Asteron Life introduces mental health support, and more daily news

Asteron Life announced that the Best Doctors service will provide free access to different mental health experts to customers with disability insurance. The service will allow customers to access general advice as well as services from psychologists and psychiatrists. 

“Asteron Life today announced that customers with disability insurance will now have access to the Best Doctors service at no additional cost. The Best Doctors package provides direct access to a multidisciplinary team of mental health experts, including psychologists and psychiatrists, as well as general advice on mental health conditions and guidance on how to navigate the mental health system.”

Graham Hill, executive manager Life Distribution said that Best Doctors works to ensure customers are connected and make medical decisions with confidence. Graham continued by saying that having access to expert medical advice in the current environment is relevant while Mike Morris, the country manager of Best Doctors said that the importance of virtual care has been highlighted this year.

“Best Doctors connects our customers with leading medical specialists, and enables them to make medical decisions with confidence,” says Graham Hill, executive manager Life Distribution at Asteron Life. “Like insurance, the service is really about being there for people when it matters.”

 

Hill says that in the current Covid-19 environment, mental health support and the ability to get expert medical advice from your own home is particularly relevant.

 

Mike Morris, the country manager of Best Doctors has said “This year has shown us that virtual care is incredibly important and effective. There has never been a better time to offer people access to virtual care and we’re delighted to be bringing new services to Asteron Life customers.”” 

Asteron Life is offering advisers virtual training sessions. Times available are:

·       09:30am – 10:30am, September, Wednesday 9

·       09:30am – 10:30am, September, Thursday 10

·       09:30am – 10:30am, September, Monday 14

·       09:30am – 10:30am, September, Monday 21

·       09:30am – 10:30am, September, Monday 28

 

Click here to register

Click here to read more

 

In other news

RBNZ: Has the Reserve Bank responded differently to upturns and downturns in inflation and economic activity?

FMA: COVID-19 response insights

Financial Advice webinar: Panel Discussion: Obtaining or Updating your Level 5 Qualification in Financial Services

 


Legal and regulatory update for the life and health insurance sector

4 Sept 2020 – The FMA released a consultation paper on the proposed Auditor Regulation Act (Prescribed Minimum Standards and Conditions for Licensed Auditors and Registered Audit Firms) Notice 2020, intended to replace two previous notices proposed to be revoked. Submissions close on 21 Sept 2020. https://www.fma.govt.nz/compliance/consultation/consultation-prescribed-min-standards-conditions-licensed-auditors-registered-audit-firms/

2 Sept 2020 – FMA issued a warning that it is aware of a case where scammers have been impersonating the FMA while operating a scam relating to money remittance services. https://www.fma.govt.nz/news-and-resources/warnings-and-alerts/fma-impersonated-in-suspected-money-remittance-scam/

3 Sept 2020 – Deloitte issued a paper commissioned by Partners Life exploring observations made in the RBNZ Bulletin, which provided commentary around the profitability of New Zealand’s life insurers, the value for money of life insurance, and life insurers’ ability to meet minimum capital requirements.

https://www2.deloitte.com/nz/en/pages/financial-services/articles/deloitte-issues-paper-life-insurance-sector.html#

3 Sept 2020 – The Commerce Commission announced that it has signed a multilateral framework enhancing international cooperation on competition enforcement with the Australian Competition and Consumer Commission, the Competition Bureau of the Government of Canada, the United Kingdom Competition and Markets Authority, the United States Department of Justice and the United States Federal Trade Commission.

https://comcom.govt.nz/news-and-media/media-releases/2020/commerce-commission-signs-multilateral-framework-enhancing-international-cooperation-on-competition-enforcement

3 Sept 2020 – FMA update released which included the following new material:

  • The release of three short videos for consumers about getting financial advice featuring Investor Capability Manager Gillian Boyes together with a related Spinoff article. Related weblinks at
  • World Investor Week 2020, starting Monday, 5 October.

