What could be the IP impact of "long-COVID"?

A back of the envelope forecast for "long-COVID" impact on IP claims: 

Start with cases - about 1,950 if we are considering current known cases, or whatever number your modelling predicts for whole of pandemic. Assuming very good containment, not much more, let's hope it stays that way. The apply your estimate for "long-COVID" I am using 20% at the moment which gives us about 400 cases in New Zealand. But not all of these will be in employment and own income protection. In fact as 42% of cases are 'imported' we can assume that most of those do not own income cover issued by New Zealand insurers. That leaves us with roughly 240 cases. FSC underinsurance research showed income protection cover at about 20% of the market - or a possible 48 cases of 'long-COVID' where a claim may be possible.

Well, well, within the capability of the industry to manage. Economic impacts on people that have claims from other causes are likely to be more problematic. 


Data rich global pandemic analysis: what is the real scale of COVID-19

What is the real scale of the pandemic? Over 600 million cases and 55% more deaths than recorded it seems. I like this data-rich analysis from The Economist, who make all their major COVID-19 reporting free as a public service - so no subscription required. Link: https://www.economist.com/briefing/2020/09/26/the-covid-19-pandemic-is-worse-than-official-figures-show 


How best to describe vaccine pre-orders? "Hoarding" or "Funding"

Various phrases have been dreamed up to describe the practice of many western countries - especially those with large pharmaceutical industries - of pre-ordering doses of COVID-19 vaccine. Vaccine nationalism is one. Others sometimes refer to the practice as "vaccine hoarding". This is deeply problematic. It is talking as if the vaccines are there, on the shelf. Graphs showing vaccine capacity and comparing that to the level of pre-orders (such as in this article) fail to adequately explain the cause and effect relationship between these two factors.

Consider the risks - there are many promising candidates and pathways to a vaccine, but the odds are, frankly, long. For the vaccine researcher huge sums of money must be spent in research, development, and testing. Yet without a pre-booked order for the vaccine, this may all be lost - not just by failure to make a viable and useful vaccine, but possibly by a more effective vaccine candidate coming on to the market, which is bought in preference. If you are conservatively managed business, perhaps, not unusually in a time of economic crisis, an eye on conserving capital, you may decide not to progress a vaccine option unless you were really confident about it. Yet the world needs the companies to take these risks. In fact, the more the better.

The scale of the cost (human and financial) of the pandemic is such that the value of effective vaccines is very, very large. By offering to pre-order doses governments are encouraging much more investment both in the science of researching vaccine and in the capacity to produce the vaccines. Turning back to the graph of capacity again and you can see the relationship between capacity and the size of the pre-orders. Far from reducing pre-orders, which would reduce the number of candidates advanced and the capacity to produce them, governments should increase pre-orders, to make it a better bet for teams to invest in the search - as argued by this article

International co-operation will be essential to any medium to long-term strategy with regard to COVID-19. It is truly a case of all being in this together - as, while there is a pool of infected people out there, reinfection could occur. However, it would be crazy for any government to lock themselves into a strategy right now. After all, so much is not known. The virus could mutate and fade away, or several good vaccines could be developed, or it takes a very long-time to develop a vaccine. Or a break through treatment is found - but no vaccine. Each might require substantially different implementation strategies. It seems best to wait and see how the situation develops before betting the farm on any particular approach.


Legal and regulatory update for the life and health insurance sector

28 Aug 2020 – FMA released updated guidelines for financial services businesses and staff under Covid-19 Alert Level 2.

https://www.fma.govt.nz/news-and-resources/covid-19/financial-services-operating-at-level-2/

31 Aug 2020 – DIA released three AML/CFT items as follows:

  • Real Estate regulatory findings
  • FIU Suspicious Activity Report for July 2020 (Previously noted on this blog)
  • Webinar available on Independent AML/CFT audits

https://www.dia.govt.nz/AML-CFT-News


Legal and regulatory update for the life and health insurance sector

27 Aug 2020 – MBIE issued a reminder that the “Covid-19” safe harbour for company directors from their insolvency related duties will expire on 30 Sept 2020 as planned.

28 Aug 2020 – Minister of Commerce and Consumer Affairs, Hon Faafoi, diary for July 2020 released, with the following potential financial services sector related meetings noted:

  • 1 July 2020 - Meeting with Christians Against Poverty (Aimee Mai and Michael Ward)
  • 1 July 2020 – Meeting with Vero (Marie Hosking, Adrian Tulloch and Helen McNeil)
  • 2 July 2020 – Meeting with AIG (Toni Ferrier and Bhairav Shah)
  • 22 July 2020 – Phone call with FMA (Mark Todd)
  • 30 July 2020 - Meeting with FSC (Richard Klipin and Rob Flannagan)
  • 30 July 2020 - Meeting with ‘Buy Now, Pay Later’ providers (Shaun Quincey, Neil Simons, Michael Saadat, John O'Sullivan, Julian Grennell)
  • 31 July 2020 – Meeting with Insurance Brokers Association of New Zealand (Melanie Gorham, Tony Bridgman and Barry Hellberg)

28 Aug 2020 – Good Returns reported that on 27 Aug 2020 MBIE released submissions made on the exposure draft of the disclosure regulations applicable to Regulated Financial Advice.


