Cigna implements new commission, and more daily news

Cigna has implemented several new changes to their commission model. Advisers will now receive 100% of Cigna’s documented commission rates, regardless of their persistency rates or group affiliation. With this change, advisers will now have the power to decide how commissions are split. Commission payments will now begin from month two. Cigna has said this change was introduced in acknowledgement of the extra time and effort advisers are putting into their businesses. Another change is giving adviser the option of choosing the payment period with the as earned option. Advisers can now choose between upfront payment and spreading the payment over the first two years. Advisers that choose to spread payment over two years will ensure that there is no clawback if a policy lapses during that time. Cigna has added more selection to their discounting options. These options have been linked to spread commissions.

Renewal Commissions will now be paid from month two

We recognise that the servicing of your customers doesn’t start from month 13, it starts from the moment their policy is issued.

With the new regulatory environment you’re now operating in, we acknowledge the extra time and work you’ll be dedicating to your business. So we want to support you further as you work harder to protect your customers.

From now on you’ll be paid all the commission

All Advisers, regardless of persistency level and/or Group affiliation, will now receive 100% of our documented commission rates. We can help facilitate any splitting of commissions you need to do, but you are in total control of where it goes.

We’re introducing an ‘as earned’ payment option

Choice matters. So we’re giving you option to receive your commission payments over the first two years, instead of upfront. With this option there’s no clawback if a policy was to lapse in the first two years.

More flexibility with our discounting options

To provide you more flexibility and options to suit your customer’s needs, we’re adding more selections to our discounting options and we’ve linked these to our spread commissions.

Updating our commission to include best in market features reflects our ongoing commitment to you and helps ensure New Zealanders have continued access to the quality advice you provide.”

Cigna commission table April 16 2021 3
Cigna commission table April 16 2021 3
Cigna commission table April 16 2021 3

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ACC: ACC estimates 90 per cent of injury claims are preventable

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Cigna: Insurance for living campaign 


Cigna set to implement number of new processes, and more daily news

Cigna is set to implement several changes, including a new commission structure, a new specific injury product, new eApp and online Adviser Hub, and new underwriting processes. The announcement was made during Cigna Live. During the livestream, David Haak, General Manager of Distribution, discussed the changes to commission by noting that advisers would no longer be paid on a 13 month basis, instead payments would commence from month two. Cigna will also offer an 'as earned' payment option that will allow advisers to spread out commission payments.

During the session Alison Manning, Head of Product, announced that a new specific injury product would be introduced. The product will focus on offering financial support to customers that suffer injuries such as fractures or burns. Unlike other products, this product will offer cover up to $5,000 for single injuries and more for multiple injuries, regardless of age and smoker status. Cigna will not consider any offsets due to ACC payments. Payment will be a lump sum and will provide cover for surgery after an accident. Customers will be able to include this product as an add-on to other policies.

Chris Hand, North Island Regional Manager, noted that Cigna has been developing a new eApp and online Adviser Hub for the past 12 months. Hand said that the new hub is intended to offer advisers and customers more data security. The new hub is also set to streamline the quoting and application process.

Similarly, Cigna is set to improve underwriting processes. Chief Operating Officer Debbie Eyre highlighted that the new underwriting approach will ensure disclosure processes are made easier. This change includes shorter questions to increase completion rates. Cigna plans to have a single simplified underwriting process for all products. 

“Cigna's top brass made the announcements during a live webcast to more than 1200 advisers and industry commentators this morning.

General manager of distribution, David Haak gave some information about Cigna's new commission structure but did not cover specific rates as that information would be sent to advisers at a later date.

However, Haak did say the new commission structure would be simplified and tailored to individual advisers.

He says renewal commissions will be paid from month two, instead of month 13 and 100% of documented commissions would be paid out.

We understand this to mean that commissions are paid to the financial advice provider, who may pay them on to dealer groups or service providers. The payment of renewal commission from month two has the effect of increasing the commission paid in year one, but not at month one, clearly. 

"There will also be an 'as earned' payment option where you can spread out commissions over a longer period, instead of a lump sum."

Cigna head of product, Alison Manning also announced a new specific injury product that would provide more financial support for injuries like fractures or burns.

Manning says cover is not determined by age or smoker status and would provide up to $5000 of cover and a higher payment for multiple limb fractures.

It will also cover second and third-degree burn cover and can be used as an add-on to any other policy.

Accidental injury cover is a valuable addition to the product range - there are now three insurers offering similar products, so we shall be adding the rating to research subscribers (available at quotemonster.co.nz). 

She says the new product was called for by advisers and "Cigna had listened and tailored the product on feedback from the industry".

Cigna's specific injury cover will not take into account any offsets due to ACC payments, will be paid out as a lump sum and will also provide cover for surgery after an accident.

