Aon look to acquire Willis Towers Watson, and more daily news

After announcing its acquisition plans in March 2020,  Aon has submitted an application to the Commerce Commission to acquire Willis Towers Watson. Aon is looking to incorporate the five Willis Towers Watson offices across the country into wholly owned subsidiaries.

“New Zealand’s Commerce Commission has received Aon’s clearance application to acquire the entirety of Willis Towers Watson, as part of a global transaction.

The step was revealed by a statement from the commission, which is New Zealand’s competition, consumer and regulatory agency.

In New Zealand, Aon and Willis Towers Watson both offer a range of insurance brokerage services, including for commercial insurance, reinsurance, group health and welfare benefits, and personal and life insurance. Both firms also provide investment consulting services to institutional investors.

Aon has 58 offices across New Zealand, while Willis Towers Watson has five – Auckland, Wellington, Christchurch, Tauranga, and Dunedin.

Under the proposed transaction, Willis Towers Watson will become a wholly owned subsidiary to Aon. According to the Commerce Commission, it gives clearance to a merger application if it is able to successfully prove that that the deal is unlikely to have the effect of substantially lessening competition in a market.” Click here to read more

In other news

AMP KiwiSaver scheme to go passive, and slash fees

Strategi: The new Privacy Act 2020 2pm webinar

RBNZ: Reserve Bank seeks to preserve benefits of cash


Southern Cross offering domestic travel insurance, and more daily news

Southern Cross Travel Insurance has announced that it will be offering customers domestic travel insurance product.

Customers will be offered:

  • Cover for cancellation of your flight and accommodation if you can no longer travel
  • Cover for accommodation and other expenses if your flight is delayed or cancelled
  • Cover for your luggage and other personal belongings if they’re stolen or damaged
  • Cover for excess charges if you have an accident in your rental vehicle
  • Cover for the kids if you’re delayed getting home and need to pay for extra childcare costs
  • Cover for your furry friends at the kennels if you’re delayed getting home

Click here to read more

In other news

Kiwis with advisers end up significantly better off - research

AMP Australia: AMP advisers call for government inquiry over alleged fraud, deception


Financial Advice conference recipient of Government funding, and more daily news

It was announced that MBIE’s $10 million Domestic Events Fund was set up to support events. Financial Advice NZ has been named as one of the 200 recipients.  The funding was granted to Financial Advice NZ for their 2020 Bounce conference.

“The $10 million Government fund was set up to support the events industry despite the disruption of Covid-19.

Financial Advice NZ received funding for its conference this year, which is set up as a series of roadshow events across the country. The events can be attended online or in-person. The association will decide this weekend whether to go ahead with an in-person Auckland event.”

Katrina Shanks has said that the funding is fantastic and would allow them to have certainty.

“Financial Advice NZ chief executive Katrina Shanks said the funding would allow the association to have some certainty as it worked with the events company delivering its conference this year.

“It’s fantastic for them. It’s yet another industry that’s had a huge hit from Covid.” Click here to read more

In other news:

AMP: AMP announced that it is considering selling all, or some, of its assets, various stories, but this one in the AFR is recent

Partners Life: Expressions of interest is now open for the September 2020 New Adviser Training Course

RBNZ: Same objectives, different challenges


Client outraged after life insurance premium doubles, and more daily news

A couple that took out a life insurance policy with AMP over 30 years ago is outraged that their monthly premiums have doubled from $165.90 to $296.50. They were informed of the changes in a notification letter that stated that their policy would be cancelled as a result of a missed payment.

“An elderly Havelock North couple feel "scammed" after their life insurance premiums are set to almost double, despite signing a contract for life more than 30 years ago.

Hilton and Trish Kyle took out a life insurance policy with AMP in November 1988, with a monthly payment of $165.90.

But Hilton, 69, said they received a letter stating failure to pay a missed payment would see their policy cancelled.

The letter also stated that their premiums will increase to $296.50 per month.”

The couple had set up an automatic payment system, and so when receiving the letter, the couple voiced their disapproval. AMP Life’s investigation found that there was an error in the automated mail system.

“"They are taking advantage of us. It makes us feel terrible," he said.

"We've had an automated payment set up with ANZ for the 32 years.

"We were gobsmacked to be treated like this from AMP. These buggers need to be exposed."

An AMP Life spokeswoman apologies for any distress the letter may have caused the Kyle's and said an automated mail system caused the issue.

"We have investigated this issue and it appears to be a mistake driven from an automated letter," she said.”

Regardless of the investigation findings, the couple have until 5 September 2020 to pay to stop the policy cancellation.

