Quality Product Research: Inflation Adjustment item update for Life Cover

Introduction

Inflation is often overlooked when customers are looking to purchase Life Cover. Although it may not be necessary for short term policies, it is however, a valued feature for long term policies (i.e., those that are in place for 20 years or more). 

Sub-items rating review

Hello

Following up on adviser feedback, we have recently added the optional Inflation Adjustment feature to MAS increasing the accuracy of our rating for Life cover for this insurer.

Please note we currently only show the pricing difference between indexed vs non-indexed (as shown below) and the rating for optional items are excluded from the total rating you will see on your research report.

Lol

Notes

The Inflation Adjustment benefit does not significantly vary among providers. Companies differ in expiry age, with Pinnacle being the only that expires at age 60. ANZ bank seems to be the only provider with a deduction for the sub-item “Excludes when premiums are waived”. A significant difference is whether the benefit is optional or included.    

Why is this important?

The benefit would be of high value for those looking to purchase long term policies. To not have this option would have a great impact in the future as you would understand that the cost of living will only increase as time goes on (and so should our Life cover). 

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


Recent Product Updates

QPR subscribers have just received the latest database version (138) it is also live on Quotemonster, the changes in this version include:

* Cigna - new policy document 11/11/2020 -  rating changes applied

* Unimed - new policy document 01/08/2020 -  rating changes applied

* AA Health - new policy document nib366402 and nib366401 effective 01/05/2019 -  rating changes applied

* ANZ Life and Living - new policy document A0006 effective 31/01/2020 -  rating changes applied

* Momentum Life: - New policy document for Life 2633-MLPL2-PW 22/10/2020, New policy document for funeral 2667-MLF6-PW 21/09/2020 - Rating changes applied

* Revised view on: Medical - Treatment (overseas)


Core services focus by banks sees them exit insurance

Current economic conditions are accelerating a recent trend in banking - a focus on core services - as evidence, we offer this series of announcements:

Alongside this, traditional branch services are being cut or slimmed down. This shift to digital was given a further shove by lockdowns so the time is right to re-appraise the value of each branch in the network. In addition to that, the value of each service in the branch is being reconsidered as well. With the decision by ANZ to withdraw from offering cash foreign exchange services being announced: https://www.stuff.co.nz/business/123131192/anz-to-stop-offering-foreign-currency-citing-drop-in-demand-due-to-covid19 

Although perhaps this is not just about economic conditions, but also competitive ones. Digital disruption is coming to the world of banking. A slew of online and consumer lenders has been grabbing attention (and high valuations) on the ASX. More challengers are likely to come. This is prompting a strategic rethink by several banks. The regulatory environment is shifting as well, creating more space for the change:


Australia: insurers responding to the post-Hayne world

Reporting in the AFR highlights the impact of Hayne on different insurance sales models. iSelect has cut staff and outsourced most administrative functions to TAL's Lifebroker. Most banks have exited, or are in the process of exiting, the insurance sector. The fact that these changes are concentrated in the no / low advice portion of the market should be of most interest to us. Similar themes have played out here, whether it was large banks selling life insurance operations (such as CBA and ANZ) or TradeMe selling Lifedirect back to Mark Solomon. Insurance assets are returning to specialist hands - those more likely to see long-term value emerging from them. 


Daily news update: FMA lodges claims against ANZ, and more stories

The FMA has lodged claims against ANZ. The FMA has stated that ANZ charged customers credit card repayment insurance (CCRI) when in fact there was no cover provided for those customers. In June 2019 ANZ notified the FMA of some CCRI policies duplicates and issuing and failing to cancel CCRI policies for ineligible customers while charging premiums on those policies. These issues were identified by ANZ between May and June 2018.

“The Financial Markets Authority (FMA) has filed High Court proceedings against ANZ Bank New Zealand (ANZ), alleging the bank charged some customers for credit card repayment insurance (CCRI) policies that offered those customers no cover.

The FMA proceedings have two causes of action. Firstly, that ANZ issued duplicate CCRI policies to some customers, which provided no additional benefits or cover, and charged premiums on those policies, during the period April 2014 and November 2019. Secondly, ANZ issued and failed to cancel CCRI policies for ineligible customers, also charging premiums on those policies, during the period 1 April 2014 – May 2018. These two issues relate back to at least 2001. However, the FMA claim reflects the introduction of the Financial Markets Conduct Act 2013, which came into effect from April 2014.” Click here to read more

In other news:

RBNZ: RBNZ is set to work on South Pacific Remittances, Climate Change and their Te Ao Māori strategy.

RBNZ: RBNZ have acknowledged the efforts of the financial sector in meeting the needs of customers.

FMA: Time for financial advisers to step up on KiwiSaver


Financial sector meetings disclosed by Minister Faafoi

28 Apr 2020 – Minister of Commerce March diary released. Finance sector meetings disclosed included:

  • 6 March - Speak: Westpac and Mastercard's Inclusive Growth Symposium
  • 6 March - Meeting with AA Finance and Suncorp (Paul Smeaton, David Flacks, Ana-Marie Lockyer, Marie Hosking, Helen McNeil and Clayton Cosgrove)
  • 18 March – Meeting with Retirement Commissioner
  • 20 March – Conference call: ANZ (Antonia Watson)

Australia: ANZ reveals remediation team and process

In Australia, ANZ has reported that they have a team dedicated to compensating victims of fees-for-no-service. ANZ has 500 people working in the customer remediation team and an additional 500 people working on remediation with other business units. Shayne Elliott, CEO, has said that the remediation program is made up of two parts and has paid out $1.6 billion over the last three years.

Wow. 

Click here to read more


Promoting insurance in languages other than English

AIA New Zealand has translated their core insurance brochures into simplified Chinese for each of the following benefits: AIA REAL Life, Health, Trauma, TPD, Cancer Treatment Benefit, and Mortgage, Income and Rent Cover. AIA’s in-house sales team, the Financial Services Network (FSN) also has advisers capable of offering discussions in advisers in Mandarin, Cantonese, English, Hendi, Gujrat, Marathi, Urdu, Punjabi, Tamil, Malayalam, Hokkien, Teochew, and Japanese.

Fidelity Life offers a Chinese language version of their corporate profile to assist that segment of the migrant market. They maintain an informal register of staff with different language capabilities and use that to help support clients with difficulties in English.

ANZ produce copies of insurance material in Chinese, which summarises the types of insurances ANZ offers. Including general and travel insurance. The development of this brochure aligns with ANZ’s migrant strategy. At this stage ANZ offers no other languages, although it states that it continuously reviews the requirement for other non-English brochures.