Daily news update: Cigna price changes introduced, and more stories

Cigna has made price changes to a number of products. The range of the changes are detailed in the table below. You can tell from the variety of changes that this is a complete repricing exercise - not merely an increase or decrease of a blanket percentage. Some prices will be much more competitive. Some segments are being increased. The only way to know for certain, is to do a comparison for each life. That's why a price comparison across the market is vital if you wish to offer help to clients seeking the most competitive products. Quotemonster still offers free price comparisons for financial advisers with an FSP number and an email account. 

YRT Life

11/05/2020

From -12% to +8%

Level Life

11/05/2020

From -24% to +1% Non-Smokers & Female Smokers, from -17% to +8% Male Smokers

Trauma

11/05/2020

From -13% to +10% Non-Smokers & -3% to +15% Smokers

Level Trauma

11/05/2020

From -16% to +10% Non-Smokers, -16% to +18% Smokers

Income Protection

11/05/2020

From -1% to -2%

Mortgage Protection

11/05/2020

From + 5% to +25% Female, from +7% to +20% Male. As per discussion, indexation was previously offered free for the first year.

In other news:

AIA: Mentemia, a mental wellbeing app, is now part of the AIA Vitality program.

AIA: Clients can get one month’s premium free when they apply for a new eligible AIA policy between 5 March 2020 and 31 May 2020 and have the policy issued by 31 July 2020.

Partners Life: The automatic COVID-19 Mental Health exclusion that was applied to disability and business risk benefits has been replaced with more targeted and specific underwriting processes.

Partners Life: Clients who had the automatic mental health exclusion applied will have it replaced with an emergent mental health exclusion.

Partners Life: Underwriting restrictions 2020


DAILY NEWS: Increased interest in digital insurance and more

Consumer behaviour is often fluid. Trends, word of mouth as well as personal experiences play a part in changing decision-making processes and purchasing habits. Similar to other purchasing behaviours, the way people are choosing to purchase insurance is changing. There is an upward trend of people relying on their own research and not seeking advice from financial advisers. Similarly, there is an increased interest in digital insurance providers.  

"Consumers of all ages are adopting a “millennial mindset,” according to Capgemini and Efma’s World Insurance Report 2020. This means that consumers are increasingly trusting their own research to source and purchase insurance products themselves. Customers of all ages are also increasingly turning to digital channels in the face of the COVID-19 pandemic, the report found.

 

“Digital adoption is no longer a function of age; for those with access to the web and social media, researching and directly procuring insurance online has become mainstream across all generations,” Capgemini said.

 

To remain relevant, insurers must shape their existing products to meet evolving customer needs and preferences, the report said."

Furthermore, it is reported that:

“The COVID-19 lockdown will further fuel this trend as consumers are forced to use digital channels for day-to-day transactions, irrespective of age or tech know-how,” Capgemini said. 

In other news:

Advisers haven't done enough to digitise their offering - expert

Air pollution dropped dramatically during lockdown

FSC webinar: Introducing the financial resilience index

FSC webinar: A global response to COVID-19

FSC: Spotlight on Insurance


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


Latest news including: AIA Vitality updates

AIA has been helping clients stay active during the lockdown. AIA has modified how customers can earn points.

"With AIA Vitality at home, members can:

  • Earn up to 50 Points per day with online workouts: led by AIA Vitality Ambassadors Ian Jones, Laura Henshaw, Chris & Bec Judd and Sarah Piotrowski
  • Enjoy a 30 day free trial, plus 10% subscription discount, with Les Mills On Demand: gaining access to 13 fitness programs and over 800 of the world's best workouts
  • Track their activity with a new device: with 25% off across the Fitbit online store, in addition to 25% off on selected Garmin devices
  • Refresh their workout wardrobe with 40% off New Balance footwear and apparel: with a unique, single-use code available on purchases until 30 May 2020"

In other news:

