Asteron Life SME insurance index 2020 findings, and more daily news

Asteron Life’s insurance index 2020 provided insight into the insurance-related decisions made by SMEs. The index illustrated that the number of SMEs with multiple life insurance cover decreased when compared to the findings of 2019, with 38% of SMEs having only one life covered in 2020 and 32% of SMEs having only one life covered in 2019. The index highlighted a decrease in SMEs seeking advice from financial advisers and insurance companies and an increase in independent navigation. The findings of the index conclude that SMEs that received advice were more likely to have a broader range of cover. Of the SMEs that sought advice from advisers, 89%  had life insurance cover, 50% had IP cover, 66% had trauma, illness, cancer cover and 50% had TPD cover. Of the SMEs that didn’t receive advice, 88% had life insurance cover, 27% had IP cover, 43% had trauma, illness, cancer cover and 27% had TPD cover. Click here to see all findings of the 2020 index

 

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AMP sale proposal falls through, and more daily news

AMP has revealed that the non-binding sale proposal made by Ares Management in October 2020 will not proceed. AMP has highlighted that it will continue to engage with Ares Management in regards to AMP Capital’s portfolio review. The AMP Board has confirmed that a transformation strategy for AMP Australia and AMP NZ wealth management is likely to be the best option for shareholders.

“In a portfolio review of FY20, AMP have revealed that Ares Management have withdrawn their non-binding indicative proposal to buy out AMP.

The report stated that, “Following detailed discussions, AMP has been advised last night by Ares that it does not intend to proceed with its non-binding indicative proposal for 100% of AMP [at] $1.85 per share.”

While acquisition of AMP is off the table, the report states that, “AMP continues to engage constructively with Ares in relation to AMP Capital as part of the portfolio review.”

While the U-turn from global asset management giant, Ares, may come as a surprise to some, AMP’s broader position is one of positivity according to the report.

“The review has confirmed AMP’s transformation strategy for the AMP Australia (Australian wealth management and AMP Bank) and New Zealand wealth management businesses is likely to be the optimal outcome for shareholders. The AMP Board has therefore concluded the review of these assets.”” Click here to read more

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nib strategic thinking shift, and more daily news

nib New Zealand CEO Rob Hennin outlined the company’s shift in strategic thinking. Instead of focusing on ‘sick care’ nib will be focused on ‘well care’. Hennin noted that COVID-19 has meant that health insurers are more determined to promote healthy living, community connection and mental health. Hennin states that nib’s core focus and strategy remains unchanged although financial protection is no longer the sole focus. nib is set to follow a more holistic approach when viewing the health journeys of members. Choosing to take a long-term approach will mean that nib will work towards empowering members to make healthier choices.

“As insurers across the country put their 2021 strategies into action, nib New Zealand CEO Rob Hennin says that for him, this year will be all about focusing on ‘well care’ rather than ‘sick care,’ and looking beyond the mindset of an insurer focusing purely on financial protection.

Hennin says that with COVID-19 having changed everybody’s lives on such a huge scale, it is more important than ever for health insurers to promote community connection, wellness, and a focus on mental health. He says nib’s core strategy remains fundamentally unchanged, but that there will be much higher focus on mental health, and on supporting members’ health journeys.

“COVID has clearly disrupted our lives and our business in unforeseeable ways,” Hennin said.

“Our strategy is very clear - we’re looking to protect our members, offer them the financial cover that they need, connect them with providers who can help with specific needs, and to help them to navigate the healthcare system that we have in New Zealand.

“We also want to empower them to make the health decisions that will put them on track to achieving what they want to achieve, and that part of our strategy is very much unchanged.”

Hennin says the company will be looking to take a more “holistic view” of people’s health journeys, and to take a “long term approach” to helping them access the care that they need. Click here to read more

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Partners Life sets off on transparency route, and more daily news

Partners Life has begun the process of becoming more transparent by publishing a timeline of key events that would be of interest to customers. This step comes after the announcement by Partners Life CEO Naomi Ballantyne and chairman Jim Minto in September. Partners Life has shared information that wasn’t previously made public by Partners Life or other New Zealand insurers. Partners Life says that it is happy to make this information public. Information shared include premium changes, claims ratios, awards and launches.

“In late September, you may have seen Naomi and our Chairman, Jim Minto, interviewed by the press talking about Partners Life’s plans to publish a whole bunch of information on our website in the name of transparency.

Since then, we have been working away, trying to figure out the best way to make this important information not only accessible, but readable and interesting to clients, advisers and regulators alike, and we are very pleased to let you know that we have today launched the ‘Timeline’ on our public website. The Timeline can be found here.