Cigna's North Island regional manager Chris Hand gave a brief overview of the company's brand new eApp and online Adviser Hub that has been developed over the past 12 months.

He says the new hub will provide more data security for advisers and their clients as well as streamlining the quoting and application process allowing advisers to send questions to clients directly before any face to face meetings.

"In many cases, this will lead to instant cover and allow advisers to amend quotes on the fly."

Cigna's chief operating officer Debbie Eyre commented on the company's new underwriting approach that she says will make the disclosure process easier and clearer for its customers.

This will involve a new, shorter set of questions designed to increase disclosure rates and "maximise completions at point of sale".

"Regardless of the level of cover...there will be just one ruleset and one questions set...and will apply to almost all of our products - income protection, mortgage cover, trauma, life cover and waiver of premiums.

"This will mean our underwriting team are freed up to talk to you about more complex cases." Click here to read more

In other news

From Good returns: From army life to life insurance - a big gun leaves the industry

Quotemonster: QuoteMonster appoints new general manager


Quotemonster and Advicemonster updates - live now

We have updated the quotemonster site, on Thursday, and made the following items live, for more detail see below:

  1. New SOA report content setting options allow you to create more customisations for your SOAs if you are an Advicemonster subscriber. To access these click settings, then SOA Setting, then Report Content Setting
  1. New SOA template for Need analysis recommendation note pad - bring through all your calculations from the recommendation notepad in Advicemonster to quote and to the SOA.
  1. New nib rates applied to the site
  1. FSP input validation for user setting and register form - so it is important that your FSP number matches your name and the entry on the FSPR. A reminder that sharing your login is a breach of our terms and conditions and unusual account activity (like switching user names) will be picked up and we will be contacting account-holders that actively share their logins. 
  1. Improved the health product breakdown table in the research report.
  1. Applied Fidelity level standalone trauma maximum level term rule
  1. Changed Partners Life IP and MP max-age to 57 - as we do not quote reduced commission versions of income protection
  1. Update Web version number to v 3.8.7

Congratulations to Albert, Doreen, and the whole team on a big package of updates. Our special thanks to the advisers sending us issues and suggestions for improvement of the Advicemonster process and the SOAs. 


Partners Life Customer Outcome Matrix update, and more daily news

Partners Life has provided more information on the upcoming Customer Outcome Matrix reporting and commission changes. Current bonus rates will remain in place until 30 September 2021 to ensure advisers have time to prepare and adapt before bonus commission rate changes are implemented on 1 October. Partners Life has noted that this adaption period is sufficient for advisers to understand the Customer Outcome Matrix process. Partners Life has also noted that they are in the process of completing changes to ensure regular reporting on Customer Outcome Matrix results.

“We have always maintained that we have wanted to provide at least 3 months visibility to the COM reporting prior any Bonus Commission changes coming into effect, allowing you sufficient time to review your own reporting and to be able to understand the feedback and how this relates to your engagement and servicing of clients.

We have continued to make good progress and are nearing the completion of the implementation project.

Given the material changes associated with COM, and with the many other industry changes that are occurring, we have however, made the decision to extend the ‘Go-live’ date for potential bonus rate changes to 1 October 2021.

We are confident that this will not only provide a robust reporting period to allow you to understand and get comfortable with the COM data but will also allow you to continue to encourage your clients to expect and participate in the COM survey process.

We will further underpin your current bonus rates until 30 September 2021 to provide you with an appropriate period of time to understand and adapt to the results of the COM.

We are close to completing the necessary changes to MPL to provide you with regular reporting on your COM results from your MPL dashboard. We envisage this being available towards the end of April.

Full implementation of COM, including the Bonus Commission levels, will now commence on 1 October 2021.”

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Partners Life announce new commission payment system, and more daily news

Partners Life has announced that they expect to implement a new commission payment system on 29 March. Although the payment system is set to be updated, commission processing and calculations will remain unchanged. The change will affect the format of commission statements. From 29 March, commission statements will be made up of a commission statement, a transaction list, and a buyer-created tax invoice and credit note if advisers are GST registered.

The first section of the statement will include summaries of all daily transactions. This will include credited and debited commission, applicable taxes, and amounts paid to bank accounts. The second section will focus on breaking down commission payments by policy number, client name, annual premium income, and commission type. The third section will highlight the policy number, client name, API of the policy, total commission paid, non-life portion of the commission paid and the GST added or deducted on non-life commission. GST registered advisers will have access to a buyer created tax invoice/credit note. Partners Life has said that it is more practical to calculate the GST on non-life commissions as they have access to the information required to perform the GST calculation.