Coronavirus: a comparison of excess deaths

Around the world deaths from COVID-19 are probably being significantly under-counted. The Economist makes its coverage of COVID-19 available to non-subscribers - this data-rich post shows how across many economies deaths have exceeded statistical norms. That is to be expected in a pandemic, but also that there is an excess over the number expected, plus the number categorised as COVID-19, and that those deaths follow the same pattern as COVID-19 deaths - i.e. that they peak at the same time. Therefore these are highly likely to be COVID-19 or at least strongly related to COVID-19: such as death from another cause, which may have been averted had the person sought hospital treatment, or had hospital treatment been available but for the pandemic. Much more detail on methods for effectively comparing excess death rates is available in this article from Our World in Data by Max Roser: https://ourworldindata.org/covid-excess-mortality 

A weakness of this article is the lack of data from countries that have more successfully managed the pandemic, except for Norway, see below. China and Vietnam may not publish their data, or it may not be considered as reliable by The Economist. But I am sure South Korea, Japan, and Taiwan all have good data - it would be interesting to see how that compares. New Zealand data is also missing, but a good article from Charlie Mitchell and Michael Day at Stuff.co.nz has that information: click here to read more. Like Norway, in The Economist's analysis we have had fewer deaths than expected - meaning that our COVID-19 response has not just squashed the pandemic, but also other deaths: road deaths, seasonal flu, industrial accidents, and so on. Of course, downstream effects on the economy, debt, and deferred medical treatment (especially from the earlier, more restrictive lock-down) may still emerge in the coming years. This is far from over.


Partners Life update waiting period restriction on QFA, and more daily news

Partners Life has announced that the waiting period restrictions for self-employed customers have been lifted from QFA. The revision to waiting periods was applied to Quote and MUM immediately after the announcement in July. The update to QFA means that advisers can quote all wait period options for their existing clients’ Income Cover, Mortgage Repayment Cover and Household Expenses Cover.

 

“In late July this year we announced a revision to our restrictions on waiting periods for self-employed customers, allowing you to quote all waiting periods on Income Cover (Indemnity Loss of Earnings), Mortgage Repayment Cover and Household Expenses Cover.

 

“The system changes were applied immediately to Quote and MUM allowing you to quote and apply for cover for new clients. The system updates to Quote for Alteration (QFA) required additional time to implement and we advised short-term workarounds to quote on waiting period changes for your existing clients.

Today we are happy to confirm that restrictions on waiting periods for self-employed customers have now been removed from QFA.

Effective immediately you can now quote all wait period options for your existing clients’ Income Cover (Indemnity Loss of Earnings), Mortgage Repayment Cover and Household Expenses Cover.

In other news:

Fidelity Life: MedScreen is currently not operating in Auckland, MedScreen paramedical visits are still happening in other regions

Fidelity Life: it is recommend that all new business is submitted via e-App

Women in Insurance New Zealand goes virtual

FSC: Get In Shape Session 7: Using Technology to make your business more effective

 


Insurer wins argument over chronic pain claim, and more daily news

The Court of Appeal revealed its verdict on the case between Asteron Life and financial adviser Peter Taylor. According to the story: Peter Taylor made an Income Protection claim in 2010 saying that as a result of his bone cancer he was suffering from chronic pain. Peter was able to get payments after supplying the required information on his medical condition and ability to work, but in 2014 Asteron Life suspended the payments stating Peter’s earnings made him ineligible for payments.

"The Court of Appeal released its judgment on Wednesday.

Taylor first took an Asteron Life income protection policy in 1994 and made a claim in 2010, saying he had bone cancer and suffered chronic pain.

Taylor was required to provide progress reports to Asteron describing the current state of his medical condition, whether he had been able to work, what income he had earned from working, and certain other matters.

He received payments until September 2014, when Asteron suspended them. It was concerned that he was earning at a level that would make him ineligible.”

Unhappy, Peter went to court arguing that he was still entitled to payments.  Asteron Life stated that he was no longer entitled to payments and counterclaimed for repayment of the amount paid out to Peter. The court noted that Peter used the payments for holiday homes, cars and overseas trips and ruled in favour of Asteron Life. The insurer was awarded $371,286.70.

“Taylor went to court seeking a declaration that he was entitled to continuing benefits under the policy, and wanting arrears of payments.

Asteron denied he was entitled to any further payments and counterclaimed for repayment of all sums previously paid.

It said he had made false statements about the extent to which he worked while on claim.

The High Court sided with Asteron and it was awarded $371,286.70. That court noted that he had used his insurance payouts to fund a holiday home, cars and overseas trips.”

