Cigna unveil product enhancements and new quoting software

Cigna has unveiled their new quoting software that allows advisers to generate quotes in real-time. Additionally, Cigna is looking to improve Assurance Extra, Business Assurance, Business Extra, and Agribusiness Extra product suites.

“Cigna New Zealand has rolled out a new online quote tool for its insurance advisers - the first in a series of planned improvements to help advisers work more efficiently.

CEO Gail Costa says the tool will allow advisers to obtain quotes in real time, giving them access to Cigna’s most up to date plans and pricing. It will also allow them to access both personal and business products at the same time.”

Gail Costa provided further insight about the software by stating that:

“This is a new kind of technology used for quotes, and it is an intuitive tool that uses all of the latest user experience ideas,” she explained.

“It also plugs into the medical database, and this makes it much easier for advisers to get accurate quotes for their clients, and also identify any other benefits they may need.”  Click here to read more

In other news:

Australia: ASIC cracks whip on three financial advisers

Suncorp: Suncorp reveals results and pandemic hit

Back to the office on Thursday (if you want)

Advisers complain about narrow rebate time limit

FMA: Cyber-resilience in FMA-regulated financial services

ASIC reminds Australian Industry the regulator is watching

ASIC has reminded life and general insurers that they are watching. In a recent letter (see this link: they have offered some relief from immediate data demands, while reminding the industry of the need to meet conduct obligations. 

Here in New Zealand Minister Faafoi has been more friendly, which is perhaps more appropriate given the nature of our own conduct review.

Australia: Westpac penalised $9.15m for poor advice

Westpac in Australia has been fined $9.15 million after Sudhir Sinha, a former Westpac financial planner provided poor financial advice on multiple occasions. 

ASIC noted that the Court found Mr Sinha failed to act in the best interests of his clients, provided inappropriate financial advice, and failed to prioritise the interests of his clients, in four sample client files identified by the regulator.

Click here to read more. 


Australia: ASIC set to ban cold calling

The Australian Securities and Investments Commission (ASIC) is set to ban cold calling for life and consumer credit insurance sales from January 2020. This has change has been justified as addressing poor sales practices that ASIC believes has led to unfair consumer outcomes. This ban will not apply if the marketer provides the person they are calling with personal advice. It is another sign of the shift in conduct expectations that creates an incentive for a financial provider to choose to step into advice provision and the supervisory regime that surrounds it. We may experience similar incentives in this market. Click here to read more


Australia: CommInsure pleads guilty to hawking charges

Lucas Baird at the Australian Financial Review writes that CommInsure has pleaded guilty to 87 breaches of anti-hawking laws:

"In all of the 87 calls charged, CommInsure did not comply with the requirement to offer the customer the option of having the information required to be included in the Product Disclosure Statement for Simple Life read to them prior to the offer to issue or sell the product," ASIC said in a statement.

The regulator said that in 14 of the calls charged, CommInsure also failed to give customers a product disclosure statement before becoming bound to acquire Simple Life; and failed to clearly inform the customer of the importance of using the information in the statement when making a decision to acquire Simple Life.

You can read the whole article at this link - although you may need a subscription. 

Australia: adviser negligence results in seven-year ban

Ian Victor Haisman, an Australian adviser has been banned from providing financial services for seven years by that Australian Securities and Investments Commission (ASIC). The ban was implemented as a result of his failure to act in the best interests of his clients. Ian Victor Haisman’s advice files were investigated by ASIC from 2016 to 2018. The investigation concluded that:

  • He didn’t adequately investigate his clients’ existing superannuation and insurance arrangement or provide product cost and risk comparisons when recommending an investment strategy which involved product switching
  • He recommended very high levels of insurance cover compared to his clients’ income and cases when he recommended life insurance policies to clients with no known dependents and no reasonable basis for the policies
  • He failed to provide statements of advice that were clear, concise, and effective to all his clients, the corporate regulator said

It is good to see regulators recognising insurance impacts in what are primarily investment decisions. That is a level of understanding of the interconnectedness of these issues which it would be good to see more of. It is important to focus on the comment about needing a reasonable basis for the policies. That was a major theme in a discussion I had yesterday with a bank and an insurer - the 'why' is important because it determines whether the customer will get benefit from owning the cover. Without it we are setting ourselves up for disappointment, lapse, claim failure, and damage to reputation. Everyone: not just insurers, but advisers too. Losing a licence, and therefore a livelihood, is no fun. 

