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Will life insurance costs rise due to COVID-19?

Will life insurance costs rise due to COVID-19? Will vaccination status make a difference? Back at the start of the pandemic both regulators and the industry scrambled to assess the impact of COVID-19 on life insurers. The good news was that the mortality profile of the disease tended not to hit the insured population so hard. While we still believe that these estimates are fundamentally right and insurers are capable of managing the expected claims as the disease spreads throughout New Zealand, there is some evidence from overseas (such as this company in the US) that there could be some cost impacts. The results of the vaccination campaign may be big factors in whether we see these changes here. Our vaccination effort recently saw us overtake the US and the UK for the share of people that have had at least one jab - and that level looks likely to rise further over the coming months - but that still leaves the question of the un-vaccinated. Rob Stock writing for Stuff.co.nz has a good article on that at this link. I expect that vaccination status will be a factor in underwriting soon, and therefore on price.

Legal and regulatory update for the life and health insurance sector

29 Oct 2021 – NZX quarterly policy update released including the following information:

  • Quotation of Debt Instruments - expect to release a protocol in relation to the debt convention standards in October 2021.
  • Listing Rules ‘Hygiene Review’ - currently considering the submissions received on the June 2021 consultation, after which application will be made to the FMA for approval of the proposed amendments to the Rules.
  • Mid-Point Order Book Final Consultation – currently considering submissions received on Oct 2019 and July 2021 consultations
  • Direct Market Access Guidance Note - expect to publish the final guidance note in Q4 2021.
  • NZMDT Rules Review - expects to commence consultation in Q4 2021 on a suite of proposals relating to the membership of the Tribunal; the Tribunal appeals’ provisions; and the Tribunal penalties assessment process and framework
  • Corporate Governance Code 2021 Review - intends to release the initial discussion document in relation to the review of the Code in Q4 2021.


AIA launches small business support package, and more daily news

AIA has released their small business support package that offers financial advisers an additional 10% Basic Initial Commission on AIA Living applications that are submitted via eApp. The offer starts on 1 November 2021 and ends on 31 January 2022. Through this offer advisers can receive an additional 20% Basic Initial Commission during the promotion period.

AIA NZ continues to support advisers and their businesses with the release of a small business support package. This offer comes hot on the heels of the insurer’s one-month premium waiver promotion for business applied for in September and October.

The small business support package offers advisers an additional 10% Basic Initial Commission on AIA Living applications placed using eApp between 1 November 2021 and 31 January 2022. To support AIA’s digital first proposition and encourage advisers to do business with AIA online, this offer is in addition to the current 10% Basic Initial Commission offered for using eApp.

This means advisers can receive an additional 20% Basic Initial Commission if using eApp to place eligible business during the campaign period.

“We understand the recent COVID-19 restrictions have significantly impacted economic activity, and continue to create business continuity issues for many NZ advisers,” says Sam Tremethick, Chief Partnership Insurance Officer. “This is on top of an already challenging year for many. We know cashflow issues are a challenge for a number of advisers, particularly those in the Auckland and Waikato regions, and this may be impacting mental health and overall wellbeing. We want to continue to offer AIA’s support, and to ensure advisers remain ‘fit for business’.”

Like many small businesses in New Zealand, advisers have been doing it tough. According to the Xero Small Business Index New Zealand August 2021 report, the New Zealand Small Business Index fell 19 points after the entire country was put into Alert Level 4 in August 2021*.

“Our aim for the small business support package is to give advisers some much-needed additional cashflow, so they can focus on doing what they do best: providing the best advice and protection for their customers.” 