“The couple, who have until September 5 to pay their outstanding premium charge before policy cancellation, say they would stay with AMP if the premiums were reverted back to their original monthly totals.”  Click here to read more

In other news

Hybrid model helps online firm fill gap in KiwiSaver

Nib: Episode 4 of the nib to hold webinar series focusing on intelligent underwriting

FSC: Professional Advice Knowledge Hub now available to view information on FSLAA regulation changes, webinars and research and other resources

Financial Advice: Bring in the Experts: Rhiannon McKinnon to discuss the "State of the Investor Nation" report


FSC looking for industry insights for new study, and more daily news

The FSC is seeking participants in a survey that relates to the three-part study Money & You. The survey is working to gather data on the views of those in the professional advice industry on the challenges faced within the industry and how New Zealanders can be better served. The survey is designed to take 12 -15 minutes to complete. The results will be published later in the year. The first part of the study was focused on the feelings and knowledge of money of New Zealanders and the second component of the study worked to understand the relationship New Zealanders have with money.

Click here to participate in the survey

AMP: AMP management overhaul keeps its risks “on the downside”

Kiwibank: Kiwibank claims negative OCR is unnecessary

Fidelity Life: new September Sharecare challenge is to achieve a minimum of 20 Green Days for a chance to win a subscription for a ‘Delight Gift Box’ from I AM Co

Fidelity Life: new September Sharecare challenge to track your sleep for at least two weeks to go into the draw to win a $250 Wallace Cotton voucher


Industry reacts to disclosure regulation draft, and more daily news

The submissions on disclosure regulations have been released by MBIE. Although the response was largely positive, some concerns were raised about the disclosure requirements set to come into place on 15 March 2021.
 
AMP highlighted the risk of repetition without addressing issues currently being undervalued by consumers. To ensure value is added AMP suggested that disclosures need to be simple and brief, something AMP doesn’t believe has been achieved by the current draft.

“AMP said there was a risk that the disclosure would end up being repetitive and not address the issue of long, impenetrable disclosures not currently being valued by consumers.

 

“For benefits to be delivered to New Zealand consumers it is essential for disclosures to be simple, meaningful, very brief and unobtrusive. We do not consider that these aims would be met with the regulations as drafted.”

 

Under the new rules, advisers are required to disclose any commissions or incentives they receive that a reasonable client might think might materially influence their advice.”

While Financial Advice said that a reasonable person wouldn’t have a good grasp of identifying conflicts of interest within the industry and that the regulation could be strengthened by having higher standards in place. Financial Advice highlighted that there are many references to ‘incentives’ so including a definition and reference to ‘disincentives’ would be valuable. 

“But Financial Advice NZ said a reasonable client would not expect to have a good grasp of identifying conflicts of interest in the sector.

 

“The regulation could be strengthened by having a higher standard, such as – ‘any interest of A, P, or any other person connected with the giving of the advice that has the potential to influence the advice given by A’.

 

“There are various references to ‘incentives’. We recommend including in the regulation a definition and reference to ‘disincentives’ as well. For example, a reduction of commission rates for low volumes could escape the disclosure regime. Disincentives is an area that is often overlooked and should be drawn attention to, so FAPs and advisers cannot avoid their disclosure obligations by saying ‘this disincentive is not technically an incentive’.”” 

AIA stated that there should be further clarification on was is “practicable” for advisers to include and highlighted that this would cause significant issues for financial advice providers. Although AIA doesn’t see this as an issue as they are prepared to invest in the appropriate systems to aid advisers. 

“AIA said there should be more detail on when it was considered “practicable” for advisers to include in their disclosure the amount of fees payable by a client connected to the advice recommendation.

 

“This is a significant issue for financial advice providers. For AIA NZ, significant system investments will be required to provide estimates. While AIA NZ anticipates making this investment, we are concerned that other providers may choose not to do so, and instead elect not to provide estimates on the basis that it is not practicable to do so. This is an undesirable outcome for consumers which we consider could be avoided by better articulating the circumstances when providers may elect not to provide estimates.” Click here to read more

In other news

FSC: Generations Conference will no longer take place

Kepa: Kepa Compliance Officer’s Course was held in partnership with Rosewill Consulting  

Fidelity Life: Fidelity Life were announced as finalists in Best ICT Team Culture category in the 2020 CIO Awards

Fidelity Life: new applications are encouraged to be done through e-App

Fidelity Life: options for alteration requests are:

·       emailing signed alteration requests to admin.services@fidelitylife.co.nz

·       email from the individual policy owner’s email address

·       Mailing to Customer Care, Fidelity Life, PO Box 37-275, Parnell, Auckland 1151


nib financial growths amid COVID-19, and more daily news

nib New Zealand announced that the 12 months to June 30 2020 has been an overall successful year for the insurer. nib experienced a 10.2% growth in revenue to NZ$253.1 million while also prioritising their efforts to support members and the community through COVID-19 related relief and other initiatives. The underwriting results also increased 11.2% to a total of NZ$25.9 million.