Related weblinks at https://www.fma.govt.nz/investors/getting-financial-advice/ and https://thespinoff.co.nz/money/12-08-2020/everything-youve-always-wanted-to-know-about-financial-advisers/


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

 


FSCL complaint foreshadows implications of non-disclosure, and more daily news

After speaking with an adviser a woman proceeded to cancel her $300,000 policy and add a trauma/critical illness policy. After suffering a back injury a month after making the changes, the woman’s claims were denied.

“The woman met with an insurance adviser to review her cover – she already had a $1 million life insurance policy with one insurer and another $300,000 policy with another, but no trauma, critical illness or mortgage replacement cover.

The adviser recorded that she was working 28 hours a week as an accountant in her own company and studying part-time.

It was recommended she combine her life insurance policies with one of the existing insurers and cancel the $300,000 policy. The adviser also said she should include some trauma or critical illness cover and mortgage protection cover in case she could not work for a period of time.

The woman accepted the adviser’s recommendations. She cancelled the $300,000 policy and a new policy providing cover for trauma/critical illness commenced in October. In November she tripped and fell, injuring her back.”

When speaking with the adviser the woman noted that she worked 28 hours and studied part-time, when claiming she told her insurer that she worked 30 hours a week and informed ACC that she worked 40 hours a week. Her insurer discovered that she wasn’t  working and instead was a full-time student. The woman proceeded to lodge a complaint against the adviser stating that she wasn’t informed that she would need to provide financial statements and a result of the advice she’s cancelled her $300,000 policy.

“She submitted a claim under her trauma/critical illness insurance, stating that she had been working as an accountant for 30 hours a week. She also stated on her ACC form that she had been working for 40 hours a week.

When the insurer asked for documents to corroborate her income, she was unable to provide convincing information. The insurer then discovered that she was a full-time student. The insurer declined the claim and voided the new insurance policies but later reinstated the $1 million life policy that she had before the changes were made.

The woman complained that the advice she had received from the adviser caused her to lose the $300,000 life insurance policy that she had cancelled on the adviser’s advice. When the complaint was not able to be resolved directly with the adviser, she went to FSCL.

She told the dispute scheme the adviser had not told her she would have to provide financial statements to support any claim.”

Although the FSCL concluded that the advice given was sound advice, the chain of events highlights the importance of risks of non-disclosure.

““We were satisfied that the advice to increase the cover with one insurer and cancel the smaller policy was sound advice and had not caused any loss,” FSCL said.” Click here to read more

Advisers reading the reports will notice inconsistencies and gaps. The story is plainly larger and more complex than is being shared. As such, there is no real basis for making form judgments. In more general observations we should probably note the increasing likelihood of client complaints and the difficulty of managing disclosures - making sure that clients are really clear about the importance of accurate disclosure and helping them to achieve that - for their benefit and ours. After all, complaints just cost us all money and reputation. 

In other news:

Southern Cross: a Risk Partner – Sales and Marketing role is currently being advertised

Strategi: Strategi are offering remote AML/CFT audits

RBNZ: Reserve Bank extending mortgage deferral scheme

RBNZ: Monetary Policy Statement Explained Q&A with RBNZ Chief Economist and External MPC Member

FMA: Sorted Money Week has begun


Planning for the new disclosure regime - what to do:

With the publication of new disclosure regulations, each transitionally licensed Financial Advice Provider must now develop a process for implementing these to take effect from 15 March 2020.

This change means engaging with systems people, reviewing websites, reviewing statements of services, and reviewing statements of advice. Outlined below is a more detailed process for designing and implementing a new disclosure procedure. It is significant.

The core work involves:

  • Identification, review and development of the disclosure content required:
    • To be publicly available on the Financial Advice Provider website, and
    • To be delivered to consumers
      • When the nature and scope of advice is known
      • When advice is given
      • When a complaint is received
    • Determining how the required disclosure is to be given to a consumer (verbally or in writing, while noting that a consumer can always request written disclosure)
  • Development of an implementation plan to ensure introduction of the disclosure changes as and when required (15 March 2020)
  • Development of a compliance and compliance assurance plan to provide comfort to the Financial Adviser Provider Governance Structure (e.g. Board) that the legal disclosure requirements are being met, or, in the event of a failure, any such instances of failure are identified and remedied.

