- Consultation on the proposed new distribution agreements
- Asteron Life product accreditation requirements
- Confirmation of FAP licensing arrangements
- Information to support in adviser complaints management processes
Asteron Life has announced that Grant Willis has been appointed as the new Head of Life. In this new role Grant will oversee the core functions of product, pricing. sales, operations, claims as well as client servicing.
“I am pleased to announce the appointment of Grant Willis to the newly established Head of Life role, effective immediately.
He comes into the role from a career in financial services, including the past nine years at Suncorp New Zealand, most recently as Executive Manager – Life, in Insurance Solutions, and from 2011 to 2016 was Asteron Life CFO. Grant has also held senior roles at AIG NZ, Colonial Fiji (a subsidiary of CBA), ASB and Sovereign.
As Head of Life, Grant will oversee the core functions of product, pricing. sales, operations, claims and client servicing. His appointment will enable us to focus on continuously improving customer outcomes in partnership with you.”
In other news
FSCL: FSCL celebrates 10 year anniversary
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
With regulatory changes finalising, the industry is working to adjust. This has resulted in a number of changes being contemplated as well as being implemented. Dealer groups have had to reconsider may aspects of their business to ensure that they are prepared for the upcoming changes. One potential change is the acquisition of a group by another.
“In the past week rumours started swirling around the market that one of the bigger groups was about to takeover/merge/acquire one of the mid-size groups.”
The impending changes to the current law has meant changes to Newpark have had to be made. Newpark is expected to announce changes to their model towards the end of next month.
“Meanwhile, Newpark is regrouping its army, but how big it will be after Partners Life new FAPO model where override commission is paid to FAPs is unknown.
Good Returns understands that Newpark will be announcing its new model around August 23. If Covid-19 hadn't rolled its dice and pushed licensing back a year it's questionable if the group would still be on the board.”
Alongside making changes to align with new regulatory standards dealer group must work to ensure that they offer advisers attractive membership services.
“For advisers there is a growing imperative to ensure they find a group that fits with their own beliefs and business practices.
For dealer groups the pressure is coming on to deliver appropriate services to their members at the right price points.” Click here to read more
In other news:
Commerce Commission: Commerce Commission release advising the Court of Appeal issued a ruling in the case regarding Harmoney’s lending model. In a judgment issued on 8 July the Court said that: Harmoney Limited is a creditor, its contracts are consumer credit contracts which are subject to the requirements of the CCCF Act, its platform fee is therefore a credit fee that is required by the CCCF Act to be reasonable.
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.
With restrictions placed on movement, advisers were unable to visit clients. We can assume that clients would want to speak to their advisers at this time to discuss their options. We can also assume that this has been a busy time for advisers. As demand increased, some clients have felt that their needs have not been properly catered to. As a result, FSCL has reported an increase in complaints.
In other news:
Professional IQ are hosting a workshop presented by Susan Taylor to discuss a number of recent cases that have been investigated by FSCL and how they were resolved. Click here to register.
We usually think of an illegal act as a crime or at least, an action the insured person took that was a breach of the law. The example we often give in workshops is that a person got drunk and drove their car. Most fully underwritten insurance will pay anyway - the best policies have no exclusions at all after an initial period. Some insurance policies decline to pay for illegal acts, but many people that take these policies out assume that because they are generally law abiding, these exclusions will not apply to them.
We invite you to consider this case, that FSCL reports. A claim was declined under the illegal acts exclusion when a passenger in a car died because she had not put her seat-belt on. We are worried about this decision, because mere forgetfulness, especially on the road, could mean many claims arise from an 'illegal act'. The lack of clarity for consumers who may not realise that an illegal act includes, essentially, a mistake or forgetfulness, that means a breach of the road rules. Road accidents are a common cause of early death and many accidents resulting in the death of the insured may have been caused, or contributed to, by acts such as straying over the speed limit (however momentarily), drifting out of lane, or failing to take another look at an intersection - thereby failing to give way.
Illegal acts exclusions could represent a much bigger problem than most clients realise.
FSCL has this disclosure and replacement case study which highlights that omission is the main problem in replacement cases:
You could say that FSCL would like some advisers to give more advice. Link.
Susan Edmunds writes in goodreturns that FSCL is unhappy with elements of the Insurance and Savings Ombudsman's plan to change its name to the Insurance and Financial Services Ombudsman Scheme. Link.
What surprises me is the idea that there is significant consumer brand value in any of the names being discussed. These are fundamentally industry brands, known mainly to insiders, referred to by consumers not because they are 'top of mind' but because they found the name and contact details in documentation from their financial services provider.