Goodreturns: level life cover

Matthew Martin reviews Partners Life's decision to increase level rates. We had a great talk through the drivers of level life rates. Interest rates is a dominating factor, but the context for level life cover has always been a backdrop of continuing improvements in mortality risk. That's been put into reverse in most rich countries by COVID-19. Here is Matthew Martin's article. Here are the links to the data investigations that show the impact on life expectancy and the examination of excess deaths through the pandemic

The biggest threat to the life and health insurance sector:

An insurable event is one which can be defined, measured, and is uncertain. Uncertainty is crucial. Things that are certain cannot be insured. Another feature of an insurance contract is asymmetrical information – we know general risks – like how likely cancer is – the insured knows specific risks – like how their health is. We have an obligation to each other, defined in law as utmost good faith.

But of course, you know all that.

Some people don’t, and some of them are actively working to break down the essential elements of the insurance process. One of those is the right to underwrite. We need to defend that. If a person knows that they are much, much more likely to suffer a critical illness such as cancer, they will be much, much more likely to seek insurance. This anti-selection causes headaches for both insurers and everyone else in the same risk pool: people with normal risks who end up paying over the odds for their cover. Pricing for risk is vital. Does this make me heartless about the problems of the person who is far more likely to develop cancer – not at all – I am glad to contribute to the costs of their care and support them, as we do through our health service and welfare benefits if they are needed. But some people believe private insurers can be compelled to cover people without pricing for the risk to the general good of all. I wish this were the case, but if we do compel insurers to take uninsurable risks, we are likely to see insurance enter a swiftly downward heading spiral: as costs rise the healthier and wealthier lives head for the exit, relying on higher savings and family to help. When that happens the remaining pool must be re-priced higher, which in turn makes the cover un-affordable for all but the worst risks. Then the risk pool fails – and no one has cover. A valuable risk sharing tool is lost.

If the aim is to destroy the insurance industry, depriving millions of a valuable risk sharing tool, the best way to do that is to deny the right to price risk. That takes all sorts of forms: the most common we have heard of recently is that we should not be able to price for mental health risks, or that we should cover cosmetic procedures in health, or that policies should always return the whole of the premium paid, or that we can’t ask all the questions we need to when underwriting, or that it is okay for the insured to withhold medical information. We must always push back against the idea that each of these would be a cost-less decision to take and would not harm other New Zealanders. Each would have consequences. Things that are certain - or very nearly certain - like events in the past or inherited conditions which emerge in later life, are not suited to insurance. As a society we need to look after people who suffer in this way - and that is probably the role of government, not insurance.

Of course, when it comes to underwriting, insurers could do more around education. Looser underwriting rules may have an adverse claims impact. Most clients cannot know that.  Material non-disclosure is not very common, normally it’s a genuine mistake. Mistake or not, some of the non-disclosure can be driven by fear or shame. Being clear about the benefits of underwriting can help reduce these a lot - as can smart question design.


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From Good returns: 'Hole in one' cover and the design of insurance products

AIA has announced data can be passed from Iress’ Risk Researcher tool to AIA’s Quote Builder and eApp. Click here to read more

Health insurer nib has replaced the free travel insurance cover feature that was part of Ultimate Health with some additional mental health coverage. Details are to come.


Not vaccinated yet? Click here to get it done:

Partners Life underwriting process updates, and more daily news

Partners Life has announced that there will be several changes made to the underwriting process from 27 September. The updates include the removal of certain requirements for large sums assured cases, changes to Monthly Disability non-medical limits and Trauma Cover non-medical limits, making questionnaires available on MyPartnersLife, and making the latest Adviser Underwriting Guide available on MyPartnersLife.

“The following changes were implemented into our systems over the weekend, and are effective today, Monday 27 September 2021:

Removal of some requirements for large sums assured cases
We have reflected on what value each of our limit requirements give to us, and have identified that a number have rarely affected the outcomes in the past. As such, we have removed the following from our standard limits requirements:

  • Resting ECG’s. This means that the Code C Medical Examination is no longer required to be completed by a Senior Physician, and a GP medical will now be sent in its place
  • HIV and Hepatitis C blood tests from Code B blood tests
  • HIV, Hepatitis C, Full Blood Count and ESR blood tests for Code C and above, where Life Cover does not exceed $5,000,000 and TPD Cover does not exceed $3,000,000

Changes to Monthly Disability non-medical limits
We have reflected on our non-medical limit sums assured for monthly disability cover, and have heard your comments around clients issuing cover at either $7,999 per month or $14,999 per month.  As such, we have changed the limits by $1 as a quality of life change, so you can now issue up to $8,000 per month on the personal statement only and between $8,001 and $15,000 per month with an additional Code B blood test and PMAR.