The Timeline narrates all of the customer-centric events that have occurred within Partners Life dating back to our launch, including yearly recaps of in-force business levels, claims paid vs. declined ratios, capital raised and financial strength history, every product related change since we launched in 2011 (both positive and restrictive), every premium rates change since 2011 along with other events which might of interest to a potential client (such as awards and new technology launches)

There is a huge amount of information contained within the Timeline, much of which has never been publicly made available by Life Insurers in the NZ market before – we are happy to make this information public, because we believe our performance over the last decade absolutely speaks for itself, and think that this information will be of great value to the general public, and to your clients in getting comfort around who Partners Life are, and what we believe in.”

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Insights from Southern Cross AGM, and more daily news

Southern Cross CEO Nick Astwick has revealed that Southern Cross has had a successful year. In the annual general meeting Astwick mentioned that Southern Cross worked to offer benefits to members during the year. Additionally, Astwick noted that it is important for Southern Cross to continue innovating and challenging the delivery of health services to ensure long-term sustainability.

“There was a sense of achievement after a year of delivering for members and it was time to build on that momentum with even more innovations, Astwick said.

“There is no question the Society must continue to innovate. We want to challenge the way health services are provided to deliver better value and healthcare to members.

“This is the direction in which we need to go to ensure sustainability of the private health sector and to deliver the best value outcomes for our members.”

Astwick noted that Southern Cross was working alongside healthcare providers to offer members more options while ensuring that there isn’t a sharp increases in premiums.

“Astwick said the Society was actively working with healthcare providers to find new ways to deliver quality outcomes for members, while keeping premiums affordable.

“We're considering exploring a number of options where we think enhancements are possible. What’s important is treatment when you need it quickly, with the best possible health outcome.”

Chairman Greg Gent spoke of the challenges of the last financial year and acknowledged that Southern Cross has been fortunate. COVID-19 has had positive impacts, with Southern Cross Society receiving more premiums and paying out less claims which led to the $50 million give back. 

“Chairman Greg Gent told the meeting the last financial year had been a challenging one for the Society, but it was fortunate to be in a position to come through it strongly.

The impact of COVID-19 saw the Society receive more in premiums for the financial year than anticipated and pay out less in claims than expected.

The pandemic also resulted in costs associated with the necessary mobilisation of the Society’s workforce, and at the same time, a market-leading decision to give back $50 million to members in the form of premium credits, said Gent."

Key figures presented in the meeting were:

“FY20 - KEY NUMBERS AT A GLANCE:

  • For every dollar paid in premiums, the Society returned 85 cents in claims to members.
  • A surplus of $32.4 million.
  • $50 million returned to members as premium rebates due to COVID-19.
  • Membership increased to 879,198, up 8,133 on the previous year.
  • The Society comprised 62 per cent of New Zealand’s health insurance market but paid 72 per cent of all claims.
  • $443.1 million in net tangible assets, representing approximately five months of claims.
  • Standard and Poor’s A+ credit rating retained for 18th consecutive year.”

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Legal and regulatory update for the life and health insurance sector

11 Dec 2020 – IRD advised that the US IRS have just issued an FATCA News & Information alert to remind NZ Financial Institutions (NZFIs) registered for FATCA that the Responsible Officer (RO) Certifications are due by 15 December 2020.

11 Dec 2020 – Further to its initial response to the Minister of Finance on 24 Nov, the Reserve Bank published a copy of its updated detailed response to the letter from the Minister on house prices and the role of the Reserve Bank. https://www.rbnz.govt.nz/news/2020/12/reserve-banks-response-to-minister-of-finance

11 Dec 2020 - ASIC releases regulatory guide on product design and distribution obligations in Australia. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-320mr-asic-releases-regulatory-guide-on-product-design-and-distribution-obligations/

11 Dec 2020 – FMA published “The Auditor Regulation Act (Prescribed Minimum Standards and Conditions for Licensed Auditors and Registered Audit Firms) Notice 2020.” https://www.fma.govt.nz/assets/Reports/Auditor-Regulation-Act-Notice-2020.pdf

13 Dec 2020 – Good Returns reports on a case heard before the Financial Advice Disciplinary Committee on 10 Dec 2020 on “record keeping” charges, with the Committee decision reserved and with details yet to be published on the FADC website. https://www.goodreturns.co.nz/article/976517952/adviser-appears-before-fadc-on-record-keeping-charges.html

14 Dec 2020 – FMA released guidance on financial products that incorporate non-financial factors, such as ‘green’ bonds and ‘socially responsible’ managed funds. https://www.fma.govt.nz/news-and-resources/media-releases/expectations-green-investment-products/


Legal and regulatory update for the life and health insurance sector

2 Dec 2020 – IRD advised that the Minister of Revenue David Parker introduced the Taxation (Income Tax Rate and Other Amendments) Bill into Parliament on 1 Dec 2020. Parliament agreed to accord the Bill urgency. The Bill contains four main measures:

  • introducing a new top personal income tax rate of 39%
  • introducing increased disclosure requirements for trusts
  • increasing the Minimum Family Tax Credit threshold for the 2020–21 tax year, and
  • clarifying more generally that Inland Revenue can request information solely for tax policy development purposes.

