nib views on financial advice, and more daily news

nib has said that members that receive financial advice are better off. In addition, nib CEO Rob Hennin noted that half of nib’s members join via financial advisers. Hennin credited nib’s view by highlighting the findings from an internal study which found that members with advisers have more financial certainty and more health benefits. Hennin used the findings of nib’s internal study and studies commissioned by the FSC to conclude that people who receive financial advice are better off, saying that people with financial advice experience an improvement to their overall health.

“Health insurer nib says it is “absolutely clear” that customers with insurance advisers end up better off, and says advisers have done an “extraordinary” job adapting to the challenges that have come with COVID-19, and multiple lockdowns.

According to nib New Zealand CEO Rob Hennin, approximately half of the insurer’s business currently comes through its adviser channel. He says its internal studies have been clear – customers with advisers have more financial certainty, and also see increased health benefits as a result.

“It’s absolutely clear from our research and the work the Financial Services Council has done that Kiwis who receive financial advice are better off,” Hennin told Insurance Business.

Hennin acknowledged the work advisers have done saying that their response to COVID-19 was extraordinary. Hennin mentioned the increased use of digital tools and other methods to reach and assist clients.

“Advisers have just pivoted and done an extraordinary job throughout COVID-19,” Hennin added.

“They’ve really embraced digital tools and they’ve gone out, consulted with their clients and done whatever they can to ensure they all have access to the care and protection that they need.”” Click here to read more

In other news

Southern Cross: Insurer promises to “build momentum” and enhance products at AGM

AIA: Belief in oneself key to empowering women


Covid-19 Management and Vaccination Rates

How is the world doing managing COVID-19 and its effects? This time, a story in just two parts: infection rates per million of people, and progress on vaccination: 

First, infection rates per million. I think it is pretty clear that there are three groups in this chart. Those with awful records of infection control (UK, US, Netherlands, and historically, Spain and Italy) those with middling records (Canada, Germany), and lastly those with a great record: Australia, Taiwan, South Korea, and arguably best among them: New Zealand.

Then to vaccination. There are some leaders. One of the UK's weaknesses in infection control (an obsession with Brexit) is suggested as a strength in early approval and distribution of the vaccine. The National Health Service also provides a strong infrastructure for a vaccination effort - everyone has a record, there is a clear national programme for vaccination, and so on. But it is very early in the whole process - note the scale and that even leaders in vaccination are only at about 2% of the population - and even if you add the vaccinatin rate to the proportion of the population that have had Covid-19, they are a long way from herd immunity. That leaves 'room' for death rates to soar unless infection is controlled. Hence the return to lockdown in the UK. The real effect of vaccination won't be felt until over about 70% of the population has received a vaccine - including a booster shot. If you want to see who is closest to that, check out the interactive controls in the chart below. While vaccination offers hope for a way out of this mess, infection control is likely to be the more important public health measure until much later in 2021.


Seasons greetings and best wishes for the break

Card screen grab for blog v1

Our best wishes for your well-earned break

After years of using the same Christmas-themed card with a traditional tree on it, planning well ahead, we took a much more clearly southern hemisphere approach in January, using some artwork that focuses on what New Zealanders tend to do in the summer: head to the beach. At the time we did not know how particularly appropriate that shift in focus was going to be!

How has the life and health insurance sector performed for its many stakeholders?

While many will want to say good riddance to 2020, reflecting on a challenging year shows that there is an awful lot to admire in how the industry has performed: Insurers were able to reassure clients that their policies would work. They were able to offer a wide range of methods to support clients – allowing premium holidays, refunds, rate increase deferrals, and cover changes that helped people manage through the economic disruption that was a big part of the year. Claims services continued even through a tight lockdown, with insurers finding workarounds for signatures, meetings, and examinations, to help meet clients needs. That was impressive.

Like many others we were grateful for flexibility when we had to reschedule meetings, shift them online, and other aspects of our usual service had to be rapidly reconfigured for delivery in a digital-only context. We are fortunate that we can operate almost all our business functions entirely online – although we will take the credit for making decisions to have most of our IT infrastructure in leading cloud facilities. We are most proud of how the Chatswood and Quality Product Research teams performed through this period to enable continued support to our customers.

Through a period of disruption, what opportunities can be found?

The effects of COVID-19 disruption are real and likely to take some time to flow through the economy and into the financial accounts of insurers. Recent results show what we can expect from others yet to report. Economic modelling suggests the worst period for unemployment lies ahead – although so far, we have outperformed the models. There are reasons for optimism: vaccines, the power of digital to enable change, and evidence of greater flexibility and resilience than expected.

The environment will improve but relying on that alone is insufficient. Plenty of our 2021 workplan is laid out for us due to the scope of legal and regulatory change but merely responding to that will also be insufficient. Every research paper highlighting underinsurance is really underlining an opportunity for growth – those growth opportunities are ones we must build. We must build them - hoping for a mere return to what once was fails to recognise market reality and environmental change.

So, as well as meeting the requirements of the new Privacy Act 2020 that came into force on 1 December; as well as playing our part in the implementation of FSLAA on 15 March; as well as working with RBNZ on the implementation of IFRS 17 and the IPSA review; and as well as working with MBIE on new conduct law, we have to invest in the new. We have to work to bring new products to the marketplace. We have to work with the changed distribution environment – realising the long-predicted increasing business size in advised distribution. We also have to work to build better digital: there is such a great opportunity to displace some of the low-quality online insurance offers with better – an opportunity to open new frontlines against ignorance and indifference through digital advice.

