Daily news update: nib offers continued support to members, and more stories

nib announced that it will offer members continued support in the form of their COVID-19 member and community support package. The support package will be offered until 30 September 2020 to ensure that members are able to maintain their health. cover.

“nib New Zealand (nib) today announced it will offer its COVID-19 member and community support package for an additional three months to make sure members continue to stay safe and healthy by maintaining their private health cover as New Zealand recovers from the pandemic.

nib Chief Executive Officer, Rob Hennin, said that while lockdown restrictions have eased and more healthcare services are now available, the COVID-19 pandemic will continue to have ongoing financial and health impacts on New Zealanders.

“We recognise many of our members have experienced financial uncertainty and additional stress during this difficult time, and we want them to be able to continue to prioritise their health and wellbeing,” Mr Hennin said.

“By extending our support package we hope this provides both our members and the community with additional support to assist them as we return to a new normal,” he added.”

nib is offering:

  • Ability for eligible existing members who are experiencing financial hardship to access special premium relief*.
  • Ability for eligible existing members who are experiencing financial hardship to suspend* their health insurance policy and premium payment for up to six months.
  • Expanded coverage* for chest, lung, kidney and bladder or other treatment related to conditions caused by COVID-19 across all levels of hospital cover (including Basic Private Hospital Cover, Mid Private Hospital Cover and Mid Private Hospital Cover Plus where currently excluded) at no additional cost.
  • Cover for GP or specialist consultations that need to be conducted via video or tele-consultation due to COVID-19*.
  • Automatic increase of pre-approval validity to six months meaning members do not need to reapply for pre-approval if they experience delays to hospital treatment#.
  • Ability for existing members to increase their excess (payable upon hospital admission) to the maximum allowable level under their policy without needing to be re-underwritten if they choose to reduce their excess as their financial situation improves^.
  • Help for members navigating COVID-19 by publishing across our various channels (including nib.co.nz) information on their cover, how to minimise infection risk and related matters.
  • A $1 million donation from nib foundation and nib to support charitable initiatives, including Lifeline Aotearoa and Clearhead, to assist the community across New Zealand and Australia during the pandemic.
  • Offering up to two weeks paid special discretionary leave for all nib Group employees (permanent, fixed-term or casual) who are impacted by COVID-19.

In other news:

Financial Advice: Bring in the Experts – What’s next for FSLAA: An update from the FMA on progress and the path ahead

Financial Advice: Expressions of Interest to join the Association’s Certification Committee now open

CoFI: watch the select committee


Daily news update: Partners Life predictions for increased suicide claims, and more stories

While there aren’t usually many suicide claims made, Partners Life is now predicting that there will be an increase in suicide claims in the foreseeable future. Naomi Ballantyne has linked the economic effects of the pandemic to increased mental health problems and self-harm.

“Life insurance company Partners Life expects a rise in suicide claims as a result of businesses failing in the economic downturn caused by the Covid-19.

"We've certainly experienced already suicides that are directly related to businesses being shut down," Ballantyne said.

The Covid-19 economic crisis was putting unprecedented pressure on businesses and their owners, and there have been predictions the pandemic could result in a rise in self-harm.

Business failure could have an intense emotional impact on individuals, and business failures were sometimes implicated as a factor contributing to owners' sudden deaths.

In desperation, people sometimes convinced themselves that their families would be better off with a payout on their life insurance policies than with them remaining alive, Ballantyne said.” Click here to read more

In other news:

FSCL: FSCL's 'allegations against a very senior parliamentary officer' This covers the issue of the right to use the word 'ombudsman'

Reinsurance sector won't achieve cost of capital in 2020, outlines Fitch Of course, many categories of business will not achieve their cost of capital. 

Financial advice saving retirement futures: Adviser This trend isn't confined to KiwiSaver advice either - events cause people to reflect on their contingency planning, including risk.

ASB: ASB to waive home loan interest, if a borrower dies


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


Advice Logic

It was great fun to be a guest of Partners Life at their online mini-conference. Kris Ballantyne, GM Marketing and Product, and Tim von Dadelszen, GM Digital and Innovation to talk about advice logic: the science behind giving advice, why process is important, and evidence-based concepts for setting sums insured. Partners Life has published the session, which you can view here: 

https://player.vimeo.com/video/415385322 

Advicelogic image 2020-05-09 173550

Working on the content for this session included talking with advisers who are passionate about giving good advice in a way that has rigour and a basis that can stand scrutiny. I particularly appreciate the input and challenges from Royden Shotter, Anand Srinivasan, and Jeremy Bernstein, although there are many more that routinely contribute to the subject. 


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. 

 


ACC to delay invoicing

ACC are delaying CoverPlus Extra invoicing for three months. Although CoverPlus Extra payment plans will be paused, all customers will remain covered at their agreed amount. Customers on a payment plan with an outstanding amount owing may have their next installment taken before being paused. ACC will be in touch if there are any further changes.

Click here to see ACC’s response to COVID-19


FMA investigate false COVID-19 advertisement by adviser

False information was posted on Chinese social media platform WeChat by an adviser. It was suggested that people living in New Zealand get health insurance to ensure that don’t have to pay the same amount for COVID-19 related hospitalisation as people in China (up to $250,000). Regardless of a person’s immigration status, anyone is eligible for free emergency treatment and testing for Covid-19. The FMA was notified and the adviser has been contact. Although the adviser agreed to remove the ad, the FMA will be following up on the issue.

 

Click here to read more