Legal and regulatory update for the life and health insurance sector

19 May 2022 – Takeovers Panel issued updated Guidance on Schemes of Arrangement and also issued comment on “Deal Protection Devices”. https://www.takeovers.govt.nz/

19 May 2022 – IRD advised of the introduction into Parliament of the Taxation (Cost of Living Payments) Bill and the Bill was passed through all Parliamentary stages under urgency in an extended Parliamentary session.

https://www.taxpolicy.ird.govt.nz/news/2022/2022-05-19-tax-bill-introduced

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123884/taxation-cost-of-living-payments-bill

19 May 2022 - Companies Office Registers Funding Validation Bill introduced to Parliament to amend 13 different Acts to retrospectively validate fees that have been collected under those Acts that have been, or will be applied under any register administered by the New Zealand Companies Office. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123888/companies-office-registers-funding-validation-bill

19 May 2022 – The Ministry of Business, Innovation and Employment (MBIE) reported that the Government has agreed through Budget 2022 to increase the Financial Market Authority (FMA) annual operating funding from $60.805 million to $76.401 million in 2025/26. As part of the new funding arrangement, the Government has agreed to set new industry levies following consultation last year. The levy increase will be phased in over 4 years to minimise the burden on the financial sector. The levies have also been apportioned by entity size and type, to ensure smaller entities are not unduly burdened with high costs. Currently, the majority of the FMA’s funding is recovered from market participants through the FMA levy (83%), with the Crown contributing the remaining 17%. The proportion of the Crown’s contribution is decreasing slightly to 16% from 2025/26. Through Budget 2022, the Government has agreed to contribute all capital funding and some operational funding for CoFI and CRD towards the FMA, which will provide some cost relief to entities. While MBIE and the FMA also consulted on funding requirements for the Insurance Contract Law (ICL) regime, decisions about funding for this regime will be made at a later date. Any levies for this regime will take effect after the Insurance Contracts Bill has been passed by Parliament. https://www.mbie.govt.nz/about/news/government-to-increase-fmas-funding-and-set-new-levies/

20 May 2022 – Under an extended Parliamentary session from 19 May 2022, the Income Insurance Scheme (Enabling Development) Bill was read a first time, with the Second Reading continuing while writing this. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123885/income-insurance-scheme-enabling-development-bill


Living benefits resume their upward march

Over the years the volume of premium for living benefits (IP, MP, trauma) has been growing closer to parity with life insurance premium. If you choose to include medical or health insurance in that picture it exceeded the value of life cover premiums some time ago.  Up until the pandemic living benefits had just got to the point where they were a majority of new business premium across members of the Financial Services Council. With the recession brought on by COVID-19 and associated control measures many insurers had to step back from offering redundancy insurance and reduce access to income protection for some markets and clients - so some tough quarters followed. Overall business levels dropped and income protection dropped substantially. Some of the premium may have been diverted to trauma / critical illness insurance, but in a falling market, it was hard to be sure.  Now IP and MP are on the rise again, in a rising market. But given the government's plans for an income insurance scheme, this return to growth may be disrupted.


Income insurance proposals - resources

I have a brief piece at goodreturns on the proposals for a public income insurance scheme - link here: https://www.goodreturns.co.nz/article/976519885/what-s-all-this-about-a-public-income-insurance-scheme.html

For those of you that subscribe to the quarterly life and health report I also have a review of similar schemes off-shore and we are working on an impacts paper for the next quarterly life report, which you will have in plenty of time for your work on submissions.

 


Cigna offer free critical care cover, and more daily news

From 1 February, Cigna will be offering up to $30,000 of free critical illness cover to eligible customers. The cover applies to customers that take out new or additional Cigna Assurance Extra Life Cove worth a minimum of $100,000 via an adviser before 31 March. These customers will receive free critical illness cover that is valid for two years. Once the two years are up customers have the option of renewing to paid cover. When customers choose to have paid cover advisers will receive full commission.

For a limited time beginning 1 February we’re offering a little something extra to New Zealanders by providing them up to $30,000 free critical illness cover for two years on us.

How does the offer work?

