost two thirds of households in New Zealand have some form of mortality protection gap. About a fifth of households have just 10% or less of the financial resources required to cover their protection needs; in other words, a protection gap of 90%.
The report also examines how to close the gap in New Zealand. Swiss Re estimates that in the decade to 2030, this could be achieved with an additional USD 1.5 billion (NZD 2.3 billion) of life premiums every year. Yet only 39% of consumers reported owning a life insurance policy, and survey responses find that buying life cover is not their default option for increasing security.
You can download the report here: Closing the mortality protection gap in New Zealand | Swiss Re
Other daily news:
AIA Vitality is offering 1,000 points for members to get their Covid-19 vaccine
Montoux, sellers of decision science software, is running a seminar on engaging long-term care insurance clients
nib: are joining Protecht, sellers of risk management software, for a seminar on culture and conduct risk management.
Partners Life: an interview with Life Kris Ballantyne and Mark Leishman discussing financial literacy can be found here:
16 Sept 2021 – Privacy Commissioner issued a warning against paper-based contact tracing registers. https://privacy.org.nz/publications/statements-media-releases/privacy-commissioner-warns-against-paper-based-contact-tracing-registers/
A package should reflect the relative value of different types of insurance protection to the person buying that cover. We put weightings on packages because, for example, a package of just life and trauma is less comprehensive than a package of life, trauma, mortgage protection, and medical.
A summary of the weightings is shown below:
Zoom in on the income and mortgage elements for a moment. That was raised by several advisers recently who feel that mortgage cover is the first element of temporary disability protection put in force. Market practice backs this up - quoting by advisers in Quotemonster shows that more mortgage protection is now quoted than income protection. So how were we to revise the package breakdown? We took the view that of the 45% of the package value assigned to MP and IP combined, the scores should reflect the relative weights when MP and IP are typically included in a plan together. MP often covers the first 40% of income insured and IP tops that up to about 75%. Clearly it can vary according to rules specific to each company and products used, but broadly this gives a new weighting as follows:
Total 45% of package value
We value and appreciate all the feedback coming through! If you have any questions or comments please email them through to firstname.lastname@example.org
We have recently added Partners Life Income & Expenses and Moderate Trauma to our product selection on Quotemonster.
To quote these products on our platform, select them in your “Settings” as per our screenshots below:
Please free to email us on email@example.com if you have any questions or comments.
13 Sept 2021 - RBNZ Over September RB are conducting a quantitative impact assessment exercise with selected insurers, to help understand the capital impacts of the draft interim solvency standard. They have published a template for feedback. https://www.rbnz.govt.nz/regulation-and-supervision/insurers/consultations-and-policy-development-for-insurers/active-policy-development/review-of-the-insurance-solvency-standards
14 Sept 2021 – FMA stories released comment from Derek Grantham titled “The Goldilocks dilemma (or how to choose the FAP full licence class that’s just right).” https://www.fma.govt.nz/news-and-resources/fma-stories/the-goldilocks-how-to-choose-the-fap-full-licence-class-thats-just-right/
14 Sept 2021 - MBIE sought submissions on whether to reissue the Addendum to the Responsible Lending Code, which elaborates on and offers guidance on how lender responsibility principles and lender responsibilities may be implemented by lenders while dealing with borrowers who have been impacted by COVID-19. Submissions close on 22 Sept 2021. https://www.mbie.govt.nz/have-your-say/addendum-to-the-responsible-lending-code-covid-19
14 Sept 2021 – Commerce Amendment Bill reported back to Parliament from the Select Committee. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_108304/commerce-amendment-bill
15 Sept 2021 – FMA media release advised that the FMA has seen a spike in investment scam complaints, issuing more warnings, since start of COVID-19. https://www.fma.govt.nz/news-and-resources/media-releases/fma-sees-spike-in-investment-scam-complaints/
15 Sept 2021 – Privacy Commissioner issued a compliance notice to the Reserve Bank of New Zealand, triggered by a cyber-attack in December 2020.
The details of a judgment in a case brought by the FMA highlight the importance of good governance and director education. In the details below I draw your attention particularly to the comments by the judge in the last five paragraphs in the quoted section below.
