Fidelity Life licensing questionnaire, and more daily news

Fidelity Life are asking all advisers who have agencies with them to complete a licensing questionnaire. The questionnaire will allow Fidelity Life to understand what an adviser’s agency structure will be in the new regime, this will allow the insurer to continue accepting new business and paying commission. The questionnaire will be emailed out to advisers shortly and must be completed by 14 November 2020.

“So we can keep accepting your new business and paying you commission under the new adviser licensing regime, we need to know what your agency structure is going to be from 15 March 2021.

To make it easy for you we’ve developed a questionnaire. We’ll be emailing these out shortly so keep an eye out for yours.

So we have time to reflect these changes in our systems please respond by 14 November 2020.”

In other news

Fidelity Life: Building Better Businesses Live training to be held 18 September 2020

Fidelity Life: Disclosure Live: understanding the new disclosure requirements training to be held 22 September 2020

Fidelity Life: Part 1 of the online product accreditation programme, Learning HQ, is available now 

Fidelity Life: Part 2 of the online product accreditation programme, will be available in October 2020 


FSC looking for industry insights for new study, and more daily news

The FSC is seeking participants in a survey that relates to the three-part study Money & You. The survey is working to gather data on the views of those in the professional advice industry on the challenges faced within the industry and how New Zealanders can be better served. The survey is designed to take 12 -15 minutes to complete. The results will be published later in the year. The first part of the study was focused on the feelings and knowledge of money of New Zealanders and the second component of the study worked to understand the relationship New Zealanders have with money.

Click here to participate in the survey

AMP: AMP management overhaul keeps its risks “on the downside”

Kiwibank: Kiwibank claims negative OCR is unnecessary

Fidelity Life: new September Sharecare challenge is to achieve a minimum of 20 Green Days for a chance to win a subscription for a ‘Delight Gift Box’ from I AM Co

Fidelity Life: new September Sharecare challenge to track your sleep for at least two weeks to go into the draw to win a $250 Wallace Cotton voucher


Industry reacts to disclosure regulation draft, and more daily news

The submissions on disclosure regulations have been released by MBIE. Although the response was largely positive, some concerns were raised about the disclosure requirements set to come into place on 15 March 2021.
 
AMP highlighted the risk of repetition without addressing issues currently being undervalued by consumers. To ensure value is added AMP suggested that disclosures need to be simple and brief, something AMP doesn’t believe has been achieved by the current draft.

“AMP said there was a risk that the disclosure would end up being repetitive and not address the issue of long, impenetrable disclosures not currently being valued by consumers.

 

“For benefits to be delivered to New Zealand consumers it is essential for disclosures to be simple, meaningful, very brief and unobtrusive. We do not consider that these aims would be met with the regulations as drafted.”

 

Under the new rules, advisers are required to disclose any commissions or incentives they receive that a reasonable client might think might materially influence their advice.”

While Financial Advice said that a reasonable person wouldn’t have a good grasp of identifying conflicts of interest within the industry and that the regulation could be strengthened by having higher standards in place. Financial Advice highlighted that there are many references to ‘incentives’ so including a definition and reference to ‘disincentives’ would be valuable. 

“But Financial Advice NZ said a reasonable client would not expect to have a good grasp of identifying conflicts of interest in the sector.

 

“The regulation could be strengthened by having a higher standard, such as – ‘any interest of A, P, or any other person connected with the giving of the advice that has the potential to influence the advice given by A’.

 

“There are various references to ‘incentives’. We recommend including in the regulation a definition and reference to ‘disincentives’ as well. For example, a reduction of commission rates for low volumes could escape the disclosure regime. Disincentives is an area that is often overlooked and should be drawn attention to, so FAPs and advisers cannot avoid their disclosure obligations by saying ‘this disincentive is not technically an incentive’.”” 

AIA stated that there should be further clarification on was is “practicable” for advisers to include and highlighted that this would cause significant issues for financial advice providers. Although AIA doesn’t see this as an issue as they are prepared to invest in the appropriate systems to aid advisers. 

“AIA said there should be more detail on when it was considered “practicable” for advisers to include in their disclosure the amount of fees payable by a client connected to the advice recommendation.