FSC: FSC Connect: A mission to healthier lives with NZ rugby legend, Ian Jones

AIA: Healthy Ad Break

nib Australia: Shareholder Announcements

OUT NOW: ASSET May issue

Newpark: NewPark_Demo_Overview

Now is not the time to shut up about suicide

Many covid deaths in care homes are unrecorded


COVID-19 Crisis will have diverse impacts on health and insurers

Members of parliament listened to the stories New Zealanders shared about their struggles and hardship during an Epidemic Response Committee meeting recently. No accounting of costs and benefits can be done in full for some years. The purpose of this post is not to attempt that. I acknowledge that a trade-off was made between the numbers that would become sick and die directly from COVID-19, indirectly from a poorly-managed response to the epidemic, against those that may suffer a similar fate because of restrictions due to the control measures. On balance, I prefer the control measures taken - as severely negative effects (more sickness and more death) are associated with a range of alternatives. However, the purpose of this post is rather to explore the impact on customers of insurance companies, and therefore the likely claim impact on insurers.

 

Death claims are much higher in markets where there has been a delayed or poorly managed response to the epidemic. Take the example of Lombardy, detailed in this news. Deaths from out of hospital cardiac arrests rose sharply, as people deferred or tried to avoid treatment, and possibly, some were simply unable to receive emergency treatment in time. Cancer treatment would likely have been affected similarly - as it has been in the UK, with some patients missing chemotherapy appointments, probably, in part, due to fear of visiting hospitals where there are a lot of COVID-19 patients. These all have an impact on insurers - as shown in these reported results from Europe: pandemic takes its toll on insurers’ first quarter results.

 

But that doesn't mean we have avoided all the negative effects of the pandemic. Various tests and treatment were deferred to ensure sufficient capacity in hospitals for the epidemic and they will take time to restart, let alone catch up. See: some DHBs weeks away from restarting breast cancer screening. Take cancer care: delays in diagnosis and treatment, for example, are likely to have some effects. In this news piece one patient explains the treatment delay and how they are now seeking treatment privately so that they will not have to wait. Inevitably in a large pool of people where diagnosis and treatment are delayed there will be some increase in cancers at a later stage and some increase in deaths. The difference between the effect of death claims from COVID-19 and those that may arise due to treatment delays is probably in three dimensions, time, scale, and age of the person affected. A COVID-19 death would tend to happen quickly, soon after the time of infection, compared to the cancer death that will emerge over a period of up to two years. The age of the person affected is likely to be younger, but the scale of people affected should be much smaller than the numbers that could have been affected by an un-managed outbreak. 

 

Three scenarios can be constructed. One was the expected claims budget for 2020 before the pandemic. It is the budget baseline. Then there is the possible scenario without effective management. Then there is the likely current scenario compared to the baseline. It seems clear that the 'saving' due to lower death claims from COVID-19 is probably large. But it not clear that the small reduction in deaths and injury due to fewer road accidents and workplace deaths may not be sufficient to off-set the other indirect affects of the COVID-19 crisis. At present, as explored in this blog post, the death rate is running slightly above last year. I think I would still expect higher claims for 2020 for life, trauma, and IP products as per this post. 

 

In other news:

Pandemic will reset all markets, economist says

Pricing strategy – choices and their meanings

Australia: Financial planners have proven incapable of self-regulation, but can FASEA stop the client rorts?

 

 


Southern Cross report on the effect COVID-19 has had on members

Southern Cross has reported that more than 1,000 of their policyholders have applied for the premium relief for redundancy and loss of income policies that the insurer has introduced. To better accommodate customer needs Southern Cross has been working alongside members to understand their needs during this time.

“Nick Astwick, Southern Cross Health Society CEO, says the company has redoubled its relief benefit offerings to all its customers, and “softened” the initial eligibility requirements to reflect customers’ growing need for financial relief. He also noted that while Southern Cross does not cover for acute care, it would still cover for any potential aftereffects experienced by affected customers.

