Creative destruction at work

Duncan Grieve writes about the media situation in New Zealand after the incredible news of Stuff being sold for $1 to management. The article is well worth a read. In an economic sense I felt it was awesome advocacy for Schumpeter's creative destruction - a celebration of how new ideas emerge in surprising places, and times. Innovation does occur in large companies, but not usually in very comfortable and monopolistic ones. Disturbance, challenge, and necessity - these drive change. What changes shall we see in the insurance sector as a result of the great shove that 202 has given everything? Well, finally digital moved to the top of the queue for many companies, after languishing for a long time. Product design is definitely under pressure. FSLAA and COFI are going to deliver additional shocks - on top of the economic ones to distribution. 


Daily news update: MAS weigh in on remote working, and other stories

In light of the past two months, Martin Stokes, MAS CEO, has said that the insurer is open to the idea of remote working. Stokes highlights the slow adoption of flexible work options in past years has been accelerated by the lockdown. MAS will use events during the lockdown to inform future working arrangements.

“Medical Assurance Society (MAS) chief executive Martin Stokes (pictured) says that the past six weeks have been a kind of mass social experiment, and, as a result, the workplace flexibility trends that were already emerging have been accelerated massively. He says the level of productivity in some areas has been surprisingly high in a remote environment, and, as a result, a much higher level of flexibility will become the norm.

“This situation has identified for us the opportunities that would otherwise likely have emerged over a much longer period of time,” Stokes told Insurance Business.

“Social trends would have influenced people’s thoughts around where they wanted to work, flexibility, different working arrangements, etc. But that’s really been concentrated into a six week-long social experiment where everybody’s had a taste of what that’s like enforced upon them.” Click here to read more

In other news:

Will corporates embrace remote working? - will this moment change everything, or will they slip back into old ways of working?

TAP: are offering to help advisers with claims

FMA: FMA urges public to pay attention to terms of insurance relief

Pepper Money: Pepper writes 600 NZ loans in first year


DAILY NEWS: Australia - huge drop in adviser numbers, expect it to continue

The Australian financial advice industry has declined by almost 18% when compared to the number of advisers in the market this time last year. The introduction on mandatory qualifications, the change in commission structure and monitoring of activity has pushed advisers out of the market.

“Five thousand and twenty-five advisers have left the industry in the last 12 months, while a meager 78 new authorised representatives joined the industry during this period, analysis of ASIC’s financial adviser register conducted by CoreData will show. The researcher pointed out that the number of new entrants to the industry is inflated considering at least half have joined timeshare schemes, an area that continues to be a focus for the regulator.

 

But it’s the bloodletting of advisers from the institutionally-owned licensees that will be a feature of this year’s list and subsequent analysis.” Click here to read more

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In other news:

Financial advisers have a ‘key role’ during pandemic

International vaccine news excites market

$1.5 billion in claims paid, FSC says

Insurers hoping for loyalty out of Covid-19 offers

How insurers moved thousands out of the office and into their homes


Daily News Update: business debt hibernation, and more stories

Below is a press release from the FMA on business debt hibernation.

“Last week, the Government passed the COVID-19 Response (Further Management Measures) Legislation Act 2020, which introduced the business debt hibernation (BDH) scheme. Business debt hibernation may help eligible businesses affected by COVID-19 manage their existing debts until they can start trading normally again. For example, businesses may agree with creditors to delay repaying some of their debt.

BDH is available to a wide range of businesses (including companies, trusts and partnerships), some of which are regulated by the FMA. BDH does not extend to registered banks, licensed insurers, non-bank deposit takers, licensed derivatives issuers, operators of designated settlement systems or sole traders.

Conditions to enter and remain in BDH include director approval, notice to the relevant Registrar, and creditor agreement. These and other conditions that must be satisfied are set out in Schedule 13 of the Companies Act 1993.”

In other news:


DAILY NEWS: Unpacking Minister Faafoi and Financial Advice NZ webinar, and more stories

During the Financial Advice NZ webinar, Minster Faafoi spoke about his commitment to ensuring that the conduct bill progresses while also highlighting that he is conscious of the importance of having enough lead-in time. During the webinar, the Minister spoke of how the Government understands that commissions are a legitimate way of paying advisers and as a result, the Government isn’t seeking to ban commissions, instead is looking to end target-based incentives. 

“In a webinar with Financial Advice NZ, Faafoi acknowledged that concern and said he did not want the conduct regime to add another layer of complexity of regulation on top for advisers.

The bill in its current form also allows regulations to dictate remuneration structures, which some industry participants have expressed concern about.

Faafoi said Government recognised that commissions were a legitimate way of paying advisers for their “important work” because consumers were generally unwilling to pay for financial advice. He said the Government was aware that commission structures were the way the sector had operated for decades.

