Legal and regulatory update for the life and health insurance sector

22 July 2021 – FMA released a report on Insurance conduct and culture: Fire and general insurers update. https://www.fma.govt.nz/news-and-resources/reports-and-papers/fire-and-general-insurers-update/

22 July 2021 – The latest FMA update included information on a report released in June titled “Filing of financial statements: review findings and guidance. https://www.fma.govt.nz/assets/Reports/Filing-of-financial-statements-review-findings-and-guidance.pdf

22 July 2021 – The FMA update also included advice that:

  • The FMA will be consulting in the third quarter of 2021 on proposals for exemptions to provide relief for insolvent FMC reporting entities that are in liquidation, receivership or administration from certain financial reporting requirements under the FMC Act to determine whether a class exemption is required.
  • AML/CFT reports for the period 1 July to 2020 to 30 June 2021 are due by 31 August 2021. AML/CFT supervisors have released updated guidance designed to help reporting entities complete their annual AML/CFT report.

https://www.fma.govt.nz/compliance/guidance-library/annual-amlcft-report-user-guide/

  • Updated the AML/CFT content on the FMA website to include information for Financial Advice Providers and Authorised Bodies.

https://www.fma.govt.nz/compliance/amlcft/faqs/#fapaab

  • A reminder of the new AML/CFT regulations that came into effect on 9 July 2021 and the availability of guidance on the new regulations available on the FMA website.

https://www.fma.govt.nz/compliance/guidance-library/amlcft-regulations-update-2021

22 July 2021 – RBNZ announced a consultation on an interim Solvency Standard for insurers, which will determine the minimum amounts of capital that insurers must hold, with submissions closing 1 October 2021. https://www.rbnz.govt.nz/news/2021/07/reserve-bank-consults-on-interim-insurance-solvency-standard

22 July 2021 – APRA released its Private Health Insurance Annual Coverage Survey for 2020. https://www.apra.gov.au/news-and-publications/apra-releases-its-private-health-insurance-annual-coverage-survey-0

22 July 2021 - Retirement Commission released its latest survey into the financial capability of New Zealanders. https://retirement.govt.nz/news/latest-news/latest-financial-capability-study-proves-knowledge-is-power-with-positive-findings-for-maori/

22 July 2021 – In an article titled “England’s NHS data-sharing to third parties”, the Privacy Commission uses this to highlight the privacy issues relating to patient data that may need to be considered with the consolidation of New Zealand’s district health boards into a single agency called Health New Zealand. https://privacy.org.nz/blog/englands-nhs-data-sharing-to-third-parties/

Probably the two most interesting items here are the conduct report on general insurers and the Privacy Commission's interest in medical data sharing. So many of the options for modernising the sector rest on medical data sharing and banking data sharing that these are likely to be areas under continually increasing scrutiny. 


Legal and regulatory update for the life and health insurance sector

6 July 2021 – IRD released a discussion document on proposals that would allow Inland Revenue to regularly collect bulk information about electronic transactions from payment service providers, with submissions closing on 20 Aug 2021. Link

6 July 2021 - The Government announced that it has agreed to establish a consumer data right framework for New Zealand. Link


Life expectancy change over time

It is always worth reconnecting with this great story from time to time: humans have been able to increase life expectancy dramatically in the last 150 years. It is not, of course, a one way proposition. Poor management, disease, bad luck, and war can have an effect - even in modern times: take South Africa as an example. This long-run analysis flatters some recent challenges. The United States, for example, is in a period where due to poor healthcare and high levels of violence life expectancy has stopped growing. New Zealand's life expectancy is great - and yet we could still save hundreds of lives every year if we could just improve our performance in five key areas to the levels that are typical in several other OECD countries. I suppose that is what makes this journey exciting: there is still so much more room for improvement. 


Home ownership rates and the impact on life insurance

Home purchase has been a major driver for bringing new households into comprehensive insurance planning. Fewer, older, homeowners, reduces the numbers in that pathway to cover considerably. Some flow remains, but the people are older, and more likely to have gained some coverage through other pathways. Financial advisers have been more flexible in identifying prospects through other life events such as immigration, starting new employment, and the birth of a child. They have also been more adept at offering insurance to renters. 

Household budgets under pressure from the increased costs of housing have less room for expenditure of all other types. 

Increasing debt levels are usually well correlated with increasing levels of coverage, so this is a broadly positive for insurance, but balanced by the budget issue, which is reducing the share of households with mortgage debt, and increasing the share renting. 

Home ownership rates av in Dec 2020


Wellbeing timeseries explorer

Statistics New Zealand has a fascinating data explorer for wellbeing - you can find it at this link. For those of you interested in the impact of COVID, you're out of luck as the most recent period included in the survey was for 2018. The two prior periods were 2016 and 2014. It is worth a look. Some things are reassuring - others more worrying: such as the metrics for houses being cold in the winter or for loneliness. 


Stats NZ update data collection approach relating to sex and gender

Stats NZ has revealed that after conducting an extensive public consultation there will be a change to the statistical standard relating to how gender, sex and variations of sex characteristics data is collected and reported. The new standard will ensure that definitions and measures are consistent and that they are inclusive of the transgender and intersex population. Stats NZ has also revealed that the collection and reporting approach is based around a human rights approach.

