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Short-term Income Protection Debate Highlights Concerns

A debate in the UK about whether or not to share claims statistics for short-term income protection has brought to the surface the conflicting views the industry has of short-term income protection.

The UK has created a much more positive environment into which to sell income protection by developing and reporting on standardised claims statistics. Consumers see headlines now which show "XYZ company pays out 92% of Income Protection Claims". That builds confidence. Concerns over definitions has kept the shared statistics for short-term IP out of the process. This statement sum up some of the industry concerns nicely: 

“Should short-term IP be defined as a proper IP plan, running to retirement age but with a limited claim period, or is it glorified accident sickness and unemployment cover?" Kevin Carr said, quoted in Money Marketing by Tessa Norman. Link

That underlines the industry attitude that nothing must be done to undermine the position of "proper" income protection, which is a contract that runs to retirement. What it doesn't do is help the 80% of consumers without income cover get some cover, rather than none. 

Interestingly, several sellers of short-term IP are not worried. They think that the headline message of "claims are paid" is adequately met by the current statistics, and more detail could be confusing. That keeps the focus on the consumer objective - to build confidence. 



Last Quarter: Top Ten News Items

The following were the top ten news items (decided by the amount of traffic and referrals generated). Click on the heading below to read the full article.

  1. Health Product Changes Summary
  2. Asteron Income Protection Pricing Change
  3. Sales Scandals in the UK
  4. New Fair Trading Act Requirements for Insurance Advisers
  5. How to Compare Banks with Advised Company Offers on Quotemonster
  6. Yes! You Can Use our Content - Follow These Rules
  7. UK Regulation Reduced Sales
  8. Pricing Database Updated
  9. More Restrictions on Using the Word "Independent" 
  10. All the Product and Pricing News in One Place - at Quotemonster

Seven Insurers Changed Product or Pricing in the Last Quarter

After a slow first half of the year the pace of change has pushed back above the trend line with seven companies changing product or price (or both) in the past quarter. 

  • Accuro
  • AIA
  • Asteron
  • Partners Life
  • Southern Cross
  • Sovereign

We report on each one as they come up, but it is worth reflecting the number as a whole. If you are not watching the market bear in mind that your perceptions of price and product competitiveness can quickly get out of date with this rate of change. 

You May Want to Child Proof Your Holiday

I am a relatively frequent traveller with children. I have spent a few tense moments in medical centres in various parts of the world. Fortunately all were relatively minor, apart from my middle-child's asthma - which can get serious. Whatever the problem, it really does help to have one less thing to worry about - like whether you can afford the treatment, which can be surprisingly expensive. Two consultations and a tube of ointment cost US$400 for the youngest child when we were in Hawaii. 

Obviously Southern Cross is keen for you to buy their travel insurance. But these case studies are useful reminders about how even minor medical mishaps can have far-reaching consequences if they happen during a bad moment in a tightly scheduled travelling day. 

Southern Cross Travel Insurance (SCTI) CEO Craig Morrison said “The other week I heard a story about a family almost missing the start of a cruise because the youngest child had fallen out of bed and hit their head on the bedside table at a hotel. Although the injury wasn’t serious, there was a cut that needed stitches. By the time they’d gone to hospital and waited for treatment they came close to having to re-plan their entire holiday.” 

Some of their recent childrens’ claims include:

-          $70,000 – child had thumb severed by tow rope while water tubing and had to undergo complex microsurgery.

-          $19,000 – child suffered a seizure requiring a doctor escort to New Zealand for ongoing investigation

-          $5,000 – child developed chicken pox and missed flights home

-          $4,000 – child admitted to hospital with Rotavirus

-          $4,000 -  child required surgery on broken arm after falling off trampoline

Southern Cross also gives the following useful tips:

  • Research basic first aid, such as what to do if a child chokes, is stung by an insect or suffers a sprain.
  • Pack a first aid kit suitable for your destination.
  • Be very clear to communicate between adults about who is responsible for watching children, particularly around water.
  • Reinforce pedestrian road safety – particularly if cars drive on the other side of the road.

Advisers Unsure of Value of Marketing Plans

In a recent survey less than a quarter of advice practices who have a marketing plan believe it to be effective. See the rest of the results of the survey over here.

Tony Vidler says that given most financial advisers write their own marketing plans this is self-criticism. I understand the reluctance to go to someone else: talking to someone who doesn't understand the industry means you can waste a lot of time and money. But there are now industry people you can approach who have long experience with what does and doesn't work in financial services sales. Tony, Barry Read, and us here at Chatswood. So if you suspect your marketing plans need and overhaul, call someone. 

Social Media Can be Financial Promotion

Financial advisers offering investment advice need to be careful with their promotion of services in social media. Recent changes in New Zealand law have brought all sorts of online and social media into the definition of what constitutes promotion of a financial product. This brings New Zealand up to date and in to line with international treatment of such media. Simon Collins, writing in the UK's Money Marketing, explains some of the issues. 

Gen Y Wants Professional Financial Advice

Way back when Gen X was all that people talked about it was predicted that future generations would mostly do without advice. That has not proven to be the case. In the most recent LIMRA study it appears that 52 percent of Generation Y consumers said they want professional financial advice to determine their need for life insurance. In the last five years, Generation Y has also improved their income and financial situation more than other age groups. Read more here.

nib Offers International Health Cover

Nib, the country's second-largest health insurer have introduced a new scheme to cover health expenses for New Zealanders working overseas. Nib's Rob Hennin says more than 45,000 New Zealanders a year went overseas for an extended time, and either relied on their travel insurance for health cover or did not have specific insurance cover.

As Kiwi's have long-since discovered that they can fly, they have been living and working for extended periods overseas. Although I am surprised to discover it many set off without even getting travel insurance. Even those that do buy some travel cover, simply forget about it when they get a job, or their temporary assignment turns into the start of an expat career. They can buy good international cover. 

Read more here.

A Message To Entrepreneurial Advisers: Call Me

The financial services industry in New Zealand contains lots of wide-open territory for new businesses, clever variations on existing business models, expansions, and re-organisations. I would dearly love to see more financial advisers carrying those forward.

If you are a financial adviser and you have been sitting on some ideas for change then I would like to meet with you. No charge, just to talk: because I would so much like to see more advisers taking more entrpreneurial steps. If you have been waiting until everything is perfect, then please, contemplate this advice from Seth Godin: Link