Changes to Trauma Cover non-medical limits
Previously our guidelines considered industrywide standalone Trauma Cover, while the rest of our non-medical limits only considered the risk held by Partners Life. We have updated this to now reflect all Trauma risk held by Partners Life, and have increased the non-medical limit from $1,500,000 to $2,000,000.

Questionnaires available on MyPartnersLife
Historically when clients have had to provide additional disclosure after you have submitted an application, our underwriting team has requested relevant questionnaires be completed from the application form.

With the continued growth in MUM, we recognise the use of our paper application form is fast becoming a thing of the past. As such, we have digitised all of the manual application form questionnaires, which are now available on MyPartnersLife’s forms section.

Adviser Underwriting Guide
We are also pleased to advise that the latest version of our Adviser Underwriting Guideline is available on MyPartnersLife. This updated guide incorporates all changes to our product offerings made since March 2020, including the addition of our new Moderate Trauma Cover and Income and Expense Cover. It also reflects the updated non-medical limit requirements indicated above.”

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GRTV Adam and Sam.mp4 from Good Returns TV on Vimeo.

FMA identify poor value product, and more daily news

The FMA released their findings on the value of credit card repayment insurance (CCRI). The FMA has concluded that CCRI is a poor value product for all customers. As a result of the findings, the FMA is now urging over 200,000 New Zealanders to evaluate if they still need this insurance. The conclusion was based on factors including that there is a limited level of underwriting completed and that customer’s medical and occupational circumstances aren’t assessed. Additionally, the FMA found:

  • Providers’ insufficiently checked customers’ suitability for CCRI, failed to take account of individual circumstances and relied on customers ‘self-assessment’ of their suitability
  • Providers had poor communications with CCRI customers
  • Consumer understanding of CCRI’s features and benefits was poor, with some not realising it was optional
  • Providers revealed a number of processes, systems and administrative failings, including incorrect premium charging
  • CCRI benefits reduced significantly when a consumer reached age 65, with many of the benefits - the policy definitions which can trigger a claim - no longer applicable, yet consumers premiums were not decreased to reflect this.

Click here to read more

“The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - is urging an estimated 200,000 New Zealanders who have credit card repayment insurance (CCRI) to check if they still need the product, after a review found it to be poor value.

CCRI is a form of insurance which covers some, or all, of a customer’s outstanding credit card repayments in certain circumstances, including in the event of a customer’s bankruptcy, redundancy, injury, illness or death.

The FMA review, published today, has confirmed that CCRI is a poor value product for customers.

This is based on several factors including the limited level of underwriting completed by providers when they issue a CCRI policy. The underwriting process involves an assessment and calculation of the amount of risk the insurer is taking on for the person buying insurance. With the CCRI product, providers do not assess a customer’s medical and occupational circumstances. These factors mean numerous exclusions and prescriptive conditions are applied when someone makes a claim on the policy, so customers may not receive the benefits they expect.

The FMA report also found providers treated CCRI as a low-touch product, with customers receiving little communication or engagement. Therefore, many customers did not make claims. Because claims are being declined due to numerous exclusions or customers simply not making claims, this has resulted in providers experiencing low claims loss ratios and accruing significant  profits. The amount paid out in claims to customers is low compared to the insurance premium collected by providers.

The loss ratio for CCRI was reported as low as 10%, meaning around 10c is paid in claims for every $1 received in premiums. This compares, on average, to loss ratios of 80% for health insurers and 47% for life insurers.

CCRI withdrawn but still earning $20 million

The Joint Reserve Bank of New Zealand and FMA report into conduct and culture of the life insurance industry highlighted concerns about CCRI in 2019 and since then insurers have stopped selling it to new customers. The FMA remained focused on this product given an estimated 200,000 New Zealanders still hold in-force policies, with insurers earning around $20 million in premiums annually.

“We found underwriters and distributors are not displaying sufficient levels of customer care in their suitability assessments and communications with customers,” the report said. Product suitability assessments are a critical part of customer care, where a customer’s personal circumstances should be checked to ensure the product meets their needs and financial position.

James Greig, FMA Director of Supervision, said: “New Zealanders should check if they have CCRI and ask themselves whether they still need it. We encourage customers to contact their provider to check if this product is still suitable for them. Some providers indicated their sales process for CCRI had involved customers ‘self-assessing’ whether the product was right for them, based on product terms and conditions, and disclosure documents. This is unacceptable.”