“An updated statistical standard will inform how agencies collect and report information on gender, sex, and variations of sex characteristics, Stats NZ said today. 

The refreshed standard makes definitions and measures consistent, provides guidance for collecting transgender and intersex population data, and is grounded in a human rights approach. 

“It’s important we collect data in an inclusive way, and our process for developing the updated standard reflects this. The refresh has involved extensive public consultation, input from government agencies, international peers, and the support of subject matter experts,’’ Government Statistician and Chief Executive Mark Sowden said.” 

Advisers and insurers also collect sex and gender information. It would be good to see the same standard applied in order to allow data sets to be compared effectively. A graphic from the Statistics NZ guide is shown below to illustrate how to ask the relevant questions. It seems that for the purposes of insurance data collection the approach recommended is to ask sex as assigned at birth and also then to ask gender (as shown in the third part of step three). When underwriting cover, however, identification of intersex variations would appear to be important. Moving these from the health questionnaire to the part of the application where sex and gender questions are asked would help some respondents a great deal. This is illustrated by the additional questions suggested in step three below.  Statistics NZ Guide to collecting gender sex and variations 2021-04-29 143507
 

 
Visit our website to read this news story and the updated standard:


Growth in life expectancy slows - but there is plenty of room for improvement

New Zealand has relatively good life expectancy (compared to many OECD countries) but still has many opportunities to improve - estimate by our data scientist, Ed Foster, using the major causes of death occurring between age 16 and 65 show that:

If we assume there are factors which are influenceable in bringing New Zealand’s mortality rates down to that of the average of the OECD, we can say that 254 deaths could be prevented annually with 87% coming from the female population.

A huge number of those lives that could be saved are women who die from breast cancer. That's another reason why cancer care and access to non-Pharmac drugs is so important. It is also a good reason why real world data should be the underpinning for insurance product rating. 

Turning our attention to the gap to the best performing country for each of the 10 causes of death, we can see that 2,049 lives could be saved annually but now with the majority (53%) coming from the male population.

That shows that although life expectancy growth has slowed recently, see media release below from Statistics New Zealand, there remains plenty of opportunity for us to improve.  A major contributor in this larger number is road safety. Another major contributor is self-harm. Subscribers to our quarterly life and health report have access to the full analysis. 

Growth in life expectancy slows – Media release

20 April 2021

Life expectancy continues to increase, although the change over time has slowed, Stats NZ said today.

Life expectancy at birth for the population as a whole is 80.0 years for males, and 83.5 years for females, based on death rates in 2017–2019. Life expectancy for males has increased by 0.5 years since 2012–2014, and by 2.0 years since 2005–2007. Life expectancy for females has increased by 0.3 years and 1.3 years over the same time periods.

“While life expectancy is still increasing, the increase over the last few years is smaller than in the past,” population estimates and projections manager Hamish Slack said.

Visit our website to read this news story, information release, and methods paper, and to download CSV files:


Merely stating facts is not enough

In research covering more than 6,000 claims for trauma conditions across greater than 2.6 million policy years, recorded claims causes show that cancer accounted for more than 40% of male claims and more than 70% of female claims. That's a huge share. It astonishes me that claims cause was not recorded for over 1,500 claims - but this gap in the data is more likely to be due to poor /legacy management information systems, than actually paying claims without a cause, it is unlikely to affect the ratio of claims causes. 

Consider another pair of facts: in a 30 year period a male non-smoker may have about a 16% (or one in six) chance of claiming on their trauma policy. Trauma claims enjoy a high claim payment rate - it varies, but in the UK a figure of greater than 90% is common. Now consider how they interact: there is about a 1.6% chance that this person will be unable to make a claim. Trauma insurance is a good bet. 

Clients, living their lives, have little or no idea about the risks and odds. It is up to someone to tell them. What's more, if you are basing product selection decisions on long lists of things that have little or no bearing on whether a claim will be payable then the information is true, but of limited use. Weighting the features by claims likelihood is essential to helping the client make an informed decision. 


If only we could do a better job at preventing brain injuries

Recently our data scientist Ed Foster produced a great paper for us on how many lives could be saved if we were able to level up our performance in the top ten causes of death to certain benchmark countries in the OECD. It is astonishing: up to about 2,500 early deaths could be prevented each year - and the knowledge to enable that is already available and being used in practice in countries like ours. 

But this article really caught my attention. How much crime do you think may be related to mental problems associated with brain injuries? It turns out - quite a lot. Imagine how much misery could be prevented, from mere theft to violent assaults, if we could just prevent more brain injuries from happening, or treat them better when they do. 


Survival curves

Max Roser at Our World in Data posted this great image of survival curves as a great way to visualise increased life expectancy added over the last 150+ years. A similar presentation can also be used to illustrate the probability of survival when demonstrating the issues of mortality risk in decumulation planning for retirement. Our World In Data is a fabulous resource for all sorts of issues, but especially good for mortality and morbidity statistics and ideas for good data visualisation. 

Exz5I1GXMActBgK