Health insurance: the problem with claims tied to the level education of the provider

Health insurance can be a driver for health treatment claims costs. Take this simple summary of the ear wax removal scenario sent to us by a person claiming on their health insurance. This is a common requirement for older people, and the claim situation indicates ways in which insurance may drive the wrong behaviour in procedure costs:

  • There are range of people competent to complete assessment of the need and to complete ear wax removal including, for example, registered audiologists, registered nurses and others such as enrolled nurses and presumably audiologists who, for whatever reason, might not be on the audiologist register.
  • There is a fee for the procedure. For example, Ear Health charge Gold Card superannuitants a discounted rate of $59.
  • A claim can be submitted to a major health insurer for the consultation and the procedure.
  • The amount the insurer will refund depends upon who does the consultation and procedure, up to approximately $200 for a registered audiologist, $30 for a Registered Nurse, and zero for anyone else that completes exactly the same procedure. We presume this is a cost control measure - but we suspect it is working precisely in reverse of how it is intended to operate.
  • Hence, competence is not the measure used to determine whether a claim will be admitted, and the rate of reimbursement, rather the educational / professional status of the individual doing the consultation and ear wax removal.

In our view, this leads to a perverse outcome as it appears on the face of it to be in the interests of the client to insist that an audiologist complete the procedure, even at a higher cost, if necessary, because the full cost can then almost certainly be claimed in contrast to the situation where a Registered Nurse or someone else does the work.

We think this is the worst outcome for everyone, as the audiologist spends expensive time doing menial work, the insurer pays out a higher amount, and the client presumably ends up with a risk of higher premiums or reduced discounted premiums because of claims.

One is tempted to suggest that somewhere a registered audiologist has already figured out that they could complete a very quick assessment, charge like a wounded bull, and passes the client on to someone else in-house to do the cleaning at no extra charge. Could other examples be given: of course.

Quality Product Research: Medical - proposed rating Grief & Funeral Support


We have recently conducted a review on our Death/Funeral item within medical. To align with all our other benefits, we have renamed this item “Grief and Funeral Support.”

Item weightings

Amount score: how much would be paid as a percentage of our total estimated value of claims over the estimated typical policy life.

This is difficult to determine within medical as multiple claims for different benefits could be made during the life of a policy. To combat this, we have created a claims model which assumes that an insured person will hold their medical cover for approximately 12 years, during this period, they will make a total of $30,000 worth of claims (if you would like more details please feel free to ask us for a copy of the model). This is only an assumed amount for our model, based on a typical claim pattern for commonly claimed services. In reality, the amount could be less or more.

Frequency: how often the benefit would be paid.

Incidence: how likely the benefit is to be claimed.

Please see our table below for details figures listed by each provider. Should you wish to send us through any data that can help us to revise this model please feel free to email us.

Sub-items rating review

Please find our proposed definition re-rate below:

GriefYour 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 Manager, Quality Product Research Limited,

nib completes purchase of Kiwi Insurance and more daily news

Kiwi Group Holdings Limited (KGH) today announced it has completed the sale of its life insurance business, Kiwi Insurance Limited (Kiwi Insurance), to nib NZ holdings limited (nib New Zealand) for NZ$45 million. More from the Kiwi Group media release:

The sale was announced in November 2021 subject to regulatory approvals which have now been received.  

Under the deal, nib New Zealand has acquired all the shares in Kiwi Insurance and entered an exclusive partnership with Kiwibank (a wholly owned subsidiary of KGH) where the bank will refer its retail customers to nib for their life and living insurance needs. 

Kiwibank Chief Executive Steve Jurkovich said Kiwi Insurance customers did not need to do anything as a result of the sale and that they were in good hands with nib. 

“I’m excited about this new partnership with nib which will allow Kiwibank to continue to deliver on its purpose of making Kiwi better off, whether that’s getting into a home or having the right insurance in place to protect what matters most,” Mr Jurkovich said.  

nib New Zealand Chief Executive Officer, Rob Hennin said they were committed to providing a seamless transition and ongoing great service to current customers including honouring all current policy benefits. 