“Partners Life is implementing a new commission payment system. We expect the new commission payment system to be live on 29 March 2021. Commission processing and calculations will remain the same, the only change you will notice is the improved format of our commission statements.

The new commission statements now contain three separate sections:

  • Commission statement
  • Transaction list
  • Buyer-created tax invoice/credit note (if you are GST registered)

The first section of your commission statement is a summary of all transactions for the day. This will clearly outline the total of each type of commission credited or debited, applicable taxes added or deducted, and total amount paid to your bank account.

In addition to the above, the commission run number will change. Instead of the commission run number increasing by one for every run, the new run number will be the date of the commission payment. For example, the commission run number for Monday 29 March 2021 will be 20210329 (e.g. YEAR/MONTH/DAY).

The second section of your commission statement is the transaction list. This will provide a breakdown for all commission payments by policy number, client name, annual premium income, the type of commission paid per policy and the amount.

The third section of your commission statement is a buyer-created tax invoice/credit note for GST purposes. The buyer created tax invoice/credit note will state the policy number, client name, API of the policy, total commission paid, non-life portion of the commission paid and the GST added/deducted on non-life commission. If you are GST registered, we will provide you with a buyer created tax invoice/credit note. We believe it is more practical for us to calculate the GST on non-life commissions as we have access to all the information required to perform the GST calculation. By receiving the buyer-created tax invoice/credit note, and continuing to sell our products, you agree not to issue a tax invoice for the commission earned and you also agree to inform us if your GST registration status changes.”

In other news

Fidelity Life: Adrian Riminton to be new Chief Risk Officer from 1 April 2021

FMA: James Greig to lead FMA monitoring of new regime


What should advice cost?

What should advice cost? That was an excellent question from the audience during the first two of our recent getting in shape series. Perhaps this seemingly simple question surprised our panel. The answer to the question is not easy. It was a kind of sub-plot in the day's event: the question of the cost of advice is part of the disclosure story, part of the story about the future of advice, part of the story about the value of advisers solidly backed up by the research shared on the day. When asked what advice should cost the panel made a good beginning - in both Wellington and Auckland the first answer was "it should not be free". This echoed John Botica's  earlier comment during the first panel in Wellington where, talking about disclosure, he asked that any advisers taking commission should not refer to their advice as free. Of course advice isn't free. Often something that is not paid for is not valued. Advice is paid for (whether by fee or commission) and it is valuable. 

The question came up in the context of a discussion about how to make advice more accessible. For people to value advice they must first know it is available, believe it is worth getting - but these are just pre-conditions. Often we know something would be good for us, but don't do it.

Many people struggle with making the time to meet with an adviser - not just because of the time for the meeting, but they fear the time the work around the meeting will take. A good portion of the population are certain that their finances are a mess, and if not, then the musty file of papers definitely is a mess. So they fear judgment. Many people struggle with making room for the cost of advice. If they believe that it will require payment at the time and their budget is already stretched they will be reluctant to make an appointment. Commission has a valuable financing role to play here - but it is not the only mechanism, of course, that can make access to advice easier. 

So although advice should not be free, we need to make it easy to start the process. Which means the initial steps should be free - and easy to do.

Most advisers offer initial discussions at no charge. More can be done to make brief trials of the value of advice accessible. Social media helps, Zoom and MS Teams helps, but nothing quite beats a meeting - and the ability to slip into a 20 minute session on KiwiSaver at lunch or hear ten top tips on managing your home loan at the local mall are probably under-utilised strategies. Now add some tools in the client's first language (which will not be English in about a third of cases in Auckland) and spoken by someone who at least knows your culture a bit... these are access strategies. They reduce the psychological costs (fear of rejection, fear of shame, fear of being exposed as not having 'enough money to qualify for advice'). 


nib strategic thinking shift, and more daily news

nib New Zealand CEO Rob Hennin outlined the company’s shift in strategic thinking. Instead of focusing on ‘sick care’ nib will be focused on ‘well care’. Hennin noted that COVID-19 has meant that health insurers are more determined to promote healthy living, community connection and mental health. Hennin states that nib’s core focus and strategy remains unchanged although financial protection is no longer the sole focus. nib is set to follow a more holistic approach when viewing the health journeys of members. Choosing to take a long-term approach will mean that nib will work towards empowering members to make healthier choices.

“As insurers across the country put their 2021 strategies into action, nib New Zealand CEO Rob Hennin says that for him, this year will be all about focusing on ‘well care’ rather than ‘sick care,’ and looking beyond the mindset of an insurer focusing purely on financial protection.

Hennin says that with COVID-19 having changed everybody’s lives on such a huge scale, it is more important than ever for health insurers to promote community connection, wellness, and a focus on mental health. He says nib’s core strategy remains fundamentally unchanged, but that there will be much higher focus on mental health, and on supporting members’ health journeys.

