AIA self-reported breach details, and more daily news

After AIA reported their shortcomings to the FMA as part of their submission for the FMA/RBNZ conduct and culture review of life insurers, the FMA filed charges in the Auckland High Court claiming that three causes of action under the Fair Dealing provisions (Part 2) of the Financial Markets Conduct Act 2013 (the FMC Act) were breached. The FMA based their case on:

  • purported enhancement of policy benefits
  • charging premiums after the termination of a policy and treating policies as terminated when they should have remained in force, and,
  • incorrect inflation adjustments.

AIA has said that a Notice of Admission will be filed and has agreed to admit to the breaches. A penalty hearing before the High Court will be held where the FMA will ask that AIA should be ordered to pay $700,000 as penalty.

“Life insurer AIA has admitted making false and/or misleading representations to customers in proceedings brought by the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko.

The case was filed in the Auckland High Court and alleges three causes of action under the Fair Dealing provisions (Part 2) of the Financial Markets Conduct Act 2013 (the FMC Act).

AIA has agreed to admit all causes of action and will file a Notice of Admission of the breaches in the High Court.  The matter will proceed to a penalty hearing before the High Court where the FMA will seek declarations of contravention, and where the parties will submit that AIA should be ordered to pay a pecuniary penalty of $700,000.

The FMA case is based on three core breaches regarding incorrect and misleading communication to customers holding various life insurance and associated policies:

  • purported enhancement of policy benefits
  • charging premiums after the termination of a policy and treating policies as terminated when they should have remained in force, and,
  • incorrect inflation adjustments.
  1. Passback benefits:

AIA wrongly told certain customers they were entitled to passback benefits (cover enhancements to an existing policy), without clarifying that the benefits only applied to post-2003 policies. The information customers received in anniversary letters misrepresented the benefits, and in some cases misled them about their policies.

  1. Termination Dates issues:
  • Premiums beyond termination: AIA continued to charge premiums when customers had no cover. Letters were sent to certain customers with policies approaching the end of their duration, specifying when cover would cease, but the letters contained the incorrect date.
  • Cover Cessation: AIA wrongly ceased cover for certain customers while their policies remained in force, which resulted in some customers, whose claims had been accepted, being underpaid on those claims. Customers were informed by cover cessation letters.
  1. Inflation Adjustments: AIA applied incorrect inflation adjustments to premiums. Many AIA customers choose to have their sum-assured adjusted in line with inflation, with premiums increased accordingly. Policy anniversary letters were sent to customers where the inflation adjustment had been incorrectly applied, and, as a consequence, some customers were charged excess premiums.

AIA self-reported the breaches to the FMA, when asked to provide information as part of the joint FMA/Reserve Bank of New Zealand conduct and culture review of life insurers in 2018. AIA has told the FMA that remediation for affected customers has been completed, and the FMA will be seeking confirmation of this as part of the process.

In deciding to bring this action, the FMA took into account a number of factors, including AIA’s self-reporting, its remediation efforts, the nature of the alleged misconduct, and the number of affected customers.

The FMA considered the seriousness of the breaches, and the length of time it has taken to deal with impacted customers, warranted enforcement action. The FMA is determined to hold such misconduct to account and send a strong message of deterrence to the market. The FMA case only captures breaches that occurred from 1 April 2014 – when the FMC Act came into force – but some breaches occurred prior to this and continued after the Act came into effect.” Click here to read more

AIA have emphasises that they self-reported the issues and completed remediation: 

AIA NZ and the Financial Markets Authority (FMA) have reached an agreement with regards to issues that AIA NZ self-disclosed to the FMA in June 2018 at the commencement of the joint FMA/RBNZ Conduct and Culture Review.

“After conducting an internal review, we found a small number of instances where we may have fallen short of our own standards and commitment to being as transparent as possible with our customers.  Since self-disclosing these issues to the FMA, we have worked relentlessly to remediate these complex issues, whilst engaging and cooperating with the FMA throughout. We have also worked swiftly with the FMA to come to a resolution” says Nick Stanhope, AIA NZ CEO. 

“Our remediation process is complete and, if a customer was impacted by one of the issues, they have already heard from us directly and we have put the issue right.  As part of this remediation, we have also reviewed our systems and processes to ensure this does not happen again. We always strive to do the right thing by our customers and community, and this situation is no different,” concludes Stanhope.