Peter then took the case to Court of Appeal. The judge again ruled in favour of Asteron Life saying that Asteron Life was entitled to a reduced counterclaim payment of $51,835.64.

”The Court of Appeal said Asteron was entitled to succeed in its counterclaim but could only recover payments made in respect of the periods about which Taylor was found to have dishonestly provided false information.

“The judge declined to find that the initial claim made in July 2010 involved false statements that breached Taylor’s obligations in relation to making claims. So Asteron’s claim as pleaded, which was founded solely on the allegation of breach of utmost good faith, could not succeed in respect of the initial period from January 2010 to July 22, 2010.

“There may well have been another basis on which the payments made in respect of that period could have been recovered. But they were not pleaded by Asteron, and Asteron did not give notice that it intended to support the High Court judgment on grounds other than those accepted by the judge.”

That reduced the amount owed to Asteron by $51,835.64. Taylor has since sold his insurance broking business. Click here to read more

In other news:

Financial Advice webinar: Economic Update by Economist Tony Alexander

Financial Advice: 2020 Conference registration

AIA: COVID-19 UPDATE


Legal and regulatory updates for the life and health sector

17 Aug 2020 – MBIE advised that the expiry date for the addendum to the Responsible Lending Code relevant to Covid-19 has been extended to 31 March 2020, to align with the extension to the term of the mortgage deferral scheme to the same date, with updated guidance released today on this extension by the Reserve Bank.

17 Aug 2020 – The FIU posted on its website information on the Basel AML Index, which ranks the risk of money laundering  and terrorism financing of countries around the world, a resource that may be useful when assessing risks of the countries that NZ AML/CFT regulated entities deal with. https://www.dia.govt.nz/AML-CFT-Independent-ML-TF-risk-country-rankings

17 Aug 2020 – Dissolution of Parliament postponed until 6 Sept 2020, with Treasury consequently announcing delay in the publication of the pre-election economic and fiscal update, to be completed between 7 & 21 Sept.


COVID-19 and the insurance industry outlook - no, it isn't over...

In April almost everyone I know became an amateur epidemiologist, or at least, COVID-watcher. Today, many of my non-insurance colleagues are blessed with an almost-normal life. We have been fortunate - meaning it is vital to acknowledge that good policy and a little good luck, brought us here. The industry, however, has to take a slightly longer view. So what does COVID-19 mean for us now? 

On a cases per million bases I chose the following visualisation to help show where New Zealand is positioned, and just how fortunate we are. The US and Brazilian data shows how a badly managed response looks. No detailed critique here, you can find plenty elsewhere. 

The World detail in this chart is deeply suspect data. Some countries are so poor they have inadequate resources, some are so badly managed the data is deeply flawed, some are merely bad at testing. Germany shows how a poor start can quickly be converted into a good outcome - on a cases per million basis it is now doing better than Australia which is battling a resurgence in the disease. 

Removing the US, Brazil, and World, allows us to zoom in on the better performers: 

Australia's resurgence is instructive. It proves several things - given that the Victoria outbreak came from badly managed isolation, it was right that media were highly critical of security breaches. Given that it has happened it is right that government has been slow to create travel bubbles. Australia shows how fragile our position is until there is better news on the vaccine front. The longer we can contain the virus the better our chances get. I am still using the much maligned contact tracing app and signing in where I see the forms - even though most people aren't. Why? if someone breaches isolation and there is an outbreak that data is our best chance of avoiding a nationwide lockdown, again, which is proving so damaging to Victoria.

Removing Australia allows us to zoom in again on the best performers (setting aside China). To further reveal differences, I have switched to a log scale: 

 

Japan is battling a resurgence too, not at the level Australia is, but still ten times as many cases as we are managing (all in isolation). South Korea sits in between, just a little worse than us, but with those cases also being in well managed isolation, like ours. Taiwan has half the cases that we do on a per million basis. Vietnam, functionally none - both would be great places to travel agreement with!

For the insurance industry, whole of pandemic modelling remains a concern. A worst-case scenario would commence with a resurgence along the lines seen in Victoria, which breaks out into general community transmission. Choices we make today, could help. During lock down I cursed myself for not preparing better - but how many of us are wearing masks, even if just when we have a cold? Very few, and those are Kiwis with links to China, Taiwan, Japan, or South Korea. How many of us are contact tracing still? Few, yet that data could have helped Victoria avoid a second lock-down.

It is complacency which would undo all the good work of the team of five million, some of whom are hurting a lot from that sacrifice.

There is good news from the UK, US, and China, about potential vaccines. But the disease is still out there waiting for us. If we are to avoid thousands of deaths then we must remain vigilant. That is not a job solely for the government - it includes us. 

Even if we continue to track along the 'best case' scenario - cases only in managed isolation, and reasonably quick economic recovery, we can expect a fair measure of misery for those worst affected: lost jobs, lost homes, and disrupted lives. Those tend to have claims effects - IP claims last longer, trauma claims are deferred, some turn into life claims.