« September 2019 | Main | November 2019 »

Australia: use of APLs

It has been claimed that institutionally aligned Australian Financial Services Licensees are funneling new clients into in-house products. Whistleblower Jeff Morris has said the industry lacks the ability to properly manage conflicts of interest, and insisted that the Government should ban the use of APLs (approved product list) by vertically-integrated advice licensees. In response, David Wappett, head of research and relationship manager at MLC Advice said that they provide a range of additional resources to ensure advisers understand the way APLs are constructed. Click here to read more

What makes a viable APL? It's all in what's on it and whether you use it. In essence, if a vertically integrated business treats its in-house products the same as any other... then there shouldn't be any problem. But how to do that? 

Utilising Konnect.NET’s free adviser tools

Konnect NET encourage the use of Track and Trace and Doctor Look-Up, free adviser tools on Konnect NET’s website work to support the experience that advisers provide to clients. 

Track and Trace is designed to allow advisers to keep track of clients' SureMed request status. While Doctor Look-Up is designed to provide a better understanding of a GP’s requirements. This could include specific consent requirements and determining if a client needs to book an appointment for an insurance request.

By identifying GP requirements and having some SureMed pipeline transparency means advisers can reduce delays and manage customers' expectations better. 

Currently, there are six major insurers on board: AIA, AMP, Asteron Life, Fidelity Life, OnePath and Partners Life.


Annotation 2019

Product Research Database Update

Institutional subscribers have been sent the latest product research database update from Quality Product Research Limited. QPRv12_8. Here is a summary of the changes: 

  • OnePath v4.6.1 policy wording effective 01.10.2019
  • Southern Cross Critical Illness effective 01.01.2018
  • Cigna funeral cover policy wording effective 01.07.2018
  • Westpac Flexi cover 01.02.2018
  • Westpac Term Cover 01.02.2018
  • Westpac Gold Disability Cover 01.09.2017
  • Cooperative Bank Loan Installment protection 01.09.2018

What makes an appropriate incentive?

There is a conversation going on right now about what are appropriate metrics and targets for incentives. Companies exist to make money. That fact is often advanced as a reason for assuming that they will place their benefit above customers, but failing companies the world over are often exemplars of companies that have placed financial gain above the need to serve customers well. In practice, over any significant amount of time, those two goals are inseparable. Sooner or later the truth comes out. 

Short-term incentives play a part. People find it hard to always be thinking about the long-run. A certain amount of get up and go is generated by creating a sense of urgency. Time-based incentives can do that. But they risk abandoning the long-run worries about sustainability to the excitement and rewards of the moment, or at least, the period of qualification for a bonus. Time-bound rewards can create oddly powerful incentives. Think of the value of the last piece of business that takes a person across a qualifying line for an incentive or bonus. 

Yet there must be measurement. Without it shareholders will abandon the sector. Their capital and expectations of return create opportunities: they invest in new technology, the basis for efficiency gains, reduced premiums, and improved service to customers. They invest in research and development, allowing new products to be developed. Go back in time and there was no cover for heart attacks, or any other trauma condition, or income protection. There were no e-apps. Cool online tools did not exist. They did not spring fully-formed from the ether. Plenty of innovation is required to make our markets and services better. More is needed, not less, in order to close the under-insurance gap and make New Zealand's insurance industry as efficient as that of, say, the UK's. 

Some ideas have been generated about how to manage these conflicting forces. In Australia APRA has sought to advance the concept that 50 percent of the measurement criteria for executive bonuses must not be financial. That has recently come under attack. Several prominent chair people (present or past) of companies in Australia have questioned the initiative, even calling it a misinterpretation of the intention of the Hayne Commission report, as Patrick Durkin reports in this article at the Australian Financial Review. They are not alone. NAB received an unprecedented 88% protest vote against some of their plans to introduce non-financial metrics. That could be a question of exactly what those metrics are, and also communication, but highlights the risk that change will alienate investors.

Clearly, there is a lot more thinking to be done on this area. 



NZ makes the list of world's wealthiest countries

NZ have placed number five on the list of world's richest countries by the Global Wealth Report. This is the first time NZ has been on the list. 

'The Credit Suisse Research Institute released its report on Tuesday, showing global wealth has risen by NZ$14.2 trillion. That's a 2.6 percent increase on last year. In New Zealand, total wealth rose 4.2 percent and wealth per adult increased 3.1 percent.'

Click here to read more. 

Cyber Smart Week

Look we found a post about Cyber Smart Week that relates to insurance: AIA's Chief Technology Officer Shane Ohlin has put together this article showing the top 5 tips for being cyber smart. Of course, we all use technology and cloud services and this applies to all of us anyway. In an interesting social trend, 


Here are some other good resources:

  • CertNZ have this cyber security quiz you can take to check out how good your cyber security habits are, and then it provides tips to improve your online safety
  • The Economist has this piece on why so many people fall for financial scams
  • The FMA has this piece on cold-callers with share scams - just to ensure that you don't fall for the idea that all scams are online