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FYI: How to quote Severe Trauma on Quotemonster

There are three insurers that currently offer Severe Trauma in their Product Suite – AIA (Progressive Care), Asteron (Major Trauma) and Partners Life (Severe Trauma)

For further information on each please click on the product below:   

To quote this on Quotemonster, simply select Accelerated or Standalone Trauma and click the “Severe Trauma” box below the cover amount

Here are some options on how to quote:

1. You can split the amount between standard Trauma and Severe Trauma to generate a quote for all three insurers

First

2. As a work around to the above, you can add $1 into the Cover Amount for standard Trauma and the full amount for Severe Trauma

Only two insurers will generate a comparision in this case as Asteron requires a minimum sum insured of $5,000 for their standard Trauma

One

3. By splitting the cover amount, you can generate a quote that contains both AIAs' Critical Conditions Cover and Progressive Care

Progress and CC

This method allows us to compare a premium and rating for Severe Trauma on Quotemonster, however if you have any feedback, please feel free to send this through to info@quotemonster.co.nz


RBNZ announce insurer Solvency Standard consultation

The Reserve Bank has announced that a consultation will be opened until 1 October 2021 for the interim standard that considers upcoming changes to accounting rules (IFRS 17). The feedback will be incorporated into the current solvency standards. Changes will be made effective at the beginning of 2022. The started is intended to assure policyholders that insurers will be financially capable of meeting promises. Geoff Bascand, RBNZ deputy governor and financial stability general manager, has said that RBNZ will work to understand the capital impact on insurers through further analysis via an industry consultation.

“The Reserve Bank of New Zealand (RBNZ) is asking for feedback saying the interim standard is needed to take account of upcoming changes to accounting rules (IFRS 17) and to incorporate feedback into its current solvency standards.

The Interim Solvency Standard consultation will be open for 10 weeks until October 1, 2021, will take effect from early 2022 and be in force for around three years.

The standard has been designed so policyholders can be comfortable that an insurance company has enough funds to meet its promises to policyholders, even if it fails, RBNZ deputy governor and financial stability general manager Geoff Bascand says.

“Through our review of the standard, we have modified some of the ways that we require insurers to calculate their capital needs. This is to ensure greater consistency and clarity in our requirements and to deal with new accounting standards for the insurance industry,” Bascand says.

“This will bring our method for capturing risks into line with international standards. We will undertake further analysis, in consultation with the industry, as we are keen to understand the capital impact on insurers. We strongly encourage them to engage with the consultation.” Click here to read more

 

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AIA grant to help tradies dealing with mental health problems

The recipients of the AIA Vitality Business and Community Grant, Mike Taylor and Ryan Edwards have created Tools Down to raise awareness of the mental health problems faced and the suicide rates of New Zealand tradies.  Tools Down is described as an introductory source that connects those struggling with specialist organisations across the country. Taylor has said that Tools Down hopes that by educating people about the help and support available they can encourage people to take control of their wellbeing.  

“Tools Down was started by Mike Taylor and Ryan Edwards, thanks to a $50,000 AIA Vitality Business and Community Grant, to shed a light on the topic rarely spoken about in the industry.

Ryan Edwards is managing director at The Adviser Platform and a Tools Down co-founder and has seen many tradies struggling with their mental health, and has worked with some of them to help alleviate financial and work pressures.

“The last decade has seen more than 300 tradies take their own lives," Edwards says.

"Not only is this a devastating number but it has a knock-on effect to roughly 1.5 million Kiwis who are affected by these tragic deaths or serious harm incidents."

“That’s why we’ve made it our mission to halve the number of suicides, serious injuries and harm experienced by tradies each year, by 2025.”

Managing partner at BBT Digital and Tools Down co-founder Mike Taylor recognises this is a lofty goal but is determined to achieve it.

“I’m a big believer in setting big, aggressive goals. By aiming to make a considerable impact, even if you fall slightly short, we’re still closer than if we set a smaller target.

“Our hope is that by educating people about the help and support available out there it can encourage people to take control of their wellbeing.

"With good education comes good prevention, this is where we’re hoping to encourage the conversation,” says Taylor.

Edwards says there are specific struggles a tradie faces that can take an overwhelming toll on mental health.

“You may wake up one morning and find your ute broken into and all your tools stolen or suffer a work injury that takes you off the tools.

"How do you deal with those lost assets and time on top of everything else? It can be the tipping point for some tradies," he says.

“Through Tools Down, people have approached us to discuss their hardships and need for valuable resources to coach them through times of stress. This is exactly what Tools Down is for and we’re glad people are using it.”

Tools Down is an introductory source for those who reach out via the platform, offering partnerships with specialist organisations across the country best placed to support those who seek help.