“We look forward to welcoming current customers into the nib family and offering all Kiwi access to a suite of life and living insurance covers in line with our purpose of your better health,” Mr Hennin said. 

Advisers I spoke with were still not aware of the purchase of a life insurer by a major health insurer and expressed interest in the prospect of the creation of another 'full range' insurer to join AIA and Partners Life.


More daily news:

Financial Services Council announced that, in partnership with the Commission for Financial Capability, it had begun “a three-month, pan-sector campaign to take meaningful action to improve the financial wellbeing of our wāhine.”

Vehicle insurers are seeing a return to pre-pandemic claims costs.

ANZIIF has announced two new board members.


Consumer magazine on mental health underwriting and more daily news

In April, Consumer Magazine published an article on the underwriting of mental health conditions. My thoughts on the article are below:

Positives: the article is a good vehicle for the complaints levelled against the insurers, relying mainly on the Beyond Blue report from Australia and some good personal stories from applicants.

Problems: while calling for fairness, it fails to explore in detail how underwriting is done, what is meant by unfairness, or the complex issue of fairness to other policy holders and the effect on them. There is no exploration of the economics of underwriting or how the proposed changes would affect the market. There are serious issues to consider in the underwriting of mental health problems, as there are with many others. One the one hand questions are criticised for not being personalised enough, on the other hand they are criticised for being too ‘invasive’. There does not appear to be a clear idea of what good looks like.

As a publication meant to enable consumers to make better choices about products and services to acquire, I was left wondering, as a consumer, what this article was suggesting - it seemed not to guide consumers either towards or even away from any specific product but could easily put off applications from people with mental health problems, when in fact a lot of cover is available for them, and a lot of good work is done in underwriting to enable insurance to work for the whole risk pool.


More daily news:

  • Financial Advice New Zealand is running a licensing workshop with the FMA on the 27th
  • The FMA is also running a licensing event supported by Partners Life and Fidelity Life on the 5th of May - details here.
  • FANZ also has the details of a member survey on adviser attitudes towards the government proposed income insurance scheme - 23% support the idea, while many are undecided or would prefer a scheme in partnership with industry (more like KiwiSaver).


Fidelity Life introduces new claims information and more daily news

Fidelity Life has released lots more claims information. I love good claims information and this has much to commend it: an overall claims paid percentage (93%), a release of process information, summary statistics (including average age of claims) and case studies. From their media release: 

At the heart of the new content is Fidelity Life’s claims promise, which sets out the standards of care customers can expect at each and every interaction during their claim.

Other useful content includes a step by step guide to making a claim, information on the most commonly claimed conditions and why not all claims are accepted, and videos with real customers sharing their claims stories.

“This new material, written in plain English, aims to give customers clarity on what they can expect when it comes to making a claim, and provide reassurance that we’ll support them during this often stressful time”, says Peter.

The new claims content can be found on Fidelity Life’s website, along with another recent content initiative: Insurance 101.

More daily news:

  • Would you like to check out the new Quotemonster website? Give us a call to get access now
  • Consumer has published an article on how mental health issues are underwritten
  • Goodreturns has a survey of advisers on the government-proposed income insurance scheme Link.


New Zealand's shameful road toll and more daily news

Long weekends always mean a spate of road deaths. I pray that this weekend there are few. Recently the New Zealand Herald published this article on the issue of people sitting in the right hand lane on multiple lane highways or passing lanes preventing speeding cars from overtaking. Who is right? New Zealand's Automobile Association (AA) says that this is one of the most-often asked questions. But buried inside the report are these shocking statistics, of great relevance to those of us that care about life and death, and New Zealand's shockingly high rate of road traffic accidents:

New Zealand averaged just under eight road deaths per billion km - worse than more than 15 European countries and the US. In comparison, Australia averaged just over four road deaths per billion kilometres. Denmark, a similar-sized country to New Zealand, registered around three road deaths per billion vehicle kilometres travelled.