For new customers

New eligible customers who purchase a minimum of $100,000 of Cigna Assurance Extra Life Cover through an Independent Financial Adviser will receive two years of free critical illness cover up to the value of $30,000.

For existing customers

Eligible customers that top up their existing Cigna Assurance Extra Life Cover with their Independent Financial Adviser by $100,000 or more will receive two years of free critical illness cover up to the value of $30,000.

For you

At the end of the free cover period, you’ll have the opportunity to connect with your customer to check in and review if the trauma cover still meets their needs. Switching them to paid cover will be as simple as ticking a box. If they choose to keep their cover, you’ll receive full commission on the renewed business. Click here to read more

In other news

Cigna: customers who get a quote for cover through the Cigna online quote tool between 13 February - 30 April 2022 will go in the draw to win a month of HelloFresh boxes

Cigna: Income Protection calculator is now available on Adviser Hub

Cigna: Cigna is currently developing a plan to run Business Development Forums across the country under the Red setting


Legal and regulatory update for the life and health insurance sector

31 Jan 2022 – MBIE published the Terms of Reference for an investigation into the impacts of recent changes under the Credit Contracts and Consumer Finance Act 2003. https://www.mbie.govt.nz/document-library (Scroll down the document list to 31 Jan)

2 Feb 2022 - NZ Police Financial Intelligence Unit released its November 2021 Suspicious Activity Report. https://www.police.govt.nz/advice-services/businesses-and-organisations/nz-financial-intelligence-unit-fiu/fiu-reports

2 Feb 2022 – MBIE released proposals for a New Zealand Income Insurance Scheme, with submissions closing on 26 April 2022. For readers who would like more background on possible interactions with income insurance we refer you to our December quarter life and health sector report. https://www.mbie.govt.nz/about/news/proposals-released-for-a-new-zealand-income-insurance-scheme/

2 Feb 2022 – RBNZ released Monetary Policy Announcement and Financial Stability Report dates for 2022/23. https://www.rbnz.govt.nz/news/2022/02/monetary-policy-announcement-and-financial-stability-report-dates-for-2022-23


Cigna enhance automatic acceptance, and more daily news

Cigna has announced that the e-app acceptance limit for Income and Mortgage Repayment Covers has been increased. This change means that from November 25 customers can have their Agreed Value Income Protection and/or Mortgage Repayment Cover conditionally accepted and issued on the same day. In order to guarantee acceptance, the cover must have a combined total benefit of up to $6000 per month, the underwriting engine must accept the risk, and evidence must be uploaded on eApp.

“You talked, we listened. As part of our commitment to bringing you and your customers a market-leading service offering, we’re proud to announce we’ve increased the automatic acceptance limit for our Income and Mortgage Repayment Covers and made it even easier to get your cover issued on the same day.

From 25 November, customers taking out Agreed Value Income Protection and/or Mortgage Repayment Cover with a combined total benefit of up to $6000 per month can have their cover conditionally accepted and issued on the same day, provided supporting evidence is uploaded and can be validated.

What do I need to do to have a policy accepted and issued on the same day?

To be conditionally accepted through our eApp and have cover issued on the same day, the application must:

  • be for Agreed Value Income Cover and / or Mortgage Repayment Cover up to a maximum total benefit (including any existing cover) of up to $6,000 per month
  • have the risk accepted by our underwriting engine
  • upload evidence of income or mortgage supporting the benefit your customer is applying for

Our underwriting team will then simply need to validate the evidence before issuing the policy. 

In other news

Cigna: over 100 enhancements made to eApp and underwriting rules engine since its release in April

Cigna: enhancements to Income Protection and Mortgage Repayment Covers to be made over the coming months

Financial Advice: Industry leaders end of year wrap up

Financial Advice: final Professional Ethics workshop of the year

FMA: More changes at the top for the FMA


nib offer complementary mental health cover, and more daily news

nib New Zealand has launched the new complementary mental health cover that is available to Ultimate Health and Ultimate Health Max members who purchased their policies from 1 October 2021. Eligible customers will have access a consultation with a psychologist or psychiatrist without the consultation being linked to a hospital claim. The new mental health cover replaces the complementary Ultimate Health and Ultimate Health Max travel insurance cover that was offered in the past.

