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.
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.
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)
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.
ANZ's cash net profit increased 2% to $1.933 billion for the year ending September 30, 2019. Last years ANZ sold OnePath Life to Cigna and also divested its 25% stake in Paymark. Click here to read more.
As of 1 December all the materials that were branded with both ANZ and OnePath are now branded with just OnePath.
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.
ANZ paid to survey over 1,500 Australians and New Zealanders to explore their financial knowledge, attitudes and behaviours in late 2017. The survey found that one in four Kiwis have no cash savings.
The absence of cash savings is of particular concern. Cash savings should be the first kind of insurance you buy - having a little money in a savings account can avoid all sorts of trouble. I teach my kids the value of having a bit put by - whether it is the unexpected invite for a friend's special occasion, a lost wallet, or an unplanned expense, the money is always useful.
Antonia Watson, ANZ's managing director of retail and business banking: "While most New Zealanders feel they are doing OK with money, we have a significant number without savings to fall back on."
The lack of savings has an impact on the insurance planning for this group - with a couple of exceptions. Many of these people will also be people that have no insurance - in effect, doubling down on their risk. For those that are very young, with family who can step in with help, and just starting out on their employment journey, this is perhaps something to be expected. Occasionally, everyone can get a bit stretched: between jobs for a couple of months, or stretching to buy a new house can create a similar cash crunch. That's not so bad if you have non-cash assets that you could always sell - and perhaps a little flexible credit facility to help you smooth out the bumps in between. But those two segments added up, should surely no equal a quarter of the adult population.
Chatswood's Bank and direct price comparison survey has been updated and is available for purchase. Please contact me directly for more details of the changes since the last update was done in April 2017.
I confess I was surprised to see this appear as a new article, because I thought it was already clearly for sale.