Happy holidays and opening hours information

Opening times: On Tuesday the 22nd of December we will close the office at midday, and open again on the 11th of January, but you can call Russell on mobile any time. Our best wishes to you for the holidays and the New Year.

Thank you for your support, from all the team at Chatswood: Fran, Jerusalem, Kelly, Rob, Ed, Wanyi, Melissa, and Russell


Legal and regulatory review for the life and health insurance sector

17 Dec 2020 – Law Commission newsletter released, including information on the following upcoming or ongoing projects:

18 Dec 2020 – Government announced expansion of the small business loan support package related to Covid-19. https://www.beehive.govt.nz/release/small-business-support-expanded

18 Dec 2020 – Commerce Commission released a consultation on a draft cartel leniency and immunity policy, resulting from the introduction of the new criminal cartel offence coming into effect in April 2021. A seminar will be held on Wednesday 27 January 2021 at the Commission’s Auckland office to talk through the key changes to the policy and to answer any questions submitters may have. Submissions close on 10 Feb 2021. https://comcom.govt.nz/news-and-media/media-releases/2020/commission-seeks-feedback-on-draft-cartel-leniency-and-immunity-policy


Legal and regulatory review for the life and health insurance sector

15 Dec 2020 - Government has announced a package to support businesses and individuals in the event of a change in COVID-19 alert levels. The package contains a proposal for a one-off resurgence support payment which businesses can apply to Inland Revenue for, with legislation to be introduced in the New Year and details as follows:
• The one-off payment will be $1,500 plus a $400 payment per employee up to a total of 50 FTEs.
• Businesses will need to declare a drop of 30% or more in income over a 14-day period as a result of an increase from Alert Level 1 to Alert Level 2 or higher.
• They must have been in business for at least six months in order to apply.
https://taxpolicy.ird.govt.nz/news/2020/2020-12-15-resurgence-support-payment-proposed 

15 Dec 2020 – RBNZ released its post-election “briefing to the incoming Minister”, Finance Minister Hon. Grant Robertson. https://www.rbnz.govt.nz/news/2020/12/reserve-bank-focused-on-responding-to-long-term-challenges-and-opportunities


Partners Life study on effects of COVID-19 on perceived value of insurance, and more daily news

A survey conducted by Partners Life and Kantar found that regardless of COVID-19, the majority of participants didn’t see the significance of insurance. The survey results were based on the response of 900 participants aged between 18 and 54. Of those surveyed, 74% stated that their views hadn’t changed regardless of COVID-19. The survey found that the majority of those that didn’t believe they needed insurance shared this view. Participants that said that they were likely to take out insurance were more likely to be of Asian descent (40%), between the age of 24 to 35 (35%), be in the $75,000-$100,000 income bracket (35%), and male (27%). In response to the survey results Unhappily Ever After was launched to challenge the current thinking of New Zealanders.

“Despite the huge impact of the COVID-19 pandemic on daily life, a significant number of consumers reject the concept of insuring their lives, health and income.

This was revealed by a survey conducted by Partners Life and Kantar in October.

The survey polled 900 consumers in New Zealand, aged 18 to 54. It found that 74% said their feelings around insurance have not been impacted by COVID-19. This was especially pronounced among the rejecter group at 84%, while only 54% said so among those who were considering buying life insurance in the next 12 months.

Those who became more open towards insurance as a consequence of the pandemic were more likely to be male (27%); younger people of 24 to 35 (35%); people of Asian ethnicity (40%); and people in the $75,000-$100,000 income bracket (35%) – compared with a figure of 24% for overall respondents who said so.

In response to the results of this survey, Partners Life launched a new advertising campaign known as “Unhappily Ever After”, which features familiar nursery rhymes and appealing to those with young families and middle-aged individuals - the life stages where responsibilities are at their heaviest.” Click here to read more

In other news


UniMed announces new CEO, and more daily news

UniMed has announced that a new CEO will be appointed in January 2021. Louise Zacest is set to take over from Dermot Martin, who is retiring after 30 years at UniMed. Zacest has held senior roles in different industries and is the current General Manager, Strategy and Partnerships at Healthcare New Zealand. 

“He will be succeeded by Louise Zacest.

 

Zacest joins UniMed from Healthcare New Zealand, the country’s largest home and community service provider, where she has held senior executive positions, including acting Chief Executive.

 

She is currently General Manager, Strategy and Partnerships. Her previous health and insurance experience includes senior roles with Southern Cross, Tower Financial Service Group and Counties Manukau District Health Board.” Click here to read more

 

In other news:

nib: nib’s 2020 virtual Annual General Meeting (AGM) will be held at 1pm (AEDT) on 5 November 2020 - note that we have five companies that have updated financial results in our tracking set for the life and health insurance sector, which will all be updated in the company information section of the Quarterly Life and Health Sector review due on 20 December

'Advisers take note' RIAA welcome sustainable finance roadmap

Long Covid a new problem for insurers to grapple with contrast this with our view: we think it is not too much of a problem provided we keep COVID-19 at bay.


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.