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AMP Australia Mandates Spread Commission - Broadly Matching Trowbridge recommendations

News on the Australian commission front has seen a shift to more spread commissions. Referred to as 'hybrid' these are close to, but not the same as the 'hybrid option' proposed recently in the Trowbridge report. Riskinfo.com.au has this report: 

"AMP has made the first move in the life insurance advice remuneration debate, mandating hybrid commissions for its insurance products, as well as for all AMP licensed advisers.

Responding to recommendations made in the Trowbridge Report, AMP will cap the commission payable on its life insurance products to all advisers, regardless of licensee, reducing upfront commission to 80% with an ongoing commission of 20%."

You can read the full article from riskinfo.com.au this link. Advisers commenting on the story are generally against the change, but some favour it. 

FSCL Upcoming Conference


FSCL Conference is being held on Thursday the 14th of May in Auckland. Here's what author and motivational speaker Simon Tupman has to say:

"I’m excited to be presenting at this year’s FSCL conference. While financial services firms can make lots of plans to succeed, ultimately I believe it’s the capability of their leaders and the commitment of their people that make the difference. My session will show you not only how you can stand out from the crowd, but also how you can build a better you and earn the reputation of ‘the trusted provider.’

Click here for the full programme and to register.

HFANZ Health Insurance Stats

HFANZ has released a statement with the latest March 2015 health insurance stats. The total amount of claims paid in the past year has now cracked the $1 billion mark. 

Media release reads "The milestone was reached in the March quarter, with total claims paid amounting to $1000 million for the year ending March 31, 2015 – up 3.9 percent on the previous March year. The annual value of claims paid has effectively doubled in the past decade.

Despite the number of New Zealanders with health insurance being just 29 percent, HFANZ chief executive Roger Styles said this was a sizable and growing contribution to total health spending.
“Health insurance really deserves more credit for its contribution to overall health funding in New Zealand. There are limits to what can be afforded via the public purse, and having a significant chunk of healthcare financed via insurance helps the public sector to focus its resources to best effect,” he said."

FMA Report on AFA Information Returns

You can view the FMA's report on AFA information returns at this link.

I am writing further on this report for Asset magazine but there are a number of comments and questions which arise from the information collected.

The value of the overview created by these returns is great and likely to get greater still as the survey is improved - the big advantage the FMA has is being able to require that AFAs complete a return. Along with this it is likely that AFAs are quite thoughtful about their answers to the regulator - in a way they may not be if, say, a telephone survey were being conducted. 

Points of interest tend to be double edged - just as your appetite is whetted you then realise that the question could be better, or the real value is tantalisingly just one question away...

The report reveals as much about the FMA as it does about AFAs at times. RFAs selling insurance will note the FMA referring to them as selling 'simpler products' and conflating 'the industry' with 'AFAs'. The charts of services offered by AFAs seem to suggest that KiwiSaver advice is the service offered by more AFAs than any other - but it isn't.

The comments on fees are not easy to interpret, and I suspect that more cannot be said until better information is gathered. 


None of this should stop you from reading this document or being grateful that we have a regulator which can collect, work on, and improve on this material.  

Bringing Long-Overdue Innovation to a Premium Pricing Model

In America auto insurers offer premium discounts for a number of reasons including, taking defensive driving courses and installing anti-lock brake systems. Life insurers issue a policy based on a single point-in-time assessment as to the client's mortality risk, then collect the contract-prescribed premiums. This is about to change according to John Hancock Financial who recently unveiled an initiative that promises to transform a largely passive relationship between insurer and insured to one where customers are rewarded over the life of a policy for healthy living.

Click here to read more about how the programme works.

H.H Holmes: The Original Client From Hell

Around 1890 in Chicago Dr H.H Holmes was caught for insurance fraud when his "Murder Castle" was raided by police. The doctor approached many employees, tenants and guests in the boarding house and hotel he ran with a business proposition: if they took out a $10,000 (the equivalent of about $150,000 in 2013 ) life insurance policy on themselves, with him as the beneficiary, he’d pay them $6,000. This way, he told them, he’d make a profit of $4,000 whenever they died, and they’d have several thousand dollars to spend in the meantime.

It is believed that Holmes killed anywhere between 20 to 200 people, making him of one of America's first serial killers.

Read more here.

Counting the Cost of America's Insurance Fraud Epidemic

It is estimated that insurance fraudsters cost American consumers upwards of $80 billion per year. Insurance fraud is the second largest criminal enterprise in the United States behind narcotics trafficking.

LifeHealthPro writes "There are two types of fraud classified as “hard fraud” or “soft fraud.” Hard fraud involves the staging of an accident or other form of a claim. It is intentional and well planned, often with connections to organized crime. Soft fraud, also known as "build up," is more opportunistic, involving insureds or claimants who will pad an otherwise legitimate claim. This can be anything from burying a deductible to running up medical bills in hopes of inflating pain and suffering awards. In some cases, claimants will go so far as to obtain needless surgeries in order to maximize the value of their claim."

Click here to read the full article.