Mr Greig noted the Financial Markets (Conduct of Institutions) Amendment Bill before Parliament will introduce obligations and duties for insurers to put customers first. “Insurers need to focus on managing conduct risk to ensure customers’ interests are prioritised,” he said. “This is an essential requirement of the new legislation, so insurers need to invest in the systems and processes to meet these obligations and show they are putting customers’ first.”

The FMA found:

  • Providers’ insufficiently checked customers’ suitability for CCRI, failed to take account of individual circumstances and relied on customers ‘self-assessment’ of their suitability
  • Providers had poor communications with CCRI customers
  • Consumer understanding of CCRI’s features and benefits was poor, with some not realising it was optional
  • Providers revealed a number of processes, systems and administrative failings, including incorrect premium charging
  • CCRI benefits reduced significantly when a consumer reached age 65, with many of the benefits - the policy definitions which can trigger a claim - no longer applicable, yet consumers premiums were not decreased to reflect this.

Inquiries ongoing, remediation underway

The issues uncovered in this review are concerning and the FMA’s inquiries remain ongoing.

Some providers have remediated, or are remediating, customers affected by any of these issues. The FMA will continue to engage with providers to ensure this activity progresses and is prioritised.

The review was carried out to better understand the suitability of CCRI for consumers and followed the 2019 Life Insurer Conduct and Culture review, which found certain insurance products provided poor value.

Sixteen underwriters and distributors participated in the review, which involved gathering qualitative and quantitative data between October – December 2020. This included gross written premium, claims ratios, dates CCRI was offered, suitability of processes, product reviews and any known issues.

The FMA received 13 consolidated responses from underwriters and distributors, with some of them related entities or part of a parent organisation.”

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Industry awards finalists revealed, and more daily news

The Life Insurance Company of the Year award finalists for the 9th Australian and New Zealand Institute of Insurance and Finance awards were recently announced. Finalists include AIA, Asteron Life, and Fidelity Life. Additionally, Amy Cavanaugh, Pinnacle Life General Manager Operations and Len Elikhis, AIA Chief Officer - Product and Vitality are among the finalists for Young Insurance Professional of the Year award. Click here to read more

“The top New Zealand insurers will have their time to shine at the upcoming awards hosted by the Australian and New Zealand Institute of Insurance and Finance (ANZIIF).

This year will mark the 9th year of the awards that aim to "...unite all sectors of insurance for a celebration of excellence, professionalism and community".

The finalists were announced this week with Fidelity Life up against Asteron Life and AIA NZ for the top life insurer award.

The 2019 awards also saw Fidelity Life's Ben Holloway win the gong for the young insurance professional of the year.

This year, Pinnacle Life's Amy Cavanaugh and AIA NZ's Len Elikhis are two of seven young professionals nominated for the award.

"This year’s awards are centred around 2020, celebrating how our industry has supported the customer, community, and its people," the ANZIIF says.

The judging panel will explore how organisations or individuals have contributed to professionalism in the insurance industry and how they have successfully addressed issues by implementing innovative change.

The ANZIIF expects more than 400 of the industry’s top professionals spanning the breadth of New Zealand insurance to attend the awards being held at the Cordis in Auckland on Wednesday, November 17.

2021 ANZIIF New Zealand Insurance Industry Awards finalists:

Life insurance company of the year:
- AIA New Zealand
- Asteron Life
- Fidelity Life

Insurance learning programme of the year:
- AA Insurance
- AIG New Zealand

Young insurance professional of the year:
- Stephen Cantwell, FMG
- Amy Cavanaugh, Pinnacle Life
- Len Elikhis, AIA New Zealand
- Joseph Fitzgerald, Wotton + Kearney
- Steph Kelly, FMG
- Daniel Mathieson, Sherpa
- Megan Wolak, Delta Insurance

ANZIIF lifetime achievement award: Announced on the night”

Amy Cavanaugh:


Len Elikhis:



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Fidelity Life announce lockdown new business underwriting approach, and more daily news

Fidelity Life has announced the approach they are taking for managing new business and underwriting processes for medical examinations, tests, and occupational and financial underwriting requirements under different alert levels. Below are the different approaches.


Level 4.

For all Auckland based customers we need to revert back to asking a series of medical questions. These questions will be different for each case, and therefore our underwriters will contact customers to telephone underwrite prior to issue.

Level 3 and 4.
Medscreen paramedical services are unavailable in Alert Levels 3 and 4. Nurses will be able to resume visits to customers for medical exams and blood tests at Alert Level 2.