If we managed to get down to the level of Australia? What would that do?

The Auckland Road Safety Business Improvement Review 2021 found that if New Zealand's road safety conditions matched the state of Victoria in Australia - which has a population of around six million - approximately 124 fewer New Zealanders would have died on our roads in each of the last three years.

That's a lot of people who we could save and it isn't all about lower speeds either - after all, several European countries have better road safety than us and permit higher speeds.


Other daily news:

  • A client base in the north of the South Island is for sale, contact us for more details
  • Have you recently worked in the UK as a financial adviser? If so, we would love to talk with you
  • Gen Re is hiring, seeking a pricing actuary to join their Sydney team



Legal and regulatory update for the life and health insurance sector

14 April 2022 – Commission for Financial Capability highlighted that the Cancer Society and have teamed up to create a new financial and legal resource for New Zealanders facing a serious or terminal diagnosis. The recently launched life guide is the first step towards helping make the financial journey of patients easier to navigate.

14 April 2022 – NZ Markets Disciplinary Tribunal released its 2021 Annual Report.

Quality Product Research: Medical - Major review process commenced for UCR Limit


Medical insurance is one of the most hotly contested areas of product comparison. Adjustments are made frequently to our Research to keep up with changes, however it’s still a complex and difficult product to compare. Following a challenge by a rated company to our methodology for assessing UCR/EMP/network limits, it’s time we reviewed the method of how insurers apply UCR Limits and have therefore started the process of a major review of this item.

Theme of review

We would like to begin by renaming the item from “UCR Limits” to "Network or market price limits/UCR"

Our review seeks to categorise and evaluate the impact of the following:

1) No requirement to use specified providers/network and no UCR/EMP

2) Requirement to use specified providers/network

3) UCR/EMP applied to all costs (including specified providers /network)

4) UCR/EMP applied to only non-network costs

5) UCR/EMP applied only specific sets of costs (e.g., overseas)

Review process

We will begin by alerting insurers of our plan to review, including the five points above anticipating they will respond with which applies to their product with appropriate references to their policy document.

Once all required information has been collected, we will make the appropriate changes to our database and share our new rating on our social platforms for further feedback.

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 Manager, Quality Product Research Limited,

Partners Life announces changes to COVID amendments, and more daily news

Partners Life has announced that the temporary amendments to Premium Holidays and Policy Suspensions will be reverted back. Below are examples of when customers are eligible for Premium Holidays and Policy Suspensions.

“On the 17th August 2021, we extended our financial assistance offering to assist clients who may have been financially impacted as a result of

COVID-19 restrictions, so that they could have the best chance of retaining their valuable cover in the longer term.

With the country having moved into the ‘Traffic Light’ settings of the COVID-19 Protection Framework and with Level 4 Lockdowns behind us, we feel the time is right to revert to the original criteria for Premium Holiday claims and Policy Suspension claims, as documented in the policy wordings.

For your reference, below is a brief summary of when your client may qualify for a Premium Holiday claim.

If the Life Assured undergoes any of the following:

Redundancy; or Bankruptcy; or Leaving paid employment to become a full-time caregiver to a spouse, de facto partner or Civil Union partner who for the first time requires such care as a result of an illness or injury; or Leaving paid employment to become a full-time caregiver to a Dependent Child who for the first time requires such care as a result of an illness or injury; or Death of a spouse, partner or child; or Natural Disaster where the event affects a life assured’s ability to undertake their usual work and where interruption is likely to last more than thirty days; or Any other event Partners Life agrees to, at its sole discretion

For Policy Suspension claims only:

Employer approved leave without pay; or Employer approved parental leave; or Overseas travel; or Tertiary Education”

In other news

Financial Advice: Key changes to the Privacy Act 2020 and what it means for your business

Astreon Life: Suncorp announces half-year results

Asteron Life: Suncorp NZ leader on inclusivity and making insurance products fit for purpose