The regulations also contain further information on other matters that should be considered, such as:

  • The requirement to consider materiality when considering what should be disclosed
  • When information must be given about a person as well as about the Financial Advice Provider
  • When reference to publicly available information will be sufficient to fulfill the disclosure requirement, rather than having to specifically provide a disclosure direct
  • When reliance can be given to past disclosures already completed until or unless a material change occurs

If you would like to discuss how Chatswood Consulting Ltd may be able to support you during this change, please call.


The power of engagement - the FMA instructs

The FMA has recently released details of research int KiwiSaver statements. You can read the full media release at this link Read the full media release but the interesting part - and this has implications for life insurers too - is this: 

"This year, for the first time, members’ statements included an estimated projection of how much money their KiwiSaver investments could provide at age 65, and what this would amount to as a weekly income.

Of the 34% who recalled seeing their projected lump sum 63% of them planned to take some form of action. The most common planned action was increasing contributions."

Every now and then I get called into a meeting to discuss existing client communications. I have a bit of insurance and I get these. Also, periodically I run projects to collect copies of annual review statements. I have also worked with adviser businesses to improve their annual review communications with advisers. I always start from the point of comparing the cover owned with the ideal in the statement, including a quick link to enable more cover to be purchased, or cover to be bought where there is a gap. In all but one case (a more entrepreneurial adviser) the idea has been rejected as too complicated. I think the FMA's research is showing us that by undertaking the awkward task of doing a projection the customer is more engaged and therefore more open to doing more to close the gap. 


Should you dollar disclose commissions?

One of the most commonly asked questions about the disclosure regulations was whether or not dollar disclosure of commission would be required. There was some obvious concern on the part of some advisers. On the other hand, a small number have been disclosing dollar commissions for a while, and for them the changes are procedural and technical, rather than fundamental.

There are several dimensions to this decision. The first focus should, as always, be the customer. Principles in the current Code of Conduct under standards one, two, and four, all lean heavily on commission disclosure. Clearly, this was an area considered to be of such importance that detailed regulation is required. Let’s look at the regulations next:

In the regulations, disclosure of commissions is required when the commission is such that “a reasonable client would expect (the commission) to, or to be likely to, materially influence the advice given by A (the adviser).”

Words in brackets above are my additions to the actual regulation extract in quotes, to improve clarity.

Then, detailed disclosure in relation to commissions must be given in two circumstances:

  • when nature and scope of advice known
  • when advice is given, to the extent that the disclosure has not already been completed under the previous step

The specific commission disclosure required in the regulation is stated to be

  • “its amount or value (or how that would be determined)”

This implies that disclosure of the amount or value of commissions are not necessarily required to be completed, provided a clear explanation can be provided as to how the commission will be determined.

Some examples follow:

Example 1:

  • When nature and scope of advice is known, disclosure is completed that commission will be payable on completion of the contract at the rate of x% of the first year’s premium (i.e. how it is determined), or a commission amount of $xxx (i.e. the amount or value of the commission)
  • When advice is given, no further disclosure is required in the event that the disclosure already given remains unchanged

Example 2:

  • When nature and scope of advice is known, disclosure is completed that commission will be payable on completion of the contract at the rate of x% of the first year’s premium (i.e. how it is determined)
  • When advice is given, no further disclosure is required in the event that the disclosure already given remains unchanged, albeit the choice remains to additionally disclose the actual commission amount payable of $xxx, even while noting that the regulations do not explicitly require $ disclosure, unless “a reasonable client would expect (the $ commission, as opposed to information as to how it is determined) to, or to be likely to, materially influence the advice given by A.”

A share-broker can reasonably say they do not know the price (and therefore the fee or commission) in dollar terms until the trade is done – as prices can fluctuate a lot, and very frequently. It is common share-broking practice to disclose the actual fee or commission on the contract note issued for the completed transaction.

An insurance adviser generally knows what commission is most likely to be. If a case comes back from underwriting with an offer of terms the question is then whether financial advice is being given around the acceptance of the terms. Should you disclose a dollar rate on application and restate that for the offer of terms? Or should you only provide dollar disclosure when terms are known? Arguments could be deployed in support of either. I know that it is possible that every case could be issued at different terms to those quoted, but for most advisers, a solid majority of cases are issued at ordinary rates. 


