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Australia: FSC releases policy on genetic testing and the situation in New Zealand

The Australian FSC has plans to implement a binding standard that ensures all life insurer members do not require clients to disclose the results of their genetic test. The introduction of this standard means that clients can potentially receive up to A$500,000 of life cover without the need of disclosing test results. Furthermore, clients will not be required to have genetic tests carried out when initially applying for insurance.

This new standard applies to clients applying for a total sum insured that is less than A$500,000, those who choose to apply for more than A$500,000 for life or total and permanent disability cover, A$200,000 for trauma cover or A$4000 a month of income protection cover will need to provide genetic test results.

Richard Klipin, chief executive of FSC New Zealand, has stated that the FSC is dedicated to specific issues within the insurance industry. Unaware of the future magnitude of genetic testing in the New Zealand market, Klipin has stated that the FSC will discuss the effects.

Although no widespread screening services use genetic tests in New Zealand at present, it is a feature in Australia. That has pushed the need for the Australian insurance sector to develop a policy. It seems obvious that as the value of these screening services becomes more widely recognised, they will be introduced here too. Within a few years that means underwriters will routinely receive applications from people that have had genetic tests. Under current underwriting practices they will need to be disclosed and the results will be used in assessments. 


Countdown begins to Towards Wellbeing conference

Only a couple of weeks remain until early bird ticket sales for Towards Wellbeing conference end. The conference will be held on 11-12 September at the Pullman Hotel in Auckland.

The full-day event will begin with breakfast at 7.30 am and the main platform welcome will start at 9 am. Attending the conference will allow attendees the opportunity to network with around 500 insurance specialists and hear from over 70 speakers discussing current industry-related issues.

Opportunity to acquire substantial renewal book

There is an opportunity to acquire a longstanding respected business based in Northland with high level of diverse recurring revenue, two third from insurance business, and roughly one third from investment business. The investment fees are mainly derived from higher growth KiwiSaver funds. 

• Sole Adviser with office manager
• All records on X Plan – backed up on Cloud
• Risk persistency: 90% plus
• In-force premiums stable over last 5 years
• FUM growth over last 5 years
• Total annual recurring revenue $230,000

SECTOR and % of renewals
RISK                             29%
LEGACY                         2%
HEALTH                       39%
KIWISAVER                 19%
TOTAL                         100%

Excellent potential in the base – has been serviced but not sold to. Please call me if you would like to discuss the opportunity further. 


Gardening, the answer to a long life

Sometimes the answers are right in front of us.

Dan Buettner has travelled and studied people living regions considered as "Blue zones". Those living in these areas had multiple lifestyles habits in common – daily exercise, plant-based diets and gardening. It is widely understood that physical activity and an outdoor lifestyle have a positive correlation with living a longer life. Gardening incorporates both things. Buettner claims that there is evidence that those who garden, live longer lives. Studies have found that gardening has both mental and physical benefits. 

A study conducted in Holland found that those assigned to gardening for 30 minutes were less stressed than those in assigned to reading indoors. While Australian researchers focused on individuals in their 60s found those that routinely gardened had a 36% lower risk of neurodegenerative diseases such as dementia than individuals who did not garden. Furthermore, preliminary studies among elderly individuals with neurodegenerative diseases has found that gardening is beneficial. Interestingly, Scottish doctors can now prescribe walks to improve overall happiness and to treat medical problems including blood pressure and anxiety.

Although there are mental and physical benefits, gardening also has social benefits. Dr Bradley Willcox of the University of Hawaii says that gardening helps with other essential factors associated with longevity. He continues that in Okinawa, a place with the world’s highest ratio of centenarian, gardening gives people a reason to wake up and start their days. Willcox explains that concept of yuimaru is achieved, through gardening, people can socialise at their local markets, ensuring they feel connected.

Researchers have found that consuming what you or others have growth also has a positive association with longevity. This conclusion was drawn from the connection between the “Mediterranean diet” and slower aging. Although Willcox argues that simply consuming locally grown vegetables is contributes to longevity.

Although aging and death are inevitable, through gardening we can benefit from the useful lifestyle habits that will ultimately help us to live longer and happier lives.

Is a wearable fitness tracker or a packet of seeds the best motivation to change your life? That will depend on you. There are usually several good approaches to improvement - and they don't all rely on the internet of things. 

Click here to read more.

How to make a submission on the Conduct of Financial Institutions Options Paper:

Step 1: Read the materials in this blog post

Step 2: This is the a good approach to thinking about your submission

  • Customer – How does this benefit customers? 
  • Facts – use relevant facts to support your submission
  • Comparison – How are we different to Australia? The UK?
  • Who do you speak for? Build scale into your response, or get together with others
  • Don’t make it confidential - unless absolutely necessary
  • Make sure you are fully across detail
  • Review your submission, get someone who is critical to help with this step
  • You don’t have to submit on the whole thing – being specific has value

Step 3: Go to https://www.mbie.govt.nz/have-your-say/financial-institutions-conduct-review/comprehensive-submission-form-conduct-of-financial-institutions-review/

Step 4: Complete your submission on the relevant parts you want to comment on

Step 5: Submit and spread the word

Step 6: Plan for change in your business

MBIE seeks written submissions by Friday 7 June 2019.