“Without the support of AIA Vitality, we wouldn’t have been able to get this platform off the ground," Edwards says.” Click here to read more

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AIA announce new AIA Vitality partnerships, and more daily news

AIA New Zealand has announced that Countdown has replaced New World as the AIA Vitality Active Rewards Grocery Partner. AIA Vitality members can receive a Countdown gift card when weekly Active Rewards targets are met. Members can earn up to $300 worth of Countdown gift cards each membership year when they continue making health-conscious decisions and remain active on AIA Vitality. New Balance has also joined the AIA Vitality partner network, offering members a 30% discount off full priced footwear and accessories. Additional AIA Vitality partnerships are set to be announced next month.

Chief Product and Vitality Officer Len Elikhis has said that it’s great to see the tangible benefits being delivered.  Elikhis shared that 25,000 members received over 164,000 Active Rewards, it was also revealed that members collectively took over 10 billion steps, claimed 3,400 free AIA Vitality health checks, and nearly 1,000 discounted MoleMaps..

“AIA Vitality members can turn their healthy habits into healthy food with the addition of a new Active Rewards Grocery Partner, Countdown.

Members can receive a Countdown gift card every time they reach their weekly Active Rewards target.

Countdown has replaced New World as a grocery partner and also joins Airpoints as an AIA Vitality Status Rewards partner, and members can earn up to $300 worth of Countdown gift cards each membership year by making healthier choices and continuing to engage with the AIA Vitality programme.

“We’re thrilled to have Countdown come onboard as our new Active Rewards Grocery Partner," says AIA NZ chief product and vitality officer Len Elikhis.

"With 180 stores nationwide, we are confident this is a benefit that members will be able to enjoy wherever they live in Aotearoa.”

Members can also get into gear with the addition of New Balance, who have joined the AIA Vitality partner network offering a 30% discount off full priced footwear and accessories.

“As we approach the second anniversary of AIA Vitality in New Zealand, it’s great to see the tangible benefits we’ve been able to deliver for Kiwis,” Elikhis says.

“Our nearly 25,000 members have received over 164,000 Active Rewards and improved their health by collectively taking over 10 billion steps.

“What’s more, our members have taken steps to learn more about their health and wellbeing, by claiming 3,400 free AIA Vitality health checks, and nearly 1,000 discounted MoleMaps.

"By regularly evolving the programme, we continue to motivate our members to live healthier, longer, better lives. With our latest partners, we’re set to take the programme to a whole new level."

Since launching in August 2019, AIA NZ has continued to enhance the AIA Vitality programme to deliver more value and rewards for members.”

In 2020 it launched the Apple Watch benefit, and in March this year welcomed new partner brands Samsung, Event Cinemas, and the Allen Carr Easyway Quit Alcohol programme.

More AIA Vitality partnerships will be announced in August 2021.” Click here to read more

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Quality Product Research: Proposed rating for Agreed Value Income Protection: Occupational Retraining

Introduction

We continually review the ratings of all our benefits and have renamed “Occupational Retraining” to “Vocational & Rehabilitation Support”. Our intention with this review is to make clearer the difference between the features in readiness for more detailed research reports that are in development. Better describing the current variations and recognising that early intervention has the ability to prevent a client’s disability from escalating further and reduces more severe complications that may lead to a long-term claim – a positive outcome for the client, insurer, and employee.

Please find our proposed sub-items below.

Proposed sub-items 

Irsme

Notes

The monthly payment limit differs between insurers, however the necessity to offset is a similar feature. The major insurers (aside from Fidelity) offer coverage for Childcare Assistance, which is likely to be claimed more often than some of the other expenses. Partners Life receives a deduction for “benefit not available for all payment periods” as they do not offer their “Vocational and Retraining benefit” for payment periods which are less than 2 years. Similarly, AIA reduces their monthly payment to 6 months with 1, 2 or 5 year benefit periods. Fidelity is the only insurer that will not pay out the full benefit until the insured has returned to paid work (minimum of 20 hours). AIA, ASB and Partners Life are the only insurers that clearly offer assistance either during or after the waiting period - an important feature, as early intervention can significantly affect the length of a claim. 

Your feedback

We value getting your feedback on how these wordings are being applied to claims you may be aware of. Please email us with details of any recent claims to help us update our understanding.

Doreen Dutt, Research Analyst, Quality Product Research Limited, researcher@qpresearch.co.nz


Quality Product Research: Proposed rating for Agreed Value Income Protection: Rehab and Home Modifications

Introduction

Following on from our previous post on “Vocational and Rehabilitation Support”, we have also reviewed “Rehab and Home Modifications” and renamed the item to “Home Modifications and Equipment”.

Please find our proposed sub-items below.