Cancer - risk factors related to diet and exercise

Cancer is the single largest cause of death in New Zealand, but what causes cancer? The link between drinking alcohol and the disease is stronger than ever. New Guidelines from the United States suggest that no alcohol is the best option for cancer prevention. https://acsjournals.onlinelibrary.wiley.com/doi/full/10.3322/caac.21591 


Money Week is nearing

Financial Advice New Zealand will be holding Money Week next week. Money Week will be dedicated to educating the public on money matters. Money Week will be filled with resources that will are intended to raise awareness and address questions and concerns that the public may have. The daily webinars will be focused on different financial topics and will tap into the knowledge base of different financial experts.  The topics will include financial planning, mortgage, insurance, retirement planning, and investment. The webinars will be led by:

  • Monday 10th: Financial Planning – Hannah McQueen
  • Tuesday 11th: Mortgage Discussion – John Bolton
  • Wednesday 12th: Insurance Discussion – Peter Leitch
  • Thursday 13th: Retirement Planning – Liz Koh
  • Friday 14th: Investment Discussion – Paul Sewell

“Financial Advice NZ goes into overdrive next week to educate the public on the need to get financial advice, particularly in these uncertain times.

Every weekday we are hosting a free public webinar to discuss aspects of financial well-being. These will be hosted by five financial advisers who work every day advising clients. The public will be able to use the chatroom during each webinar to ask questions.”

The FMA have partnered with Financial Advice to run a joint event at The Base in Hamilton. Advisers will be present to chat with attendees, although they will not be providing financial advice. Joining Money Week will provide the public with the opportunity to think about their financial wellbeing and seek professional assistance from advisers.

"This year we are excited to have partnered with the Financial Markets Authority to visit The Base to raise the awareness of the importance of your financial health, wealth and wellbeing. Financial advisers will be on site to provide information to you regarding your general financial wellbeing (note this will not be personalised advice)." Click here to read more


Incentives for the right behaviour, and more daily news

Victoria University’s Economics of Disasters and Climate Change Chair Ilan Noy made a few suggestions when addressing Insurance Council members. To begin Noy pointed out that insurers could incentivize more clients to take out policies by introducing products that offer a greater scope of cover.

“Victoria University of Wellington’s Economics of Disasters and Climate Change Chair Ilan Noy said that, at the moment, insurance doesn’t realistically incentivise risk reduction as much as it needs to. He says part of this needs to happen through lobbying the government to make certain changes, but also potentially providing new products with an increased scope of cover.”

A common issue faced by clients during the lockdown was confusion over their cover limits. To minimize confusion, Noy encouraged insurers to either introduce new products or adjust current risk limits.

“Noy says insurance can also incentivise customers to directly reduce their own risk, and its other crucial role is improving and speeding up recovery from an event. He says a major problem during the COVID-19 pandemic has been confusion over limits of cover, and this may need to be remedied with new products or adjusted risk limits.” Click here to read more

The question of directly incentivising behaviour that reduces risk is always vexed. There are two main levers for providing feedback on risks that are controversial: the first is the willingness to offer cover or not, the second is the price for cover. These are strong, market-based, mechanisms which are employed all the time. A I know of a couple who first took proper control of their adult onset diabetes when they were deferred for cover by an insurer - it suddenly became real for them. I also know that insurers are routinely criticised for not offering cover to people they deem uninsurable as this is seen as 'unfair'. I also know that when insurers charge more for certain risks - for example, housing in coastal districts and earthquake zones - they are again criticsed heavily for a lack of 'fairness'. In a country where we have made desperately slow progress on climate change this price signal should be celebrated. 

The link between product design and incentives also reminded us to link to the question of IP pricing and product design - see below. 

Price is an incentive. In many activities, it is time to pay attention to it.

In other news:

Fidelity Life: two roles in the design team are being advertised  

FMA: Head of Banking/Insurance role being advertised

FMA: FMA publishes derivatives issuer Sector Risk Assessment

Should we be warning consumers about IP prices?