CLSAP Premium New Zealand Limited, formerly known as KVB Kunlun, has been ordered by the FMA to pay $770,000 for anti-money laundering breaches under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. The FMA made a case in the Auckland High Court in June claiming that CLSAP NZ didn’t comply with its obligations under the AML/CFT Act between April 2015 and November 2018. The FMA’s case was focused on transactions undertaken by 10 CLSAP NZ customers. The FMA and CLSAP NZ filed an agreed statement of facts where CLSAP NZ admitted:
- failures to conduct enhanced customer due diligence in relation to 12 transactions;
- failure to conduct customer due diligence in relation to one customer;
- failures to terminate existing business relationships when customer due diligence could not be completed;
- failures to report suspicious transactions / activity on nine occasions; and
- failure to keep records as required under the AML/CFT Act
“CLSA Premium New Zealand Limited (CLSAP NZ) has been ordered to pay a total pecuniary penalty of $770,000 for breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act, following proceedings brought by the Financial Markets Authority – Te Mana Tātai Hokohoko (FMA).
The FMA filed proceedings in June 2020, in the Auckland High Court, alleging CLSAP NZ failed to comply with its obligations under the AML/CFT Act between April 2015 and November 2018. These were the first court proceedings brought by the FMA under the AML/CFT Act.
In a judgment determining the penalty, Justice Edwards noted CLSAP NZ’s failure to obtain any evidence of source of wealth or source of funds for some of the transactions where enhanced customer due diligence was required and “the inadequate information obtained when it was sought, is particularly concerning.”
The Judge said although CLSAP NZ had an AML/CFT programme, policies, and dedicated compliance staff, the mitigating effect of those features on the penalty was undermined by several factors:
CLSAP NZ was warned by the FMA about its substandard AML/CFT programme in 2014 and, despite improvements, the FMA identified further issues in 2018
CLSAP NZ’s executive directors interfered with compliance, including by suspending information collected on source of wealth/funds in 2017, and one director vouching for a customer’s source of wealth/funds
Two CLSAP NZ compliance officers resigning over the relevant period due to disagreements with CLSAP NZ directors, with one director saying a “bendier” compliance officer was required
When one customer refused to provide information sought, CLSAP NZ was willing to accept inadequate information, including objectively suspicious information, to retain business.”
In other news
Cigna: New customers to receive two months of free cover
Cigna: Existing customers that increase their level of insurance will receive the first two months of increased cover at no additional cost
Cigna: financial advisers will receive twice the servicing commission for two months for all new business and increases sold during the campaign period
The media release from AA "...announces new CEO to guide next stage of journey..." at 9am this morning and that new CEO is Nadine Tereora, most recently Chief Operating Officer at Partners Life Limited.Congratulations to Nadine on the appointment. AA is one of the largest and most trusted organisations in the country. There are many brand-promise similarities between AA's service and insurance and much of AA's operations concerns financial services as well.
More details in the release below:
AA announces new CEO to guide next stage of journey
The Board of New Zealand’s Automobile Association is delighted to announce that Nadine Tereora has been appointed as its new CEO from February next year.
The appointment follows current CEO Brian Gibbon’s decision to retire in January 2022 after 30 years leading the AA as the only CEO it has known, and the ten years prior as CEO of the Wellington (Central) Automobile Association which he joined in 1982.
Association President Gary Stocker said Nadine was clearly the best candidate to take the AA on the next stage of its journey.
“We are absolutely thrilled that Nadine will be joining us as CEO. Her leadership experience in the financial services industry is extensive and varied, making her one of the leading and most innovative executives in the sector. We have worked with her before when she was CEO at Asteron Life, our joint venture partner on AA Life Insurance, and have held her in high esteem for many years.
“More importantly, Nadine is an exceptional people leader. She intuitively understands the importance of the service culture which is at the heart of the AA, and has a natural drive towards customer innovation. She understands that we are here to serve our Members, and for the greater public good,” Gary said.
Nadine has most recently been the Chief Operating Officer of Partners Life, the second-largest insurance company in New Zealand, and assumed the role after four years as the CEO of Fidelity Life from 2016 to 2020, during which time she played a central role in securing a $100m cornerstone investment by the New Zealand Super Fund to drive innovation and growth.
Nadine’s 2014 appointment to Asteron Life, where she served as CEO and Executive General Manager, distinguished her as the first female CEO of a Suncorp Group company, just as she will also be the AA’s first female CEO.