Proposed sub-items

Equip

Notes

The biggest variation can be seen in the monthly benefit limits. AIA and ASB have limited their payment to 6 months while Partners Life uses a tiered approach (the monthly payment reduces in line with the payment term).

Your feedback

We value getting your feedback on how these wordings are being applied to claims you may be aware of. Please email us with details of any recent claims to help us update our understanding.

Doreen Dutt, Research Analyst, Quality Product Research Limited, researcher@qpresearch.co.nz


New Asteron Life Chief Financial Officer, and more daily news

Suncorp New Zealand has announced that Andrew MacFarlane will join as the new Chief Financial Officer in August. MacFarlane will be responsible for providing strategic oversight and monitoring of financial, actuarial, investment, capital and reinsurance for all of Suncorp’s businesses, which include Vero, Asteron Life, AA Insurance and AA Money. Jimmy Higgins, Suncorp New Zealand CEO, has said that MacFarlane’s experience will be invaluable for Suncorp.

“Suncorp New Zealand has appointed Andrew MacFarlane (pictured) as chief financial officer, effective August 02.

MacFarlane will join Suncorp from ANZ, where he spent 25 years holding several senior finance roles in areas such as its institutional division, retail bank and tax, and product management and strategy. Most recently, he was chief financial officer, group functions for ANZ New Zealand.

In his new role, MacFarlane will provide strategic oversight and monitoring of financial, actuarial, investment, capital and reinsurance aspects of Suncorp’s businesses in New Zealand. These businesses include the Vero and Asteron Life brands, as well as AA Insurance and AA Money, which are joint venture partnerships with the New Zealand Automobile Association.

Suncorp New Zealand CEO Jimmy Higgins said MacFarlane’s extensive industry experience will be invaluable to Suncorp’s business.

“I’m delighted to welcome Andrew to the Suncorp New Zealand leadership team,” said Higgins. “His experience of the financial services markets in New Zealand and Australia, coupled with his leadership within high performing businesses will be invaluable for Suncorp New Zealand as it continues to transform its business, while delivering great customer outcomes.”  Click here to read more

Andrew MacFarlane

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AIA Vitality campaign launches and more daily news

AIA has announced the launch of an AIA Vitality campaign to encourage advisers to share their AIA Vitality experiences. AIA has noted that the campaign is designed to support adviser businesses and amplify health and wellbeing. Chief Partnership Insurance Officer Sam Tremethick has said that AIA is aware of countless AIA Vitality stories and would like to hear more personal stories from advisers and clients. Advisers have the opportunity to share their stories and go into the draw to win a day with one of the AIA Vitality ambassadors. Ambassadors will offer their services throughout the day. Advisers are able to enter the draw until 9 July 2021.

“AIA New Zealand has launched a campaign encouraging its advisers to share their experiences with AIA Vitality, the insurer’s flagship programme.

The campaign’s winners can spend a day with one of the programme’s three ambassadors: Dame Valerie Adams, former All Black Ian Jones, and wellness advocate Jess Quinn. The ambassadors will support the winning advisers in their business for a day, taking part in various activities, such as speaking at a business event, participating in a team activity, or supporting a community project. 

According to AIA NZ, the competition is its way to further support advisers’ businesses with a creative concept, as well as broadcasting its message of health and wellbeing for all New Zealanders. Entries are open until July 09, and can be submitted through the AIA NZ website.

“There are so many amazing stories out there that bring the AIA Vitality journey to life,” said AIA NZ chief partnership insurance officer Sam Tremethick. “We know of advisers who have seen significant mental and physical benefits since joining the program, and clients who’ve shared their own positive personal experiences. We’d love to hear more of these, and how together we’re making a difference in people’s lives.” Click here to read more

AIA_NZ_Bring_Us_With_You_banner

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AIA appoints new BDMs around the country and more daily news

High performance was a central theme in the appointment of several Business Development Managers. Tim Coltman, Anna Corbin, Rakesh Masalawalla, and Hannah Anderson have all been appointed as BDMs.

Tim Coltman has been appointed as the Southern BDM and will be responsible for servicing advisers based in the lower part of the South Island from Timaru and Dunedin through Central Otago to Invercargill.

Anna Corbin is the new Lower North Island BDM. Corbin is based in Wellington and is responsible for servicing advisers in the Whanganui, Wairarapa and Wellington areas.

Rakesh Masalawalla is based in Wellington and will be closely working with key advisers in the Wellington region.

Hannah Anderson has been appointed as the new Christchurch BDM. Anderson will be responsible for looking after the wider Canterbury region. Click here to read more


Screen Shot 2021-06-16 at 4.34.59 PM

 

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