moneyblog

Magic Johnson Buys $14.5 Billion Life Insurance Company

The $14.5 billion deal, which represents the largest transaction involving a financial services company from an individual African American entrepreneur or group of African American entrepreneurs, sees Magic Johnson Enterprises gain control of Equitrust, an enterprise that distributes fixed-rate and indexed annuities and life insurance through a national network of more than 23,800 independent agents.

Click here to read more. As an aside, should anyone from Equitrust be reading this, you should proof your Google adverts again. 

Customer Views of FAA/FSP - Colmar Brunton Report

MBIE has published the Colmar Brunton report on focus groups with customers as a part of the FAA/FSP review. The report makes interesting reading (find it at this link). Some highlights for us: 

• Consumers were aware of conflicts of interest
• ...but had little awareness of the different forms of registration and authorisation and did not understand what the difference was
• There was a definite decision not to take as much advice when investment clients were presented with a fee option
• Clients reported little difference between pre-2011 and post-2011 behaviour in their advisers
• They were not aware of much commission disclosure by insurance advisers - but that didn't surprise me reading the report. Most insurance advisers do not disclose commissions

There are a host of other good things - and best of all is to simply read the quoted consumer comments. 

FMA Profile Low to General Public

A recent survey found that most New Zealander's have no clue who the FMA are or what they do. Rob Stock wrote this article about it on Stuff.

Winter Related ACC Injuries

As it is getting much colder remember to stay safe this winter - ACC released some numbers from the last year of claims made to winter-related injuries.

In 2014 ACC paid thousands of claims relating to winter activities including burns from heaters and fireplaces, skiing injuries, chopping and stacking firewood injuries to name a few.

Here is a list of the number of claims and amount paid:

• Slips on ice (not including those while playing sport): 925 claims, costing$1,381,775
• Skiing: 7608; $13,488,971
• Snowboarding: 5897; $6,923,364
• Ice skating: 1587; $1,667,974
• Curling: 31; $31,222
• Chopping and stacking firewood: 7242; $6,683,786
• Scarves: 21; $9,172
• Hypothermia: 18; $26,129
• Frostbite: 6; $10,951
• Burns on heaters or fireplaces: 874; $380,942

Click here to read the full article on Stuff.

Insurance Age on Advisers and Technology

UK insurance website Insurance Age published this article explaining that brokers have been told that if they don't keep up with how technology is changing the market they will be left behind.

Of course, technology is a great leveler. In this market the most innovative ways of buying insurance are both online and adviser owned. 

Underinsurance in New Zealand

This article on stuff.co.nz by Richard Meadows points out just how underinsured Kiwis are. New Zealand spends 2.8 per cent of GDP on insurance, compared to the OECD average of 8.4 per cent.

The article breaks it down into each category and shows the following figures for each:

• Home: 98% coverage
• Vehicle: 96% coverage
• Life: 57-60% coverage
• Health: 29% coverage
• Income Protection: 15-20% coverage

Meadows interview Dr. Michael Naylor, Peter Neilson (FSC Head), and Darrin Bull who runs strategy for Sovereign. 

Well worth a read. 

 

 

 

Financial System Inquiry Forum

Finsia are hosting a presentation and panel discussion into the Financial System Inquiry and its implications, with a unique focus on New Zealand.

There are two presentations - one in Auckland on the 8th of July and one in Wellington on the 9th of July.

For more details and to register click here.

Insurers Face the Genetic Test

Rob Stock writes for stuff.co.nz about genetic testing and insurance.

Cigna's new Cancer Cover insurance policy turned heads for its genetic testing clause as it specifies that no breast cancer claims will be paid for those who have tested positive for certain genetic mutation before taking out the policy. 

Stock writes "Genetic testing and insurance are uneasy bedfellows, and there are fears that unless insurers are regulated, widespread genetic testing could result in a class of people whose DNA heritage leaves them unable to get insurance."

Click here to read his full article.

Australian Treasury Proposes New Life Insurance Framework - Including Commission Restriction

The Australian Treasuring has proposed a new life insurance framework which includes a package of reforms including: 

Adviser and licensee remuneration

• Maximum 60% initial commission
• Maximum ongoing commission of 20% 
• Three year retention (‘clawback’) period
• Ban on other volume-based payments from 1 July 2016
• Life insurance companies to offer fee-for-service insurance products to support advisers who wish to operate on a fee-for-service basis

Government to consider measures to widen Approved Product Lists - requiring banks and similar advice businesses to offer the products of at least half the market

Life Insurance Code of Conduct to be developed 

Ongoing reporting by life insurance companies of policy replacement data to ASIC 

Industry efficiency

• ASIC to review Statements of Advice, with a view to making disclosure simpler and more effective
• Government to consider developing a mechanism to rationalise life insurance legacy products

You can read more about the proposed Australian changes at this link. 

Should Life Insurance Premiums Be Lower for the Wealthy?

A study done in Canada used the post codes and median family incomes and then cross-referenced it with death certificates from 2004 to 2012. The study found that those living in poorer postal codes were more likely to die young. The study didn't explain why those living in richer areas lived longer but factors such as access to better medical care and living in cleaner environments are believed to contributing factors.

So then came the question should rich people pay less for life insurance? You can click here to read the full article, but there is another clue - they already do, because they are, typically, healthier. Also, consider that the correlation between wealth and health is common, but the direction of causation can work both ways. If you're wealthier you tend to seek out and obtain better care - because money is less of an obstacle. But also if you are unhealthier you tend to earn less and may have fewer relationships that create opportunities for wealth creation.