Under Nadine’s leadership both Asteron Life and Fidelity Life won numerous top industry awards, including Fidelity Life being named Life Insurance Company of the Year at the ANZIIF Awards, in 2017, 2018 and 2019, and the same award for Asteron Life in 2014/15.
She has been a Financial Services Council Board Member since October 2016, serving as Chair of the Life Insurance Committee, and a founding member of the Diversity and Inclusion Committee.
“What is fantastic is that Nadine is clear that she wants to honour what’s special about the AA, and feels privileged to lead the Association into a new era. Brian is very supportive of this changing of the guard, and having worked so closely with Nadine, knows how well her expertise and personality will fit the organisation and its aspirations, ensuring a smooth transition ahead. At this time I would also like to once more pay tribute to Brian who has been such an inspirational leader to us all over the past four decades.
“Brian has achieved an immense number of milestones such as turning a Membership base of 600,000 into 1.8 million Members, while building an Association regarded as one of the most successful in the world. Its activities are incredibly diverse, offering roadside assistance to more than 500,000 Members each year, providing driver licensing services nationwide on behalf of Waka Kotahi, and supplying all forms of Insurance to Members. The Association also offers financial services, tourism services, expert advice at AA Auto Centres nationwide and driver training. This has all been achieved without increasing the annual Membership fee for 30 years, and most Members receive more in benefits and discounts than the cost of the subscription,” Gary added.
Brian will continue as CEO until the end of January 2022 and then retire to spend more time with his family, but is expected to continue his role with the FIA, where he has been President of the Senate since 2017.
13 Sept 2021 – FMA announced the appointment of experienced international regulator Samantha Barrass as its new Chief Executive, expected take up the role in January 2022 with Liam Mason as Acting CEO in the interim following Rob Everett’s departure at the end of October 2021. https://www.fma.govt.nz/news-and-resources/media-releases/fma-announces-new-chief-executive-2021/
9 Sept 2021 – MBIE issued advice that, of significance to lenders and borrowers, the Government has agreed to a short delay to the full commencement of the Credit Contracts Legislation Amendment Act 2019 by two months, to 1 December 2021, considered necessary due to the impact of recent COVID-19 alert levels.
9 Sept 2021 – FMA advised that it will generally provide “no action relief” where a market participant breaches, or expects to breach, a regulatory obligation as a result of the COVID-19 circumstances and seeks relief from the FMA. https://www.fma.govt.nz/news-and-resources/covid-19/no-action-relief-as-a-result-of-covid-19/
9 Sept 2021 – RBNZ advised that it will be holding a webinar on its insurance policyholder security consultation at 10am next Wednesday, 15 September via Microsoft Teams.
9 Sept 2021 – MBIE advised that various papers related to the Regulation of the Retail Payments System have been released, including:
The current AdviceMonster process captures scope limitations and automatically reflects that in the SOA, as well as providing scope for advisers to further explain or limit scope. This is provided because there are many different ways to limit scope. Advicemonster offers scope limitation in three ways:
- At the start, there are parameters for the advice engagement, which clearly define what the adviser is offering to give advice on. Four levels of advice limitation can be defined and additional limits can be added in a personalised approach by the adviser.
- We also offer limitation of advice by specifying client objectives. These can be broad, which is the default, or very narrow, by choosing specific goals from the list. They can be further limited by adviser in a personalised objective.
- We also offer limitation by product scope in the cover area. Different types of cover can be removed from the scope of the engagement, the adviser can add notes to explain the reason for limiting the scope to provide a robust process should there be a file review.
If you would like to attend a session to walk through scope limitation please register your interest at the email below.
If you'd like to attend an in-depth demonstration on Advicemonster, the following sessions are currently available:
- Tuesday, 14 September 11.00 AM – 12.00 PM
- Thursday, 23 September 11.00 AM – 12.00 PM
- Thursday, 30 September 11.00 AM – 12.00 PM
- Thursday, 14 October 11.00 AM – 12.00 PM
Please email us on firstname.lastname@example.org with the session you'd like to attend or if you're interested in a 14 day trial.
Fidelity Life has announced the approach they are taking for managing new business and underwriting processes for medical examinations, tests, and occupational and financial underwriting requirements under different alert levels. Below are the different approaches.
In other news
September 10 is World Suicide Prevention Day
Fidelity Life: no current policies have an exclusion for Covid-19 or the effects of the Covid-19 vaccine. Customers are fully covered according to their policy’s terms and conditions.
