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Client Base for Sale

A client base is available for sale. The base has renewals of between $30,000 and $35,000. Clients are located between central Auckland and Warkworth. Persistency is 90% to 95%. Clients own a mix of life and health products. Please drop me a line at my email to let me know of your interest and some more detailed information can be made available to you.

Minister promises process of review of sales incentives

In this piece on RiskInfo Minister Faafoi and the Honorable Grant Roberston appear to outline a separate consultation process to run alongside the insurance contract law review process, later this year. This process is to review sales incentives in the light of the recent report on the life insurance sector. Link.

Minister of Finance, Hon Grant Robertson, highlighted four changes the Government wishes to see:

  • Clearer duties on banks and insurers to consider a customer’s interests and outcomes, and to treat customers fairly
  • An appropriately resourced regulator to monitor the conduct of banks and insurance companies, with strong penalties for breaching duties
  • Changes applied to both banking and insurance, since the issues identified in both are similar. There are also overlaps between the sectors, with banks often selling insurance products.
  • A strong response to internal sales incentives and soft commissions

“We will consult with the public and industry on these changes, but we are going to move as quickly as possible on this because New Zealanders need to have confidence their rights and interests are being protected,” said Robertson.

Faafoi noted that the consultation will run alongside the insurance contract law review currently in progress.

FMA and RBNZ report on life insurance sector

While I will do a thorough review of the document and its implications for clients in due course, I thought it worth mentioning some of the questions people have asked about the report. They are not my view, but a good reflection of the, sometimes contradictory, views of people in the industry:

  • Well, that's better than expected
  • More products should have been listed as cause for concern (along with...)
  • Less products should have been listed as cause for concern (concern for product scope to be set)
  • So, are commissions to be banned? (based on the NZ Herald's take on the report, not the report content, obviously)
  • Will advisers have to go to eight different training course run by insurers on how to sell their products? (considering one vision of an attempt to direct on suitability)
  • If insurers are responsible for suitability doesn't that push them into the advice space? (a valid concern, detail is available in recent reports)
  • The FMA's big data trawl found very few advisers aggressively replacing business
  • I've chosen my last supper - my personal favourite, from an adviser who actually has very little to worry about

My feeling is that there is a lot to address, and that I think most insurers are not that surprised at much of the content. As a fairly high-level document, there are some significant questions. A lot of concerns were based on an absence of evidence of good management, rather then evidence of bad management or bad intent. But the concern, and the link to the Hayne report, is whether a culture of focus - in this case, on sales, perhaps - rather than good outcomes could dominate in decisions about value for customer.

Anyway, more details for clients, coming soon.

AMP after Life

David Chaplin has a breakdown of AMP's performance after the sale of the Life insurance business. Interestingly, this includes separate line items for the advice division and wealth management division. It provides some insight into how important the advice division is going to be in the IPO. Something that other businesses with advice divisions, and probably AMP advisers who form part of that business, will be interested in. Link.

Reading the conduct review with an open mind

If you are still thinking about the impending review of the insurance sector by the FMA and RBNZ when you should be enjoying your Auckland Anniversary Day holiday (if you live in the region) you are probably doing this wrong. Take the day off, enjoy it, and promise yourself only this: to read the review with an open mind. That's probably the best approach, and requires very little preparation - in fact, quite the reverse.

Gout and health policy

Gout, the disease associated with 18th-century kings, brought on by indulging in rich foods is making a comeback according to this article. This is another one of those indications that life is good, and many more people than in the past have the ability to indulge. Insurers know the reality of the impact of lifestyle factors on health: diet, smoking, exercise levels, and so on show up in rates of heart disease, stroke, and cancer. I have been a fan of talking about them as if they are all individually controllable. A few weeks on holiday has challenged that point of view somewhat: sometimes circumstances make it harder to eat well. Sure, I can walk a bit further, hunt for different shops, spend more time preparing food rather than buying convenience food on the run. But all those increase the effort required by each consumer - and if we want more people to choose healthier lives we may have to see what we can do to make it easier to make healthy choices.

What insurance advisers can tell you about entrenched views

People with strongly entrenched views love them, and are willing to suffer a lot to keep them, even in the face of the evidence.That curious mental 'stickiness' shows up in sales processes all the time.  That is why insurance advisers, who have the hard job of helping people plan for their death, illness, or disablement, have some of the finest practical experience with the phenomena of all. Ask them about it some time. Some of the things they tell you are supported by recent science on the subject. According to this article from The Economist many of us will pay money to avoid points of view that differ from our own. Click here to read more. There are many strategies for working around entrenched views, some of the best are based on guided discovery and the exploration of shared values. They all require a bit of work, but they are worth it, I think. After all - aren't we all struggling to learn new things, get over our own entrenched views, and persuade people?

A fierce argument about accessibility

The article below sparked a fierce argument about the extent to which companies should work to make their products accessible to people.

Domino's Pizza had legal action taken against them after a blind man in the United States was unable to use their website and app. 'This, he argued, put the company in breach of the Americans With Disabilities Act of 1990, which says it is unlawful for businesses to deny individuals with disabilities access to their goods and services unless the effort involved places them under an "undue burden"'

Click here to read more.

Without repeating the details of the argument - or who was arguing for or against greater access, the issues can be summarised:

Big companies tend to design access for the many, not the few. This is obvious. Market segments of few, or one, tend only to be served by specialists. The skills of one company are unlike the skills of the other, historically.

While it is true that customers with special needs (disability, lack of knowledge or experience, poverty, language barriers, or different requirements from the mass) can often access our products, they also often face barriers to doing so. In overcoming these, they face higher transaction costs. When transaction costs rise, fewer transactions are made.

While there is a public policy debate to be had about whether companies should be forced to provide access, and the extent of cost that they should have to bear in order to do so, we don't have to wait for that to happen: if you are wondering how to increase your market share, you might look to tackle some of those segments that are underserved. If you can find an innovative way to break down the barriers, you can own a segment for years. Success stories are usually built on this. Early Amazon was.