“We’re here to compliment the services provided by New Zealand’s public health system, so there’s no cover in our policies for acute care,” Astwick explained.” Click here to read more

In other news:

Tower: Tower follows AA Insurance's coronavirus lockdown profit pledge

nib: nib Joins Forces With Top Footy Talent To Ignite Wellbeing Conversation

How insurers are supporting their advisers during lockdown

Insurers weigh up pandemic impact

Fidelity Life: Millennials Most Anxious About Post-Covid-19 Future As App Launched To Support NZers’ Wellbeing


NZ death rate data tracking

No sooner had I asked my new data analyst to get up to date death rate data, I see this article: Farah Hancock at newsroom.co.nz has an excellent piece on expected death rates versus actual death rates for recent weeks for New Zealand. Hancock takes the data trends reporting from northern hemisphere countries and sought the same information here: 

"Overall, there have been 129 more deaths this year between January 1 and April 29. Nineteen of those are attributed to Covid-19. As in previous years, weekly fluctuations are seeing the 2020 line both dropping and rising above the historical average calculated on weekly deaths each year from 2015 to 2019."

It should be noted that Statistics NZ show the moving average (see link to full article below) as:

"After smoothing the fluctuations out by averaging them against the week either side, he said numbers have trended down a little."

That's good - ideally it shows that we are probably counting our COVID-19 deaths accurately - which is surely easier to do when they number in tens not thousands, another benefit of the approach taken to managing the pandemic here. It is a data set we will now continue to keep an eye on as COVID-19 is not the only factor - as highlighted in the UK there are concerns that consumers may not be using health services as much as they should due to concern that they do not wish to put more pressure on services that may need to be used by others, or fears that they could catch COVID-19. That risk is now very low. Insurers and advisers can encourage clients to seek early diagnosis and to keep up appointments for treatment. In the UK, for example, significant numbers of chemotherapy appointments are being missed. Links to those articles are in this post below. We need to avoid that situation here in order to prevent knock on effects such as increasing cancer deaths. 

Hancock also refers to The Ministry of Health statement that there had not been a surge in suicide deaths after an online troll had asserted a large rise. As the MOH put it in their release: 

“The Covid-19 response may have significant, long-term effects on people’s lives BUT it is not inevitable that there will be a significant increase in serious mental health issues or suicides.”

“Suicide numbers may increase as a result of the Covid-19 response and they may decrease. Data from previous international crises have shown both outcomes ... Every life matters; it’s vital we focus on preserving life rather than speculating about the likelihood of ending it." 

This is a great message. Life insurance is a grim business, of course, as regrettably we are required to consider what impact events will have on future claims, especially when being asked for updated forecasts by shareholders and regulators interested to understand resilience in the face of claims increases. We know, for example, that income protection claims tend to last longer during recessions. Recessions tend to worsen mental health problems and New Zealand has a poor record on suicide prevention. Some of the likely claims impacts are explored at a high level in this post below. This is also an opportunity for insurers and financial advisers to contribute to a wider community message on prevention and management of mental health issues. Subscribers to the quarterly market data report will see death rate reporting in that for at least the next few quarters. 


COVID-19 Impacts on claims - which insurers win or lose?

COVID-19 and associated policy responses impact all types of insurance differently, as media reports have somewhat highlighted recently. 

Vehicle insurers are enjoying a drop in claims due to the low levels of driving, and therefore accidents. Sense partners has a dashboard showing an index for traffic congestion with rates running between 20% and 40% of pre-lockdown levels. As the Insurance Council points out, not all car insurance costs come from driving, consider these complete idiots, but nevertheless, vehicle related thefts should be down too. Guyon Espiner, using overseas experience, estimated the saving to be $100million. I doubt it, especially as the contry gets moving again. There is a saving. There is also a cost - as the economic impact begins to bite, there will be missed premiums and cancelled coverage. Deferred maintenance on vehicles will take its toll as the months and years roll by. New cars are safer too and our fleet will age as people defer vehicle purchases. Some changes could be permanent - converts to cycling and working from home may find driving reduces to the point that the household can do with one less car. A handy change if they have taken a hit to income. But economic impacts will take time to flow through and for now, vehicle insurers have a saving. 

