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Solvency Standard Reissue 2014

The Reserve Bank issued this release today:

On the 17th December 2014 the Reserve Bank issued a set of Insurance Solvency Standards.  The new standards commence on 1st January 2015, except for certain provisions relating to reinsurance within the Solvency Standard for Life Insurance Business 2014.  The reinsurance provisions commence over a phased transition period set out within the standard.  Conditions of licence will be amended throughout 2015 so that individual insurers will be required to calculate a solvency margin under the reissued solvency standards as at, and from, their 2015 balance date.

The new standards are available on the Reserve Bank website here.

The issue of the December 2014 solvency standards completes the Reserve Bank’s considerations in respect of the recent consultation on amendments to insurance solvency standards.  The Reserve Bank’s response to submissions made, and copies of the standards indicating the changes made to the consultation exposure drafts, are available on the Reserve Bank’s website here.

Variable Annuities

The Reserve Bank has reviewed the submissions received in response to the recent consultation on the proposed treatment of Variable Annuity business within the Insurance Solvency Standards. The Reserve Bank’s response and the near final set of requirements for Variable Annuity business is set out in the Response to Submissions Variable Annuities available on the Reserve Bank website here.


Kiwis Go Online for Health Information

Recent research conducted by TNS on behalf of Southern Cross Health Society shows that 57% of people using the internet to access health information used it for the following reasons:

  • look for information about a medicine (59%)
  • get advice on a condition that they have, or may have (56%)
  • look for information to make a self-diagnosis (45%)
  • get advice on a condition that a family member or friend suffers from (39%)
  • look for information about a hospital or clinic (23%)

The research showed females and those under forty were the most likely to educate themselves about health and medical online.

Southern Cross's CEO Peter Tynan says 

“In the last year (to November 30, 2014), there were over 4,000,000 visits to Southern Cross websites, and over 55.5% of these were to our medical library. We certainly encourage people to use quality online medical information to educate and reassure themselves about conditions that they or their loved ones have. We would however urge caution on self-diagnosis and encourage people to visit their GP if they have any concerns about their health,” 

Data shows that the types of devices used to access Southern Cross material online is also changing with a strong increase in access from smartphones.

In the last year:

  • Desktop access decreased 23% to 63.7%
  • Mobiles and smartphones increased 48% to 23.9%
  • Tablets has also increased 29% to 12.4%.

The five most viewed topics in the Southern Cross medical library, which offers information on a broad range of medical conditions and procedures, including prevention tips and health promotion ideas, were:

  1. Pneumonia – 217,000 (47% of these accessed from a smartphone)
  2. Glandular fever – 131,000 (43% accessed from a smartphone)
  3. Strep throat – 121,500 (53% accessed from a smartphone)
  4. Gout – 87,700 (34% accessed from a smartphone)
  5. Shingles – 92,300 (37% accessed from a smartphone)


Causes of Death We're Glad Not To Have

The other day I read the article about this brave woman who is working in Sierra Leone in the effort to fight Ebola. I am truly grateful for her sacrifice and doubly grateful that we don't have Ebola here, and people like her are trying to conquer the disease. 

I am also grateful that we don't live in a society which is as violent as this one: the United States. There are many admirable things about the United States, of course, but the level of violence is scary for someone used to modern western countries having unarmed citizens and unarmed police officers like me. Even so, some police forces can take down aggressive, angry, and confused suspects without killing them. Check out the numbers at this link


Giving Is Good For Business, So Why Not Do It All Year?

It is that time of the year when people come together to spend time with friends, family, colleagues and clients. One thing everyone loves about the Christmas season is that people become just a little more charitable. People become nicer it seems. 

Over on The Financial Adviser Coach Tony Vidler talks about ways that giving something of yourself can help build your business.

Countdown Life and Trauma Insurance Ratings are Live on Quotemonster

The Life and Trauma insurance products Countdown are now selling through CIGNA have been rated on QPR in Quotemonster. 



Countdown is the latest company to enter the insurance market, offering a range of product underwritten by CIGNA. The range includes:
• Bill Protection Insurance
• Pet Insurance
• Travel Insurance
• Life Insurance
• Accidental Death

This is a consumer-focused offer. Note the prominence in the offer of bill protection insurance, which is judged to have near-universal appeal. The presence of pet and travel insurance will not trouble life insurers, but these are valuable to attract attention and traffic to the offer.

The Trauma component of the product has some extensive exclusions. Limitations:
“We will not pay any benefit under the Serious Illness Benefit if the claimed condition is caused or contributed to, directly or indirectly, by:
• attempted suicide, intentional self-injury, whether sane or insane
• an unlawful act by you or the Life Insured
• alcohol or drugs taken by the Life Insured (unless prescribed and taken as prescribed by a registered medical practitioner)
• driving a motor vehicle with a blood alcohol level in excess of the minimum legal limit.”
That last point is perhaps particularly significant as the allowable blood alcohol level has just been reduced, and car accidents would be a leading cause of paralysis and major burns.

Good Features
The value to customers: a well-priced offer with the convenience of easy application, online. The value-for money pricing is a good fit for the Countdown brand.
The premium rating is interesting too. The standard (non-smoker) premium is at the more expensive end of the market. The Healthy lifestyle premium is cheaper than the market, even beating low price offers such as Pinnacle Life and being lower than CIGNA’s standard rate – but only just.

More details. 

What to do When Health Care Costs Start to Rise Again

Joseph Antos over on Harvard Busienss Review Claims abound that we have permanently bent the health-spending curve. The growth of health spending has indeed declined to historically low rates, driven largely by the Great Recession and the subsequent slow recovery. But slower spending growth does not guarantee an increase in value — sometimes less is less. Waste and inefficiency won’t evaporate just because we enthusiastically adopt new ideas — or re-label old ones. Even sensible changes can backfire if they address only part of a much larger problem.

Actuaries at the Centers for Medicare and Medicaid Services (CMS) predict that growth in health spending will begin to increase this year, returning by 2019 to 1990s-level rates of about 6.5% annually, sharply higher than the 3.6% growth estimated for 2013 in the United States. And that is not a worst-case scenario.

Read more here.

The Danger of Being a Competent Adviser

Tony Vidler, over on The Financial Adviser Coach, writes "I believe that it is THE reason why so many advice firms amble along doing the same thing year after year: the Principal has reached their level of incompetence."

When we think about how the typical advice firm evolves, it usually goes like this:

  1. Adviser enters business, studies hard, and becomes technically skilled
  2. Adviser does the hard yards in the real world for some years and becomes an excellent relationship manager as well as being technically skilled.
  3. Adviser works out how to make a very good living by generating enough prospective clients to keep very busy, so hires some support staff.
  4. Adviser looks to leverage business knowledge and time and starts bringing other Advisers into the practice, and becomes largely a business manager…

….enter The Peter Principle.

Read Tony's full article here.