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Insurance: Ready for an Upgrade

Another high-level look at the insurtech opportunity - but this one is surprisingly readable. Although not all the developments are about insurance as such - some are just the application of tech in a way which bets on direct to consumer, for example, leaving the insurance offer essentially unchanged - the most interesting are the ones which hack away at core costs: ledger, identification, underwriting, claims. Link

Actuaries Appoint First Female President

Press release from NZ Society of Actuaries:

Actuaries appoint first female President

The New Zealand Society of Actuaries (NZSA) has elected Andrea Gluyas as its first female President, in its nearly 60 year history.

"I am delighted to be the President of the NZSA. It is an honour to lead the society", says Andrea.

"During my time as President I am keen to further develop our profession’s relationships with our key stakeholders and work closely with our sister organisation in Australia. I look forward to working with the NZSA Council, talented individuals who represent our profession with enthusiasm and insight”, she says.

"This is an exciting time for our profession. Actuaries play an important role in New Zealand's insurance industry, protecting our homes, assets and livelihoods. We are increasingly contributing to better outcomes in the public sector through our long-term world view and in-depth statistical analysis. I encourage young women and men with a talent for mathematics and an interest in our wider society to consider becoming an actuary”, she adds.

Andrea is a consulting actuary in PwC’s Wellington office. She has been Vice President of the society since 2014.

About the NZSA

The New Zealand Society of Actuaries (NZSA) is the professional body for actuaries practicing in New Zealand. Actuaries analyse the past to estimate outcomes and help manage risk in the future. Actuaries provide advice to many industries including healthcare, superannuation, insurance, banking and investments. Actuaries are becoming increasingly involved with non-financial sector organisations that aim to improve outcomes through data-driven insights. Learn more at www.actuaries.org.nz

Fit for Purpose versus Ranking

For those people obsessed with the best, nothing will do but number one. But a focus on ranking can hide a multitude of problems, which is why Quality Product Research scores products, it doesn't rank them. Take these examples: 

Which would you prefer the number one product, or the number two? Well, in the absence of any other information, number one please! But what if the number one product was double the cost, but only a tiny bit better? 

So maybe now we're looking at second and third place, which shall we buy? Well, in the absence of any other information, number two please! But what if number two has one feature which is important to you but is worse much than the number three? 

So now maybe it's product number three... but actually it's within a half a percentage point of being the same as product number four, five, and six. 

Now what if one of those is slightly better for me, but not quite so good for my partner?

Like many purchase decisions, insurance has trade-offs. We haven't even begun to talk about service, customer preference, or other matters. The point is this - if picking your insurance product were as simple as taking the one which scores highest, you wouldn't need an adviser, and the robo-advice programming would be pretty easy. 


Testing Policy Documents on Children

Sara Cobbett has written an interesting article on LinkedIn discussing the findings of a study which had 11 year-old's read and reflect on life insurance policy documents. That's right - testing policy documents on children, because this is the state of adult literacy: 

The UK's Skills for Life survey that out of adults aged 16-65 the following had poor literacy: 

  • 25.8% had literacy equivalent of GCSE grade D to G
    [Translation / equivalent NCEA level one, age 16 equivalent qualification - not achieved, or failed English at School C if you are a little older]
  • 15% had literacy level around 11 year-old standard
  • 5% had literacy skills of a 5-7 year-old

That's a total of about 45% of the UK population. Reading ability comparisons are available, we reviewed several when we were designing readability scores, and the situation here in New Zealand is not very different. Sara Cobbett poses some good, challenging, questions about the design of policy documents, given that situation: 

Would you read 50 pages of text about a product you’re about to buy? How about 20 pages? Or even 10 pages? Lower than 10 - say 6?

A cynic in the consumer movement might say that documents of 50+ pages, lots of long words, and compound documents (requiring a reader to look at several parts of the document such as schedule, definitions of terms, definitions of conditions, and even separate documents) all add up to a very effective way of ensuring that consumers do not know what they are buying. I prefer to think that we just gradually got ourselves into this mess, with plenty of help from legislators and lawyers along the way, and we now need to sustain long-term effort to get ourselves out of it. 

The whole article is well worth a read. If you care about reducing complaints and improving the communication with your customers, whether you are an insurer writing policies, a financial adviser writing advice, or a direct marketer writing ad copy, you should read the whole article. Click here

Robo-advice "Essential"

Goodreturns has this interesting piece which highlights consumer expectations of being able to deal with their adviser using digital means - and how that makes a 'robo' component of your business pretty much essential.

Of course there are exceptions. An amazing adviser offering incredible service can buck any trend - write with a quill pen, or make your clients climb to the top of a mountain in Tibet to obtain your advice - but most normal humans will be unable to do that.

Most adviser businesses will opt for an incremental improvement of their business where they progressively shift into the digital world. Faster might be better for some, slower might be better for others. How far you push and how quickly will depend a lot on the nature of the business you do and the clients you work with. 

But get on and do it, because there will not be a big chunk of the market left for the folks with quill pens. 

FMA - Second Round of Section 25 Requests to Insurance Advisers Issued

The second round of section 25 requests has been issued to advisers. These now seek more details on a number of client files, details of clients where claims have been declined, or complaints made, details of compliance reviews, and commission debts. We congratulate the FMA on tackling the question of the advice given on insurance directly. 

Friday Fun: All Blacks, by the numbers

Just how good is the current All Black side? The Economist can be relied upon to hunt down a quantitative answer, so if you want to know the win/loss percentage against any tier one side versus the All Black (at a neutral ground) then you should take this article as your starting point. I say starting point because it links to an even more detailed stats website focused on rugby if you wish to lose the better part of next week to the subject. 

But if you want to know how the All Blacks got this way, especially when you want to see how it came to be from an outsider's perspective, then you should take in this long article which covers the game from a grass-roots training and development perspective

An Intriguing Career Move: Teach Now

A financial columnist at the AFR, Lucy Kellaway, is leaving to go and teach in London. It is a break from our usual insurance-focused financial news. However, I know that a good number of readers are interested and have acquired great skills in long careers in advice or management. If you have something to offer, it can almost always be used with gratitude somewhere else. We should have a programme like this here. Link