Click here to read more

ASIC: no-one reads the PDS and what it means for contracts

ASIC has stated disclosures have been assumed to inform consumers to make good financial decisions, but in the real world they are much less effective than those writing them might have wanted them to be. I am sure that most people do not read the PDS. Likewise, most people don't read their insurance policy documents. They are too long, and customers are probably assuming that they would find it too hard to understand. They are probably correct in that assessment.

This is an immensely difficult area - because in an intangible purchase the contract is very, very, important. This is also a problem not limited to insurance: increasingly intangible services come packaged with legal agreements that are dozens of pages long, that would be read by fewer than one in a hundred people. Did you read the updated terms and conditions for the Apple Store when they popped up last? What about the terms for Amazon Prime? Instagram? Seemingly small differences in contracts can have large impacts on claims: consider how hard it is for a consumer to properly understand the difference between income minus offsets multiplied by 75% and 75% of income minus offsets. 

What is to be done? 

I don't agree that the contract is meaningless. We cannot issue insurance without a contract, and the contract has to mean something. We can't have a contract based on what the client wishes they had bought at the time the claim arises. This is a complex problem for which there is no one answer, but several strategies working together in concert. Consumers can buy complex packages of services and contract with confidence when these are all deployed together. Plain English policy wordings help. So do minimum standards, so it is valid for regulators to ask the question about products with very low rates of accepted claims, and low claims as a proportion of premiums. Policy comparison tools are important too in helping to shine a light on the most important features and clauses (of course I think that, owning half of Quality Product Research Limited). Advisers have a particularly important role to play: in explaining the likely terms, providing examples of how the policies work in the real world, and through past claims experience, showing confidence in the claims paying intent behind each policy. New technology and new attitudes can work wonders as well: automating some aspects of the claims process would be marvelous.

Click here to read more about the ASIC statement that sparked these thoughts. 

ASIC report focused on mortgage brokers

The Australian Securities and Investments Commission (ASIC) recently published a report which was based on the observations of 300 consumers that we currently in the process of taking out home loans and on a survey of 2,000 consumers. the report was released shortly after the federal government introduced the National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019.

The key points of the report are:

  • consumers who visit a mortgage broker expect the broker to find them the “best” home loan
  • mortgage brokers were inconsistent in the ways they presented home loan options to consumers, sometimes offering little (if any) explanation of the options considered or reasons for their recommendation
  • first home buyers were more likely to take out their loan with a mortgage broker

ASIC commissioner Sean Hughes has made a statement about the responsibilities of lenders, brokers and aggregators, saying that they “must step up” to ensure that it is  “easier for consumers to meaningfully compare loan options”. 

Click here to read more

Australia: Consumer credit insurance harmful to consumers

In a recent review of the sale of consumer credit insurance in Australia by ASIC has found "unacceptable sales practices, poor product design and significant remediation costs in CCI sold by major banks and lenders." 

ASIC’s review found that:

  • CCI is extremely poor value for money – for CCI sold with credit cards, consumers received only 11 cents in claims for every dollar paid in premiums. Across all CCI products sold by lenders, only 19 cents was recovered in claims for every premium dollar which consumers paid.
  • CCI sales practices caused consumers harm:
    • consumers were sold CCI despite the fact they were ineligible to claim under their policy
    • telephone sales staff used high-pressure selling and other unfair sales practices when selling CCI, and
    • consumers were given non-compliant personal advice to buy unsuitable policies.
  • Consumers were incorrectly charged for CCI, including being charged ongoing CCI premiums even though they no longer had a loan.
  • Many lenders did not have consumer-focused processes to help consumers in hardship make a claim under their CCI policy.

I think it worthwhile highlighting the issue of consumer harm and the costs of remediation: 

  • ASIC’s work has led to a significant remediation program expected to exceed $100 million paid to over 300,000 consumers. To date, over $51 million has been paid to over 186,000 consumers. ASIC’s work to secure further compensation will continue.

It is important to highlight that with a change in stance at regulators harm can result in hard liabilities. To read the summary click here to read more in the report itself, click here.