Where medicals and bloods are required due to non-medical limits (refer to our underwriting guide), you do have the option to consider reducing levels of cover to no longer require these. However, you should consider this in line with advice provided to the customer and review the levels of cover once the situation changes.

Occupational and financial.

The Covid-19 lockdown may be having an impact on the financial stability of some customers’ business or employment. Our underwriters must take a prudent approach to the underwriting of disability cover where there are signs of financial impact due to Covid lockdown and for applicants in continued ‘at risk industries’ such as travel and tourism, retail and hospitality.

We’ll be taking a ‘case-by-case’ approach to the underwriting of disability cover and aim to contact all customers to telephone underwrite and try to gather the information we need.

Customers who can’t work during Alert Level 4 may require a short deferral of disability cover until restrictions are lifted and we can ensure that their employment or business continues without serious impact.

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AIA offer one-month free premium, and more daily news

AIA NZ has announced that customers with qualifying new policies will have the first month’s premium waived. The one-month free premium is designed to offer advisers and customers support during the lockdown. AIA has noted that they understand that COVID-19 lockdowns can be a challenging time for advisers as their ability to meet new customers is limited. Additionally, AIA is offering to cover the cost of specialist appointments e-consultations for customers with health policies. The Health Screen service is now offered as a tele-consultation. To support new business demands AIA will develop the tele-underwriting service to include more conditions.

“AIA NZ has announced it will waiver the first month’s premium on qualifying new policies, as a way to support both advisers and customers during the current NZ COVID-19 outbreak.

“We know from past experience COVID-19 lockdowns can be challenging for our advisers, as it limits opportunities for them to meet with new clients. We wanted to quickly get an offer in market that will support all our advisers to continue to do business during this tough time,” says Nick Stanhope, CEO AIA NZ.

The offer applies to any new eligible AIA policy placed between 1 September 2021 and 31 October 2021, and eligible customers will automatically be credited with one month’s premium on new policies.

While the offer has been made to support advisers in the current COVID climate, Stanhope says it’s also about helping get more Kiwis covered.

“We all know the important part the insurance industry plays in addressing the sustainability challenges our communities face. Life and health insurance provides people with peace of mind, knowing that they are protecting themselves and their families against life's uncertainties. With rising consumer debt and increased cost of living, it's now more important than ever for Kiwis to review their insurance needs, to ensure they are adequately protected for the future.

“At AIA we want to help more Kiwis best protect themselves and their loved ones, and to support them in leading Healthier, Longer, Better Lives,” Stanhope says.

To find out more about the new business offer, please click here.

To further support advisers and their customers in the current COVID climate, AIA NZ is covering the cost for e-consultations needed for specialist appointments under health policies, as many customers cannot attend regular in-person appointments. AIA’s unique Health Screen service has also moved to a tele-consultation service to continue to provide an efficient medical service for customers.

AIA NZ already underwrite a number of conditions via tele-underwriting, and this service will continue to be delivered and expanded to support new business demands. The insurer has stated they are taking a pragmatic approach to evidence of medical requirements for ongoing income protection claims, and are looking for alternative ways to support customers unable to certify documents during COVID Alert Levels for lump sum products. Click here to read more

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AIA appoint new Chief Technology Officer, and more daily news

Marc Hale has been appointed as the new Chief Technology Officer at AIA NZ. Hale has experience in IT operations, software, and infrastructure delivery. Nick Stanhope, AIA NZ CEO, has said that Hale’s appointment is more important than ever, as technology has been identified as being a key enabler of AIA’s strategic priorities. Hale has said that he is happy to be back in New Zealand and is excited about the technology challenges and opportunities within the life and health insurance industry.

“AIA NZ is pleased to announce the appointment of Marc Hale as its new Chief Technology Officer.

With extensive experience in IT operations, software, and infrastructure delivery across organisations in London, New York, Auckland and Singapore, Hale joins AIA NZ from Standard Chartered Bank Singapore, where he held the role of Global Head of Technology Operations.

Hale has also held senior roles at Orion Health and ClearPoint, both based in NZ, at Thomson Reuters in New York, along with various technology roles in London following graduating in Software Engineering Management at Bournemouth University, UK.

Nick Stanhope, AIA NZ CEO, says this appointment and role is more important than ever, with technology a key enabler of AIA’s strategic priorities.

“Over the past couple of years, AIA NZ has completed a major system integration project, and significantly improved our digital tools, journeys, and systems.