“nib New Zealand today announced an improved operating performance for the 12 months to 30 June 2020 (FY20) lifting membership, revenue and earnings.

nib New Zealand premium revenue grew 10.2% to NZ$253.1 million while underwriting result was NZ$25.9 million, up 11.2%. The FY20 underwriting result includes a NZ$9.0 million COVID-19 deferred claims provision for an expected claims catch-up in healthcare treatment deferred during the peak of the COVID-19 that is expected to occur in FY21.

nib New Zealand Chief Executive Officer, Rob Hennin, said nib performed well in FY20, reporting good financial results alongside its strong focus on supporting members and the community throughout COVID-19.

“Helping our Kiwi members stay safe and healthy throughout the COVID-19 pandemic has been a priority, which is why we moved quickly to implement an extensive support package,” Mr Hennin said.”

As part of their member support initiative nib has provided COVID-19 financial hardship support to over 2,000 members, premium relief and suspension options to over 5,000 members, extended cover for COVID-19 related treatments, expanded GP and specialist consultations through telehealth, and extended treatment pre-approvals.

““To date, we’ve provided more than 2,000 Kiwis members with access to financial hardship support, including premium relief and suspension options, postponed premium increases for over 50,000 members and extended coverage for COVID-19 related treatment across all levels of hospital cover, at no extra cost.

In addition, we expanded cover for consultations with GPs and specialists through telehealth, ensuring members could continue to see their medical practitioner during severe lockdown restrictions. We also extended treatment pre-approval from three to six months, meaning over 1,000 members did not have to reapply for surgery approval if they experienced delays in accessing hospital treatment."

In partnership with nib foundation, nib has donated $1 million to Lifeline Aotearoa and Clearhead as part of their community support initiatives.

"Further, we made a $1 million donation, together with nib foundation, to Lifeline Aotearoa and Clearhead, helping support our communities and the ongoing mental health needs of New Zealanders,” he said." Click here to read more

In other news:

Nib: Episode 4 of nib’s webinar series is set to stream September 2 2020 at 11:30am 

AMP: AMP makes top-level changes amid allegations

Asteron Life: Asteron Life profit drops

RBNZ: RBNZ to lead Asia-Pacific Central Banks working group

Financial Advice: Economic update by Economist Tony Alexander


Ditching the life insurance business appears to be just the start of a long process for AMP

David Chaplin of investmentnews.co.nz reports that the Just-appointed AMP Capital chief, Boe Pahari has resigned along with AMP chair, David Murray, following intense pressure over a sexual harassment incident. The scandal has also claimed AMP director, John Fraser, who resigned at the same time. More details at this link https://investmentnews.co.nz/investment-news/pahari-murray-gone-as-amp-capital-scandal-bites-back/


Importance of focusing on replacement business, and more daily news

Engagement in replacement business has been a focal point of regulators in previous years and the introduction of the new regime will mean that advice on policy replacement will be closely monitored. During an FSC Get in Shape webinar Steven Burgess from Compliance Refinery highlighted that the FMA has identified replacement business as an area that has the highest risk associated with it.

“Advisers engaging in replacement business have been under intense scrutiny from regulators over the past several years, and the new financial advice regime will ensure that close attention is paid to the details when replacing a customer’s existing policy.

As part of the FSC’s ‘Get in Shape’ programme for advisers, Steven Burgess, of Compliance Refinery, says the FMA has determined replacement business as an area ridden with potential risk. He says advisers will have to be extremely thorough in explaining the benefits, and, most importantly, the potential negative impacts of replacing a policy, and it will no longer do to simply quote a cheaper price.

“Replacement business is an area the FMA has determined as an area of ‘highest risk,’ and rightly so,” Burgess said.”

Steve suggests that advisers focus on providing comprehensive advice to clients. This means first understanding the different product offerings to ensure clients make informed decisions.

““That’s an area that advisers should be focusing on a lot more. It is much higher risk to potential customers, and it’s an area where you really need to be providing comprehensive advice to clients. You can’t limit the scope of that advice.”

“You need to make strong comparisons between what the old product was, and what the new product would be,” he explained.

“It’s really important that you get right down into the actual product details, so you can outline it and say “this is what you used to have, and these are the differences between that and what I’m recommending.” The more detailed the better, because these are the areas where the client can come back and tell you that they don’t have some sort of benefit or cover that they used to have, because they didn’t understand those differences.”

Burgess says that at the heart of it, advisers need to be extremely sophisticated in their understanding of various insurance products. He says risk is an area in which customers are usually the least knowledgeable, and it’s the adviser’s job to clearly lay out the risks specific to them.” Click here to read more

In other news:

Financial Advice: the Money Week event at the Base in Hamilton has been cancelled as a result of lockdown

Fidelity Life: Fidelity Life adds to board

AMP: Shake-up at AMP