 

“This is a significant issue for financial advice providers. For AIA NZ, significant system investments will be required to provide estimates. While AIA NZ anticipates making this investment, we are concerned that other providers may choose not to do so, and instead elect not to provide estimates on the basis that it is not practicable to do so. This is an undesirable outcome for consumers which we consider could be avoided by better articulating the circumstances when providers may elect not to provide estimates.” Click here to read more

In other news

FSC: Generations Conference will no longer take place

Kepa: Kepa Compliance Officer’s Course was held in partnership with Rosewill Consulting  

Fidelity Life: Fidelity Life were announced as finalists in Best ICT Team Culture category in the 2020 CIO Awards

Fidelity Life: new applications are encouraged to be done through e-App

Fidelity Life: options for alteration requests are:

·       emailing signed alteration requests to admin.services@fidelitylife.co.nz

·       email from the individual policy owner’s email address

·       Mailing to Customer Care, Fidelity Life, PO Box 37-275, Parnell, Auckland 1151


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

 


Importance of focusing on replacement business, and more daily news

Engagement in replacement business has been a focal point of regulators in previous years and the introduction of the new regime will mean that advice on policy replacement will be closely monitored. During an FSC Get in Shape webinar Steven Burgess from Compliance Refinery highlighted that the FMA has identified replacement business as an area that has the highest risk associated with it.

“Advisers engaging in replacement business have been under intense scrutiny from regulators over the past several years, and the new financial advice regime will ensure that close attention is paid to the details when replacing a customer’s existing policy.

As part of the FSC’s ‘Get in Shape’ programme for advisers, Steven Burgess, of Compliance Refinery, says the FMA has determined replacement business as an area ridden with potential risk. He says advisers will have to be extremely thorough in explaining the benefits, and, most importantly, the potential negative impacts of replacing a policy, and it will no longer do to simply quote a cheaper price.

“Replacement business is an area the FMA has determined as an area of ‘highest risk,’ and rightly so,” Burgess said.”

Steve suggests that advisers focus on providing comprehensive advice to clients. This means first understanding the different product offerings to ensure clients make informed decisions.

““That’s an area that advisers should be focusing on a lot more. It is much higher risk to potential customers, and it’s an area where you really need to be providing comprehensive advice to clients. You can’t limit the scope of that advice.”

“You need to make strong comparisons between what the old product was, and what the new product would be,” he explained.

“It’s really important that you get right down into the actual product details, so you can outline it and say “this is what you used to have, and these are the differences between that and what I’m recommending.” The more detailed the better, because these are the areas where the client can come back and tell you that they don’t have some sort of benefit or cover that they used to have, because they didn’t understand those differences.”

Burgess says that at the heart of it, advisers need to be extremely sophisticated in their understanding of various insurance products. He says risk is an area in which customers are usually the least knowledgeable, and it’s the adviser’s job to clearly lay out the risks specific to them.” Click here to read more

In other news:

Financial Advice: the Money Week event at the Base in Hamilton has been cancelled as a result of lockdown

Fidelity Life: Fidelity Life adds to board

AMP: Shake-up at AMP


New Premium Comparison data base Version 110

A new copy of the Premium Comparison database version 11 is now being delivered to institutional subscribers. 

Changes in this version

Updated Fidelity Life rates effective 1/8/20 for:

  • Income Protection and Mortgage Protection ‘To Age 65’
  • Level Trauma

Added new level premium ‘to age 70’ price points for Income and Mortgage Protection

Added new sums assured of 90K and 120k per annum for IP and 60K per annum for MP.


Southern Cross study finds Millennials and Gen Z less happier, and more daily news

The Southern Cross Futures Report 2020 has found that Millennials and Gen Z are unhappy with several aspects of their lives including friendships, social lives and wellbeing. The study revealed the number of dissatisfied Millennials and Gen Z participants outweighed the dissatisfied participants in other generations.

“Nearly half of young adults are dissatisfied with their friendships, social lives and overall wellbeing, a survey has found.

The Southern Cross Healthy Futures Report 2020 looked at the mental health of Kiwis aged 18 to 29. Fifty one per cent of them were concerned about being lonely compared with 38 per cent of the average adult population.”

The study also revealed that suicide, cost of living, access to mental health services, and violence were issues concerning Millennials and Gen Z. Dr Stephen Child, Southern Cross chief medical officer credits exposure to unrealistic lifestyles in the media as being a contributing factor to dissatisfaction, with people comparing their reality to their expectations that are influenced by what is portrayed in the media.