All parliamentary stages, including the Third Reading, were completed on 2 Dec 2020. https://taxpolicy.ird.govt.nz/news/2020/2020-12-02-introduction-taxation-income-tax-rate-other-amendments-bill

2 Dec 2020 – Financial Services Council released the third and final part in its Money and You research series - ‘Breaking through the Advice Barrier’ - focused on what is stopping people from getting financial advice, and why it’s important that more New Zealanders have access to it. https://www.fsc.org.nz/bulletin_display/x_blog_code/2121.html

2 Dec 2020 – Good Returns story on an Australian report released by Key Person Risk Management on the potential costs and implications for the life insurance industry of removing commissions and replacing them with a fee for service basis. https://www.goodreturns.co.nz/article/976517905/australian-report-raises-alarm-over-life-insurance-s-future.html

3 Dec 2020 – Department of Internal Affairs issued an AML/CFT update on expiring regulations timeframe and the impact on independent audit obligations. The Ministry of Justice has advised that the timeframes for amending these regulations has changed and the Ministry now aims to have new regulations in force by July 2021. Note the resultant impact on timeframes for reporting entities with an independent audit due prior to July 2021. https://www.dia.govt.nz/AML-CFT-Update-to-expiring-regulations-timeframe


Partners Life introduce Unhappily Ever After, and more daily news

Partners Life has announced the launch of the second phase of the Get Life Right campaign. The new campaign, titled Unhappily Ever After, is designed to open a dialogue about risk. Actor Dave Fane narrates the messages of financial risk in a nursery rhyme style. The campaign aired on the 29th of November and is expected to be aired on different media channels. It is always a challenge to find a way to tastefully yet assertively remind people that bad things happen and insurance has to be bought before. This approach combines a little seriousness, a little unpleasantness (after all, it's a cautionary tale), and a little humour. 

“That’s where ‘Unhappily Ever After’, our second wave of campaign material comes in. We have taken a number of classic nursery rhymes, had them beautifully animated and narrated by NZ Actor Dave Fane (Sione’s Wedding, Eagle vs Shark, Bro’Town, Outrageous Fortune) and turned into irreverent, cheeky tales about why Kiwis should be thinking more regularly about their financial risks.  Not only do Nursery rhymes take people back to their childhood, but they often have a dark origin which lends nicely to conveying our message that unexpected things do indeed happen.

The first Unhappily Ever After spot (Humpty Dumpty) launched on TV last night - If you didn’t catch it, you can watch this first video here or by clicking the image above. Make sure you keep your eyes and ears open over the coming months for this campaign, as we will be on TV, Radio, Online Streaming, Spotify, iHeartRadio and Social.”

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FMA provides glimpse into full licence, and more daily news

The FMA has provided some insight into the requirements of the full license. It has been revealed that advisers can begin the application process from 15 March 2021. Although the process will be similar to the transitional license, the questions advisers will be required to answer have been described as being more rigorous. Unlike transitional licenses, full licenses will not have expiration dates. John Botica, director of market engagement, has noted that classes and conditions are another difference between the two license types.

“Advisers will be able to start applying for a full license on March 15, 2021, and the FMA says the process will be similar to what advisers have done for their transitional license – however, it says its questioning will also be a lot more rigorous.

According to FMA director of market engagement John Botica, the key differences between transitional and full licensing will be the time period they cover, and the different classes and conditions attached to a full license. He says the FMA will also go into more depth around an adviser’s practices and procedures.

“Transitional licenses last for up to two years, from March 15, 2021, to March 15, 2023, whereas a full license has no fixed term,” Botica explained.”

An important aspect of the full license is that it will include three different license classes. It will be important that advisers choose the right class as they will need to go through the full license application process again if they need to amend their class selection. Botica noted that advisers with transitional licenses will have two years to apply for their full license while new advisers must apply for full licenses. It has also been revealed that questions around competency, to conduct, to conflicts of interest will be examined during the application process.

““You have that license for as long as you continue to run your business. The full process also includes three different license classes, and it’s important to choose the right class – if you need to change it, you’ll need to go through the application process again.”

“There were two standard conditions for transitional licensing, and for the full license, we add another five,” he continued.

“That was subject to consultation, and we had an overwhelmingly positive response from everyone around standard conditions.”

Botica confirmed that there will be a two year period in which advisers can apply for a full license, and the competency safe harbour will last for those two years. However, new advisers will need to go straight to a full license – they won’t be able to obtain a transitional.

Botica says the questions asked by the FMA will also be much deeper, and will touch on everything from competency, to conduct, to conflicts of interest.” Click here to read more

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