In other news

FSC: Why Does Money Matter? school video competition will be closing on 29 October

FSC: Thriving, or Struggling: How New Zealand businesses and regions have navigated the Covid-19 divide session

FSC: Money and You website is now live

Legal and regulatory

27 Oct 2021 - APRA released its Operations of Private Health Insurers Annual Report for the financial year 2020-2021. The Operations of Private Health Insurers Annual Report shows expenses, revenues and operational information about private health insurers. https://www.apra.gov.au/news-and-publications/apra-releases-operations-of-private-health-insurers-annual-report-0

Legal and regulatory review for the life and health insurance sector

26 Oct 2021 – Retail Payment System Bill completed its first reading in Parliament, referred to the Economic Development, Science and Innovation Committee with report back due by 3 March 2022. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_116198/retail-payment-system-bill

27 Oct 2021 – RBNZ inaugural general insurance stress test highlights general insurance reliance on reinsurance. https://www.rbnz.govt.nz/news/2021/10/inaugural-insurance-stress-test-highlights-reliance-on-reinsurance

Partners Life reimagined, and more daily news

Partners Life has announced that they rebranded to commemorate their 10th anniversary. Naomi Ballantyne has noted that this rebrand represents a key milestone in Partners Life’s journey. Additionally, Naomi has said that the new look celebrates life and challenges New Zealanders to change their minds.

“In 2011, Partners Life opened its doors with a clear vision – to reimagine the way life and health insurance is offered.


Since then we’ve grown from a humble start up to the second largest life and health insurer in New Zealand.


In celebration of our 10th anniversary, we’re unveiling a bold new look!  This transformation represents the next chapter in the Partners Life story, in line with our vision to revolutionise the New Zealand insurance industry, ensuring Kiwis get the most out of their life and health insurance.


At the crux of our rebrand is our commitment to responding to the needs of our clients – by being ‘always restless’ in our resolve to ensure Kiwis ‘get life right’, by being a company that never rests on its laurels and by always looking for ways to adapt and improve.  This pursuit is visualised through an innovative ‘restless form’ design complimented by a new logo, website and visual identity.


Naomi Ballantyne, CEO of Partners Life commented: “Partners Life has spent the last decade reimagining the customer experience for life and health insurance.  Our brand relaunch represents a key milestone in our journey to making sure Kiwis are getting the best cover for their unique needs”.


“We have invested a lot of money over the last ten years in tools and technology, meaning we are now realising the economies of scale, and can really invest in new ways of doing insurance: a vibrant and dynamic brand that celebrates life, and challenges Kiwis to change their minds”.

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In other news

Cigna: Business as usual after Cigna sell-off

Russell’s latest article: The lives we could save

Financial Advice: registration still open for virtual conference

Legal and regulatory review for the life and health insurance sector

26 Oct 2021 – RBNZ released a report titled, “Climate Changed 2021 & Beyond”, outlining its Climate Change Strategy, including:

  • Measuring and managing our own operational emissions, including our balance sheet;
  • Working directly with our regulated entities on climate-related risk management, including stress testing and supervisory frameworks; and
  • Leading the Council of Financial Regulators’ climate work streams.


Population estimates and the vaccine coverage

Marc Daalder has a good article at Newsroom which discusses the difficulty with the 90% vaccination target given the different statistics for population that are in-use. The central point is that two major government bodies disagree about the total NZ population by about 122,000 people. Clearly, that's a significant difference.

The Ministry of Health uses health services uptake as a measure, or HSU, which is the lower number. Lots more detail is available at this link. This may under count younger people, who may have never accessed health services, especially if they are migrants. If they haven't even used a health services they may be less likely to get vaccinated.It would explain why some segments of the population appear to have vaccination rates greater than 100% (see example below from a Spinoff article).

Vaccination rate

On the other hand, it may be more accurate for older lives than Statistics NZ, which estimates from the 2018 census using a quarterly adjustment for births, deaths, and migration - a good explanation of how this is done and the resulting numbers is at this link. The article is well worth the read. It also underlines the wider problem of belief in one right number. These things are difficult to get right and there are some good arguments in favour of different methods. We often have this difficulty in our sector where different people and companies have different preferred measures and there is often a surprising difference between the results each measure generates.


A one page personal risk plan summary?

In a recent newsletter we mentioned that we were in the process of developing a one page personal risk plan summary for Advicemonster (our system for fact-finding, needs analysis and producing a statement of advice). If you would like to see our draft of this development - please email one of the team at info@quotemonster.co.nz