“The issues weighing most heavily on young millennials and Gen Zers’ minds were suicide, the cost of living, access to mental health services, and violence, the study conducted by Colmar Brunton on behalf of Southern Cross revealed.

Southern Cross chief medical officer Dr Stephen Child said the level of happiness people felt was often related to how closely their reality matched their expectations.

“If people’s expectations are higher than their reality, they can be unhappy. Generally, advertising, television, music videos over the last 30 to 40 years have all been selling and projecting expectations that are unreal.”” Click here to read more

In other news:

FMA: KiwiSaver statements starting to help members take action

Fidelity Life: Not All Hope Gone – Millennials Can Bounce Back Amid COVIDUpheaval, Says Top Advisor

AMP: AMP predicts profit drop


Fidelity Life moves 3000 policies to the cloud and more daily news

The first phase of Fidelity Life’s technological update is now completed. The $25 million change is part of Fidelity Life’s digitisation process that will ensure 3000 policies are relocated to the cloud.

“New Zealand's largest locally-owned insurer, Fidelity Life, has completed the first phase of its $25 million technology transformation, migrating of 3000 policies to a Microsoft Dynamics 365 cloud platform.  

The project, which was nicknamed ‘Watson’ for the innovative spirit of Fidelity Life founders Gordon and Shirley Watson, underpins the company’s five-year transformation strategy, built on the idea of "reimagining life insurance for New Zealanders".”

Project Watson is in collaboration with Datacom, Theta, DX Labs and Microsoft. In the past 12 months Fidelity Life has worked to update different aspects of the business to accommodate the implementation of Project Watson.

“The project has been delivered with the assistance of partners Datacom, Theta and DX Labs as well as Microsoft.

Fidelity Life chief technology officer Dan Wilkinson said the strategy required a high degree of ambition and innovation, and a traditional approach wouldn't cut it. 

Over the past 12 months we’ve focused on bringing our people along via fundamental improvements to the entire technology ecosystem, such as a new virtual desktop solution which enabled a seamless transition to remote working during the Covid-19 lockdown," he said.”

The transformation is designed to ensure sustainable growth is achieved as well as improving the support offered to advisers and partners.

“Fidelity Life’s transformation was all about delivering sustainable growth. 

“Project Watson will drive innovation, productivity, resilience and improved support for our advisers and partners," Wilkinson said. 

"Most importantly, though, it will allow us to develop simpler, more flexible products and deliver good outcomes for our customers."” Click here to read more

In other news

Kloogh victim despondent protections not in place

AMP: 'Retirees' stick with KiwiSaver, AMP says

RBNZ: Transparency And Disclosure Critical To COVID-19 Response


Greater effects of unemployment, and more daily news

RBNZ released its unemployment report to understand if unemployment in one region of the country could influence unemployment in different regions. Upon completion, RBNZ found that unemployment in one region does affect unemployment in other regions although the impact varies. It was found that unemployment in Auckland and Waikato has the biggest impact on other regions while unemployment in Taranaki and Southland have the least impact.

“The paper finds rising unemployment in Auckland and Waikato has the biggest impact on unemployment around New Zealand. In contrast, rising unemployment in the Upper South Island, Southland, and Taranaki generate few spillovers into other regions.”

RBNZ has determined that the information in this report can assist in setting and amending future monetary policies to support employment in New Zealand. Similarly, the identification of regions with greater impacts will help in the improvement of unemployment forecasts.

“The modelling indicates that regions with the largest spillovers can be used to improve the accuracy of national unemployment forecasts.

This can help inform the Reserve Bank when it sets monetary policy to achieve its mandate in supporting employment in New Zealand.” Click here to read more

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In other news:

Fidelity Life: Sharecare August challenge allows user to go into the draw to win a 'Winter Wellness' bag from My Food Bag worth $189.99 if they earn 20 Green Days over a 30-day period

Fidelity Life: Sharecare August challenge walk into winter gives puts users in the draw to win a Fitbit Versa 2 worth $359.99

Fidelity Life: Premium changes for some income protection cover, Key Person Cover and for new level trauma (including Trauma Multi) covers effective from 1 August

Strategi: Whitepaper - Vulnerable clients

RBNZ: Introduction of Bill marks exciting new phase for Te Pūtea Matua


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?