“We’re in a perfect position now to build on that stable platform and accelerate our strategic priorities in technology, digital, and analytics. We’re excited to have someone of Marc’s calibre join us to lead the technology team and continue to grow our culture of technical innovation and creativity.”

Hale is excited about the technology challenges and opportunities he sees within the life and health insurance industry.

“As an industry we have a huge opportunity in front of us to continue to improve customer experiences, simplify and modernise our tech stacks, and grow our digital partnerships. Insurance IT is modernising fast, and has such a broad range of opportunities from wearable devices, microinsurance, advanced analytics, and more,” Hale says.

“At AIA NZ, we’ve made great progress in digitising customer journeys, and building our capabilities in automated underwriting, self-service, and straight through processing. With our strategic focus on technology, digital, and analytics, we’re well placed to continue this transformation, and I’m excited to be a part of this journey.”

Hale is also pleased to be returning with his family to NZ and being a part of AIA NZ’s long-term commitment to helping New Zealanders live Healthier, Longer, Better Lives.

“There’s probably never been a more important time to realise the importance of our health and wellbeing. Having the opportunity to join the passionate team at AIA NZ and to connect my love for technology with wellbeing and living healthier, longer, better lives, feels like the perfect fit.”

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Financial Advice NZ awards, and more daily news

The Financial Advice NZ awards entries are open until 17 September 2021. The awards will include five award categories, with a total of 16 awards on offer. The categories include:

“SERVICE TO THE PROFESSION AWARD - The individual who has made an outstanding contribution to the financial services sector, going above and beyond to champion or enhance the profession. - This person does not have to be a member of Financial Advice NZ. - There is an opportunity for one award for this category.

OUTSTANDING ADVISER AWARD - Recognises members who help New Zealanders achieve financial wellbeing through providing an outstanding financial advice service and who exhibit professional excellence. - There is one award per financial advice stream for this category.

RISING STAR AWARD - Recognises the brightest new talent in advice among members in their chosen field of financial advice. - There is one award per financial advice stream for this category.

OUTSTANDING SUPPORT PERSON AWARD - Recognises members who demonstrate exceptional adviser support and ongoing commitment to the financial services sector. - There is one award per financial advice stream for this category.

COMMUNITY SERVICE AWARD - Recognises members who have made a meaningful and positive impact on the lives of people in our communities in respect of financial wellbeing. - There are three awards in this category.

While there are five award categories, there are 16 awards to be handed out over the night with multiple awards for different advice streams. ” Click here to read more

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Number of advisers on FSPR decreases, and more daily news

It has been announced that the Companies Office has deregistered advisers that were registered as financial advisers on the FSPR. Although the number has decreased from the initial number recorded in March 2020, it has increased from the figured reported in March 2021. Currently are there 9236 registered financial advisers. Bolen Ng, MBIE national manager of business registries, has said that 458 FSPs were registered under s18(1)(b) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. 550 letters were sent out to FSPs who weren’t linked to a FAP. Individuals had 20 working days to update their registration. FAPS now have until 15 March 2023 to apply for their full licences. Click here to read more

“As of July 29, there are 9236 financial service providers (FSPs) registered as financial advisers (FAs) on the Financial Service Providers Register (FSPR).

This number is down 80 from March 15, 2020, but up 58 from March 15, 2121.

FSPs on the FSPR:

- FSPs registered as financial advisers on the FSPR as at 15/03/20: 9316

- FSPs registered as financial advisers on the FSPR as at 15/03/21: 9178

- FSPs registered as financial advisers on the FSPR as at 29/07/21: 9236

Ministry of Business, Innovation & Employment national manager of business registries Bolen Ng says the Companies Office has deregistered 458 FSPs under s18(1)(b) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

"These are the FSPs that became financial advisers under the new financial advice regime on March 15, but hadn’t linked to a financial advice provider within three months of that date," Ng says.

In June, the Companies Office sent about 550 letters to FSPs who had not linked themselves to a financial service provider (FAP) warning them of imminent deregistration.

FSPs had a 20 working day objection period within which to update their registration.

FAPs now have less than two years to apply for a full licence by the cut off date of March 15, 2023.”

These reductions are not as great as feared by some through the implementation of the new regime. However, it may be too soon to declare that the necessary balance has been struck between raising standards and sustaining access to advice for the greatest number of clients. As the process of gaining a transitional licence did not require passing much of a threshold many advisers that may leave the industry may have entered the new regime with little or no intention of obtaining a full licence. Insurers report levels of new business production have fallen substantially. That suggests that the industry has sustained a serious blow not fully described by these numbers. 

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