Health insurers are enjoying a drop in claims too as all non-essential medical care was deferred. This is opening up again, but capacity constraints mean that we simply cannot get all the deferred treatment done in the next month - or even the next few months. That has enabled Southern Cross to give back $50 million to policyholders and nib to defer a premium increase to next year. However, for reasons, 

Life, trauma, and income protection insurers will experience an increase in claims. The policy response in New Zealand has limited COVID-19 deaths very successfully. In fact our 'best case' scenario published in the week we started level four restrictions estimated 1,785 deaths and a direct claims impact of $22.8m. That excluded deaths from other causes running above trend. It is now clear that although we could see the number of deaths remain low (assuming no breakout of infection again) we can expect to see the death rate run significantly above trend - albeit much more modestly than the examples I gave from overseas in this article. Why? Although accidental deaths will fall this is expected to be off-set by other factors:

The first is that (as we have previously reported) COVID-19 deaths will probably be underestimated in current statistics as shown by overseas experience, more evidence came from the UK overnight as they restated upwards their COVID-19 death count, plus deaths from other causes will rise as a consequence of the lock-down and deferral of non-essential medical care. In the UK they expect cancer deaths to rise by 20% for this reason.  Life cover is typically five times the amount of trauma cover sums insured - so some trauma claims of $50,000 or $100,000 and a recovered living person will instead become a life insurance claim of $200,000 or $500,000, with a grieving family. Cancer is not alone in benefiting from early detection and treatment. Again, from the UK, medical experts are worried that there aren't enough people attending emergency rooms. For example: 

"... the British Heart Foundation (BHF) said on Thursday that as many as 5,000 people a month who would normally have gone to hospital with symptoms of a possible heart attack are putting their lives at risk by staying at home." from this article.

Again, an earlier intervention, and a smaller insurance claim is being turned into one which is larger, and has a far-reaching economic effect: many people experience their first heart attack while relatively young with plenty of life ahead of them: including a life contributing both personally and economically to their households and communities. These excess deaths will be experienced quickly (unlike the cancer deaths which may take months to emerge). They undoubtedly form a significant part of the excess mortality being seen in other countries.

This leads us to the psychological effects of the pandemic and the economic impacts arising from it and from the policy responses to it. Some of these will be felt in life insurance claims. In the UK researchers see the conditions for a sharp rise in suicides. Our suicide rate is 80% higher than the UK's and our mental health services are an identified weakness in overall health provision. According to Treasury economic forecasts we are headed for a bad recession. It will affect people. Some will die and some will experience bad mental health impacts, claiming on income protection policies. These impacts will likely be distributed over the next four years, based on past recessions, but the impacts will be felt for decades: some families, and the lives of their children, will be blighted by years of lost income and trauma due to the effects of losing a loved on to either suicide, or a prolonged period with severe symptoms. The impact of that on their long-run health, wealth, and happiness will be enormous. For life insurers the claims impacts can run from a $200,000 death claim (using a typical sum insured) to an income protection claim in the region of $1m over ten years. That is contributing to substantial changes to the sale and issue of income protection contracts. 

In sum, the impacts are hard to model and quantify, but they are not zero, they are negative - increasing claims costs - and they are likely to be well within the resources of virtually all insurers to manage. Having said that, you won't have to rely on my gut feeling: the Reserve Bank, however, has already asked for insurers to provide details of stress tests. 

Further work available:

I shall be asking my data folk to follow up in seeking more information about this and I shall expand on the estimates in my forthcoming quarterly market data update. Subscribers to my quarterly life and health sector report are welcome to have a copy of our COVID-19 deaths modelling. Just email me.