Commissions and service

With the mass attention on the commission structure of the insurance industry, Partners Life has produced a document to offer a counter-argument to people advocating a commission ban. The six-page document begins by describing Partners Life priorities, their products, benefits, and their selected distribution method. Following the brief introduction, four tables outlining different processes are detailed. Examples are used to further illustrate four different processes and scenarios.

  • the process of providing initial advice to a client
  • the type of changes clients can have assistance understanding and the appropriate policy changes
  • the process involved in assisting a client with changes
  • the impact on an adviser’s commission earnings of potential policy changes

The tables illustrate the work that goes into approaching, attracting, servicing and retaining clients. It demonstrates the extensive workload continues once a potential client becomes a client. The table reveals that a lot of possible work and background information is completed with nil commission or charge. Outlining the process step, possible work, background information and commission impact of four processes is intended to provide some insight into the work of advisers under the current structure.

My view is that commission forms a really important mechanism to finance a lot of advice - and not just insurance advice. I know plenty of advisers would not be able to offer good home loans or KiwiSaver advice if it were not for insurance commissions. 

Looking at MBIE's options paper for the regulation of conduct of financial institutions I see that the option of a 'cap' on commission is not part of the preferred options package, but the preferred approach is a duty to ensure that remuneration systems support good customer outcomes. 


Asteron Life aiming to ensure advisers are up to date through workshops

Asteron Life is holding two workshops focused on their personal lump sum cover products and their personal disability income cover products. Advisers seeking to upgrade their understanding of Asteron Life products, advisers and support staff new to Asteron Life and advisers needing to update their product accreditation will benefit the most from attending these workshops.

Both workshops will be held Tuesday 28 May at the Takapuna District Cricket Club.  The first session will be on lump sum covers and will be held between 9 am – 12 pm. The second session, which is on focused on disability income covers will be held between 12.45pm – 3.45pm.

The workshops are set to be interactive and are intended to give advisers confidence. Structured CPD credits will be available. Asteron Life’s latest products will be discussed. Additionally, attendees will understand unique points of difference of products categorised under disability income cover and products categorised under lump sum cover.

RSVP to Julie_omeara@asteronlife.co.nz

Insurance Broker ordered to pay back over $370,000 in claim money paid

Chris Morris writes in the Otago Daily Times that an insurance broker, Peter Taylor, has been ordered to pay Asteron Life back $371,286.70. Taylor was being paid out an Income Protection claim as he was too sick to work due to a back injury back in 2010. Payments to Taylor were stopped by Asteron Life as there were unanswered questions relating to his claim and finances and Taylor was 'splashing out' on luxury cars, holidays and new holiday home. Click here to read more. 

Antibiotic resistance threat to economic stability

Used to treat countless individuals undergoing differing medical treatments, antibiotics can be classified as something that we take for granted. The influx of antimicrobial resistance is amplifying concerns globally. The spread of Candida auris and super-resistant gonorrhoea exemplifies the horrifying reality of antimicrobial resistance. The increased antimicrobial resistance could potentially kill 10 million people over the next thirty years – a 700,000 increase on current deaths directly related to antimicrobial resistance.

As a response to the growing threat, a UN commission has recommended an immediate and well-co-ordinated action plan be implemented and exercised to ensure that we avoid a catastrophic event that would result in dire economic outcomes that the World Bank believes could be equivalent to the global financial crisis of 2008-09.

Although pharmaceutical companies have failed in the past to conjure solutions for pressing medical issues, developments relating to antibiotics have been poor. To restrict antimicrobial resistance doctors often refrain from commonly using novel antibiotics. Novel antibiotics are seen as the last resort and are only used for short periods of time. Unlike other medicines, the price of antibiotics is often set low, giving pharmaceutical companies very minimal motivation to develop their current products further; this has the negative implication of discouraging investors from approaching and potentially working alongside antibiotic firms.

click here to read more

Behaviour change

My latest piece in the insurance section of goodreturns highlighted the challenges of helping consumers resolve conflicts in their priorities. Philip Macalister just dropped me a line to share his latest Goodreturns TV piece, an interview with Tim Noonan of Russell Investments. Noonan was talking about the need to help customers make behaviour changes too - particularly around spending - which is the big overarching priority challenge in financial planning: consumption now versus later. It is exactly the same issue for many clients when contemplating the purchase of insurance. The reduction in the regulatory boundary between giving insurance advice, investment advice, and giving financial planning advice is one of the best features of the regime. It contains an opportunity for better conversations to be had. Do check out the interview with Noonan, which contains much of interest even if you are not an investment adviser.