“It is not the Government’s intention to ban all commission.” Click here to read more

It would be a great relief to advisers and insurers if it could be clearly discerned from the Bill that the power to ban commissions is reserved. At present the definition of incentives in the law can be read as including all normal commission payments, which is unnerving when long-term decisions need to be made. 

In other news:

Suncorp: Kate Armstrong joins Suncorp’s NZ boards

Suncorp: Suncorp earmarks further NZ$2 million for hardship fund

FMA: Transitional licensing continues at a “steady rate” despite COVID-19 delays – FMA

AIA: AIA new business value slips 27% after coronavirus disruption

 


We can help you make informed decisions 

We have seen unprecedented change occurring all around us. These changes may lead to re-evaluating our plans and considering other pathways. Regardless of your need for change, we can assist you understanding the value of your adviser business. We offer several different valuations to suit your valuation needs. We offer basic, complex and full sale valuation services. Additionally, we work with our preferred chartered accountancy vendor to offer a unique valuation service. 

Reasons why you might get a valuation:

  • Sale purposes
  • family buy-outs
  • Succession planning
  • Staff share schemes
  • bank lending
  • Transferring shares into a trust
  • Shareholder/partnership disputes
  • Divorce/separations

Click here to find out more


DAILY NEWS: Global COVID-19 effects on insurance industry, and more stories

Lloyds of London has reported that COVID-19 will likely cost the global insurance industry over NZ$336 billion (US$200 billion). It is predicted that the industry will experience a greater loss if lockdowns around the world continue into the next quarter. 

“The pandemic will cost the insurance industry over US$200 billion (NZ$336 billion), according to Lloyds of London, who estimated that its own payouts are now on a par with the Sept. 11, 2001 attacks or the combined impact of hurricanes Harvey, Maria and Irma in 2017.

Lloyds, which as an insurance market pays out to insurers affected by disasters, said it expects to pay between $3 billion and $4.3 billion to insurance companies to help them cope with the COVID-19 pandemic.

Losses could widen if lockdowns continue into the next quarter, which would push the overall cost to the insurance industry to $203 billion. Unlike the storms, for example, the pandemic's impact is global, systemic and long term.” Click here to read more

 

While most of those impacts are for catastrophe cover, there will be impacts on life insurers, especially in those markets where control measures were less successful.

In other news:

Applications show small advice firms still see future: FMA

Leading Adviser explains why a group's actions need to speak louder than words

Association CEO joins Trustees Executors board

Financial Advice NZ welcomes Budget 2020

Advisers back wage subsidy extension


DAILY NEWS: Increased interest in digital insurance and more

Consumer behaviour is often fluid. Trends, word of mouth as well as personal experiences play a part in changing decision-making processes and purchasing habits. Similar to other purchasing behaviours, the way people are choosing to purchase insurance is changing. There is an upward trend of people relying on their own research and not seeking advice from financial advisers. Similarly, there is an increased interest in digital insurance providers.  

"Consumers of all ages are adopting a “millennial mindset,” according to Capgemini and Efma’s World Insurance Report 2020. This means that consumers are increasingly trusting their own research to source and purchase insurance products themselves. Customers of all ages are also increasingly turning to digital channels in the face of the COVID-19 pandemic, the report found.

 

“Digital adoption is no longer a function of age; for those with access to the web and social media, researching and directly procuring insurance online has become mainstream across all generations,” Capgemini said.

 

To remain relevant, insurers must shape their existing products to meet evolving customer needs and preferences, the report said."

Furthermore, it is reported that:

“The COVID-19 lockdown will further fuel this trend as consumers are forced to use digital channels for day-to-day transactions, irrespective of age or tech know-how,” Capgemini said. 

In other news:

Advisers haven't done enough to digitise their offering - expert

Air pollution dropped dramatically during lockdown

FSC webinar: Introducing the financial resilience index

FSC webinar: A global response to COVID-19

FSC: Spotlight on Insurance


DAILY NEWS: nib non-PHARMAC webinar and more

nib will be hosting a webinar on May 20, 2020, from 11:30 am – 12:15 pm. During the session, nib NZ CEO Rob Hennin, RMA Financial’s Shaun Vining, and nib Customer Care team leader Hannah Larking will be sharing their experiences on non-PHARMAC drugs and the importance of including them in medical policies.

"Join our webinar where we’ll be focusing on why cover for treatment with non-PHARMAC drugs is so important for your clients. We’ll be bringing you the insights of adviser, Shaun Vining, and nib Customer Care Team Leader, Hannah Larking. There will be opportunity to discuss why it’s so important your clients have health insurance with non-PHARMAC cover." Click here to register

in other news:

OUT NOW: ASSET May issue

Australia: Signature scandal puts more pressure on AMP's battle-weary management

Wealthpoint: Wealthpoint advisers ‘cautiously optimistic’

Finzo: Finzo develops 360 integrated solution

Brokers with no BCP urged to make one, ASAP