“nib New Zealand (nib) has launched a new complementary Mental Health cover for eligible Ultimate Health and Ultimate Health Max members to provide greater access to mental health services and help Kiwis continue to keep on top of their health and wellbeing.

The new mental health cover is available to members who are covered under a new nib Ultimate Health or Ultimate Health Max policy purchased from 1 October 2021 and provides up to $2,500 of consultations annually with a registered psychologist or psychiatrist on referral from a GP. The complementary cover will initially be available to members for one year.

nib New Zealand Chief Executive Officer, Rob Hennin said the health insurer was pleased to help improve access to mental health services and support the one in five people1 across the country who experience a mental illness each year.

“More and more Kiwis are seeking vital mental health services and we want to ensure eligible members are provided the opportunity to access such care, when they need it,” Mr Hennin said.

“The new Mental Health cover offers eligible members greater access to treatment as they can access a consultation with a psychologist or psychiatrist without it needing to be linked to a hospital claim such as cancer or cardiac services. Those members only need a referral from their GP to claim and they have the flexibility to choose their own health provider,” he added.

The introduction of nib’s mental health cover replaces the previous complementary Ultimate Health and Ultimate Health Max travel insurance cover. nib travel insurance sales have stopped while nib pursues new underwriting arrangements for its travel insurance business across Australia and New Zealand.

Mr Hennin said he believes the new cover will be well received by members who may need additional support for their mental wellbeing.

“As we move towards our ambition of health partner, we want to ensure our members feel supported and empowered to be proactive when it comes to taking care of their health and wellbeing. And, with varying lockdowns and COVID-19 restrictions likely to have an impact on the mental health of our community we believe the introduction of our Mental Health cover is timelier than ever,” he said.

nib’s new Mental Health cover is also available to existing members with an Ultimate Health and Ultimate Health Max policy that commenced from 21 April 2018, with the complementary mental health cover commencing following the renewal of their Ultimate policy from 1 December 2021.

For more information on nib’s Ultimate Health cover advisers should speak with their Adviser Partner Manager. ”

In other news

Fidelity Life: Fidelity Life has revised customer documents to simplify the language and made changes to policy wordings terminology

Fidelity Life: enhancements to CPI option and Indexation option. This will apply to new business issued on the amended wordings.

Fidelity Life: survivor's income cover options have been simplified

Fidelity Life: class 1-4 definition of ‘total disability’ has been updated for income protection-type covers

FSCL: FSCL sees spike in overall complaints


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.”

In other news

Asteron Life: Feedback improves Asteron's trauma cover

From. Good returns: [The Wrap] It's time to check in on advisers' wellbeing

AIA:

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


Quality Product Research: How do we model the package weightings and why?

A package should reflect the relative value of different types of insurance protection to the person buying that cover. We put weightings on packages because, for example, a package of just life and trauma is less comprehensive than a package of life, trauma, mortgage protection, and medical.

A summary of the weightings is shown below:

Prdouct new

Zoom in on the income and mortgage elements for a moment. That was raised by several advisers recently who feel that mortgage cover is the first element of temporary disability protection put in force. Market practice backs this up - quoting by advisers in Quotemonster shows that more mortgage protection is now quoted than income protection. So how were we to revise the package breakdown? We took the view that of the 45% of the package value assigned to MP and IP combined, the scores should reflect the relative weights when MP and IP are typically included in a plan together. MP often covers the first 40% of income insured and IP tops that up to about 75%. Clearly it can vary according to rules specific to each company and products used, but broadly this gives a new weighting as follows:

MP         25%

IP           20%

Total      45% of package value

We value and appreciate all the feedback coming through! If you have any questions or comments please email them through to info@quotemonster.co.nz


FYI: How to quote Partners Life Income and Expenses or Moderate Trauma Cover

We have recently added Partners Life Income & Expenses and Moderate Trauma to our product selection on Quotemonster.

To learn more about these please click on the product - Income and Expenses or Moderate Trauma

To quote these products on our platform, select them in your “Settings” as per our screenshots below:

Moderat

IE

Please free to email us on info@quotemonster.co.nz if you have any questions or comments.

Happy Crunching!