“COVID has clearly disrupted our lives and our business in unforeseeable ways,” Hennin said.

“Our strategy is very clear - we’re looking to protect our members, offer them the financial cover that they need, connect them with providers who can help with specific needs, and to help them to navigate the healthcare system that we have in New Zealand.

“We also want to empower them to make the health decisions that will put them on track to achieving what they want to achieve, and that part of our strategy is very much unchanged.”

Hennin says the company will be looking to take a more “holistic view” of people’s health journeys, and to take a “long term approach” to helping them access the care that they need. Click here to read more

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Fidelity Life: Fidelity Life announced that they will be introducing a new commission framework - no further details announced yet

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Asteron Life upfront commission enhancements, and more daily news

Asteron Life has announced that upfront commission rate will be 190% effective October 5 2020. The decision for this change has been credited to working towards sustainability by ensuring more New Zealanders can access independent financial advice. Asteron Life has announced that it is offering a temporary 10% Covid-19 support in addition to upfront commission changes, which means upfront commission will total to 200%. This additional support is set to be reviewed at the end of June 2021. A summary comparison is available for subscribers to the Quarterly Life and Health review and much more detail in the Quarterly Commission Comparison. These have just been published to subscribers. For subscription information please contact Kelly Pulham or Russell Hutchinson. 

In other news

Cigna: General Manager- Distribution role being advertised

Fidelity Life: Sharecare October Eat More Greens Diet Challenge launched

Fidelity Life: Sharecare October Stress Relief Challenge launched

Fidelity Life: information about Centr^, personalised daily digital health and fitness program by Chris Hemsworth can be found in Sharecare

Kiwibank: Senior Conduct Manager role being advertised

nib: Mental Resilience webinar


Fidelity Life set to halt upfront commission on CPI increases, and more daily news

Fidelity Life has announced that it will no longer offer advisers upfront commission on premium increases resulting from inflation rates. Fidelity Life is currently the only insurer offering this type of upfront commission. Acting CEO Adrian Riminton said that this change will be implemented in six months.

“"We've concluded that paying initial commission on CPI increases is out of step with changing expectations around good customers outcomes and we're the only insurer that pays it."

The change would take effect in six months' time.

If a clients' premiums were $1,000 and increased to $1,030 because of inflation, most insurers would pay renewal commission on the total new amount.”

Adrian Riminton continued by acknowledging that this change may cause issues for some advisers but said that the early notice is intended to allow for adjustments. Riminton announced that Fidelity Life will stop be paying upfront commission on CPI increases on former Tower policies that weren’t eligible for payment from next month. Fidelity Life  is set to announce more changes in the near future.

“"We acknowledge this change may have a financial impact on some advisers. That's why we are providing six months' notice to allow you as much time to adjust as possible."

Riminton said the insurer had also found that, since 2015, it had been paying initial commission on CPI increases for some former Tower policies that were not eligible for the payment.

"While we won't be looking to recoup this, we do need to correct our mistake. So from November 2020, we'll no longer pay you initial commission on CPI increases on these policies."

He said Fidelity Life would reveal more changes to its adviser proposition in the coming months.” Click here to read more

In other news

FMA KiwiSaver report: Contributions, fund-switching and fees

RBNZ: Reserve Bank relaunches Insurance Act review

nib: top five claims in August:


Amount

Details

 

1

$98,810

Spine Surgery

2

$78,780

Coronary Bypass Surgery

3

$77,530

Spine Surgery

4

$72,860

Aortic Valve Replacement

5

$72,850

Coronary Bypass Surgery


Deloitte report on the New Zealand life insurance sector

Deloitte's report on the New Zealand life insurance sector provides a comprehensive overview of the structural differences between the New Zealand environment and the markets with which it is often compared. It provides context for the comparisons that are inevitably made as part of the debate over issues such as efficiency, commission payments, claims ratios, and channel mix. Rather than give quantitative answers to challenges - such as concerns about the level of commissions - it seeks first to explain the situation. Some assertions are made, usually about the possible causes of some features of the market, but refreshingly, without advocating for any particular prescription. Except for one: the report suggests caution. I think that is wise. Dramatic changes have been made to the Australian life insurance sector. It appears to be much the worse for them. In a sector where contracts are commitments for decades of cover, often with fixed terms, and sometimes with fixed premiums, it seems wise to exercise caution. Anyone writing a background paper for a strategy session would do well to set this as background reading or use the issues as a checklist for their decision-screens. What solutions you may bring to each of the issues, that will be up to you. Link: https://www2.deloitte.com/nz/en/pages/financial-services/articles/deloitte-issues-paper-life-insurance-sector.html#