« December 2011 | Main | February 2012 »

Out of date...when it was written

Heh. The Statistics Department has this page as an introduction to the insurance industry, and it includes such gems as: 

"The life insurance market is dominated by AMP, National Mutual, Colonial Mutual, and by New Zealand Insurance Life,..."

To be fair to them, it has a header which states:

"Source: New Zealand Official Yearbook 2000. Please note, this information may now be out of date."

But, given that was 2000, it was well out of date before it was published. I mean, Colonial was already being merged into Sovereign, to name just one inaccuracy, and NZI Life?

Bringing the Orphan Client in from the Cold

This article at LifeHealthPro offers a series of good suggestions for financial advisers that receive 'orphan policyholders' or which purchase books of business and need to think of ways to engage with clients that have no personal relationship with the new owner. It's well worth a look.

The suggested use of the guaranteed insurability option as a way to grab attention and create some urgency to engage through a time-limited option strikes me as particularly useful - perhaps even more-so than life events, because as a new adviser you may be unaware of life events and therefore unable to tap into those.


What Makes A Difference In Underwriting?

There is a fashion for high non-medical limits in New Zealand. I've had two underwriters in the last couple of months tell me that reinsurers say that our non-medical triggers for additional tests are high compared to other countries, although I don't have a public reference handy right now.

Then there is also the NZ Society of Actuaries paper by Jonathan Eriksen reviewing experience improvements for various products over time. It notes that the experience improvements for Term insurance have been very slight, compared with other products, and relative to population improvement.

On the other hand I have advisers say all the time that our underwriting is tougher - refer to your copies of Beaton, or the feedback you have from your BDM team for evidence of that.

What is going on?

  • The product mix has changed over the years, with an increasing dominance of term insurance coupled with the almost disappearance of with-profits business.
  • Most term insurance is being written in flexible bundled products with a lot more income protection and trauma business than in the past - both products that require more underwriting, and where underwriting requirements have changed as the products have become better understood by the companies offering them.
  • Those products cover more today than they have ever covered in the past: a modern Trauma product covers many more conditions, modern diagnostic procedures make the discovery of those conditions easier, and modern treatment makes them more survivable. All that means more underwriting too. Sovereign's original trauma product (Recovery Power) had eleven conditions listed, today they cover more than 40. Sure, many are rare, but the cover is definitely broader.

  • Then we have some big societal trends to cope with: New Zealanders are fatter and more depressed today than they were twenty years ago when I started in the industry and it is these factors which are now contributing to more deaths.

Put like that you might think one was related to the other... but I'm no medical expert.

All of those add up to big reasons why our underwriting is tougher today than ever before.

But not why we love high non-medical limits. That's partly because the insurers desire to limit new business costs suddenly places them alongside the adviser who also wishes to reduce barriers to the client purchasing.

We also note that there is a substantial population of 'never insured' people. They are, younger, fitter, and have fewer pre-existing conditions. It would be better for us all - brokers, insurers, and all New Zealanders, if more of these people were insured.

Half of all Britons are Injured by their Biscuits

Danger lurks everywhere, including in the humble biscuit for morning tea: http://www.telegraph.co.uk/news/newstopics/howaboutthat/6153518/Crumbs-half-of-Britons-injured-by-their-biscuits-on-coffee-break-survey-reveals.html Goodness know how the poms would cope if they stepped up to the deadly meat pie beloved of so many kiwis.

Choice in Healthcare - what happens when funding is up someone else...

I think this is an important story about choice in healthcare. Take 2 minutes to read it - if only to feel grateful that it isn't you facing this situation.

Whoever is paying the bills ends up making a decision about which treatments to fund and which not to fund. That's always the case. Don't forget it, and don't try to hide it.

I've read a lot about people who say that talk of "death panels" is deliberately meant to scare individuals in the US away from the idea of a state provider of treatment.

Maybe it is. Maybe it should.

You see, far from being an rarity of outlier in the debate, the issue of which care to fund and which not to, rapidly becomes a decision about who shall live and who shall die. Think of the debate over funding Herceptin back here in New Zealand.

The shadow of these judgements is cast over almost every treatment decision.

It's this lack of control which leads roughly one in three New Zealanders to 'pay twice' for their medical care by buying private medical insurance as well as making their contributions to the state system.

Hat tip to Henry Stern at Insureblog.

So, Gareth...

...sure, let's be fair, it's the flavour of untruth we have all told.

At a delicate point in negotiations, perhaps, and governed by a confidentiality agreement, almost certainly, a pesky journalist comes along and asks you if the rumours are true that you are about to sell your business. So Gareth Morgan denied it. David Chaplin's article quoted him verbatim:

"The [sale] rumours are not right," he said. "In fact, we're looking at a little expansion deal with someone else."

That was reported on the 13th of December, although the comment could have been made earlier, when it hit the press it wasn't corrected, and on the 18th of January the deal is announced. 23 working days later. Maybe he didn't lie. Maybe he got the call the very next day and made the fastest sale of a financial services business ever.

We can all understand that, and forgiveness for such a small sin will be swift. Certainly by the many people who are devoted to his commentary and relentless criticism of the financial services industry. The champion of value has found an ideal home in the Kiwibank brand: value-focused, challenger, resistance-themed positioning of is smart and simple offers.

In fact, it could hardly have been sold to anyone else when you think of it like that, so, since Kiwibank is 'our' bank, I feel entitled to say that I hope we didn't pay too much.

SOPA / PIPA Protests

As a producer of intellectual property I am all for it's protection. I am not happy about SOPA / PIPA as these tools are very heavy handed, hard to operate, and the costs of the consequences are likely to be much higher than the copyright infringement that they prevent.

If you would like to know more about SOPA / PIPA, and by that I mean a good general grasp of exactly what is wrong with the proposed laws, instead of a generalised "this must be a bad thing if Wikipedia is against it", then there are many good sites you can check out. I like this post by alienth because it refers to specific sections of the law and especially looks through some of the consequences - see "fallout".