Quality Product Research works continually to update our product ratings. We have just distributed the QPR Database V145 to subscribers which includes the following changes:
* Medical Exclusions Major Review - all insurers
* Partners Life - new policy document effective 12/07/2021
> Income & Expenses Cover and Moderate Trauma rated
> Enhancements effective 12/07/2021
* AIA enhancements to Trauma & IP/MP effective 23/07/2021
* Pinnacle Life - new policy document loaded
> Life: no rating changes
> IP: no rating changes
> TPD Any Occ Accelerated rated
> Trauma: minor rating changes
- Osteoporosis re-rate for all companies
- Asteron - Trauma Reinstatement replaces continuous Trauma in TBB
- Total Disability Class 1&2 5yr for PL
- Financial Planning & Legal - re-rate for all companies
- Grief and Funeral Support - re-rate for all companies
- Business Future Insurability (optional) added to PL
AIA NZ has announced that customers with qualifying new policies will have the first month’s premium waived. The one-month free premium is designed to offer advisers and customers support during the lockdown. AIA has noted that they understand that COVID-19 lockdowns can be a challenging time for advisers as their ability to meet new customers is limited. Additionally, AIA is offering to cover the cost of specialist appointments e-consultations for customers with health policies. The Health Screen service is now offered as a tele-consultation. To support new business demands AIA will develop the tele-underwriting service to include more conditions.
“AIA NZ has announced it will waiver the first month’s premium on qualifying new policies, as a way to support both advisers and customers during the current NZ COVID-19 outbreak.
“We know from past experience COVID-19 lockdowns can be challenging for our advisers, as it limits opportunities for them to meet with new clients. We wanted to quickly get an offer in market that will support all our advisers to continue to do business during this tough time,” says Nick Stanhope, CEO AIA NZ.
The offer applies to any new eligible AIA policy placed between 1 September 2021 and 31 October 2021, and eligible customers will automatically be credited with one month’s premium on new policies.
While the offer has been made to support advisers in the current COVID climate, Stanhope says it’s also about helping get more Kiwis covered.
“We all know the important part the insurance industry plays in addressing the sustainability challenges our communities face. Life and health insurance provides people with peace of mind, knowing that they are protecting themselves and their families against life's uncertainties. With rising consumer debt and increased cost of living, it's now more important than ever for Kiwis to review their insurance needs, to ensure they are adequately protected for the future.
“At AIA we want to help more Kiwis best protect themselves and their loved ones, and to support them in leading Healthier, Longer, Better Lives,” Stanhope says.
To find out more about the new business offer, please click here.
To further support advisers and their customers in the current COVID climate, AIA NZ is covering the cost for e-consultations needed for specialist appointments under health policies, as many customers cannot attend regular in-person appointments. AIA’s unique Health Screen service has also moved to a tele-consultation service to continue to provide an efficient medical service for customers.
AIA NZ already underwrite a number of conditions via tele-underwriting, and this service will continue to be delivered and expanded to support new business demands. The insurer has stated they are taking a pragmatic approach to evidence of medical requirements for ongoing income protection claims, and are looking for alternative ways to support customers unable to certify documents during COVID Alert Levels for lump sum products. Click here to read more
In other news
AIA: AIA offering AIA Vitality customers 1,000 points for getting both COVID-19 vaccinations. Customers will need submit proof of attendance and completed proof of vaccination via the AIA Vitality app
We have recently conducted a full review on our “Financial Planning & Legal Advice” item. Please find the new sub-items below.
The Financial Planning & Legal Advice benefit differs between insurers with a significant weighting on whether the company offers reimbursement on legal expenses. Fidelity is one of the major insurers who doesn’t offer this, and customers are only eligible for payment if their Life cover sum insured is over $100,000. Similarly, Momentum Life requires 3 years continuous cover before payment eligibility.
Another item worth mentioning is Asteron, Fidelity and Westpac directly stating that the benefit will be paid out to all policy owners – the maximum amount paid by most insurers is $2,500 so this particularly feature seems to reduce the value of the benefit.
We value getting your feedback on how these wordings are being applied to claims you may be aware of. Please email us with details of any recent claims to help us update our understanding.
Doreen Dutt, Research Analyst, Quality Product Research Limited, email@example.com