Cigna announce product enhancements, and more daily news

Cigna has announced that they have enhanced aspects of Income, Mortgage Repayment, Complete Disablement, Trauma and Premium Covers. The enhancements include changes in wording and benefits. The changes were made effective as of 11 November 2020. The changes are designed to give customers more flexibility during the claims process as well as allowing customers with a low-grade tumor or a listed progressive conditions such as Alzheimer’s disease to claim.

“We’ve made enhancements to a number of definitions and benefits across our Income, Mortgage Repayment, Complete Disablement, Trauma and Premium Covers.

Among the changes is the addition of an alternative 10-hour disability definition to our base Income, Mortgage Repayment and Premium Covers. This will give your customers more flexibility when applying for a total disability claim.

The enhancements also include removing the severity requirements on the full Trauma benefit criteria, making it easier for your customers with a low-grade tumor or a listed progressive condition such as Alzheimer’s disease to claim.”

Below is a full list of benefit changes.

“We have made the following enhancements to our Assurance Extra Income Covers, Mortgage Repayment Cover and Premium Cover:

  • Adding an alternative (10 hour) Total Disability definition

Assurance Extra Income Cover, Mortgage Repayment Cover & Premium Cover

We’ve introduced an alternative total disability definition to our base covers where if an illness or injury causes the life assured to be unable to work more than 10 hours a week in their pre-disability occupation, they may still be considered for a Total Disability Benefit. Any income they’ve earned from working within these 10 hours, will be subtracted from the benefit amount payable.

  • Total Disability Benefit & Partial Disability Benefit –Removal of the 14 days & 7 days total disability criteria

Assurance Extra Income Cover & Mortgage Repayment Cover

We’ve removed the 14 days initial period of total disability criteria under our Total Disability Benefit, and the 7 days initial period of total disability criteria under our Partial Disability Benefit. This has improved the claim-ability of this cover, meaning the life assured is more likely to qualify for a claim payment.

  • Total Disability Benefit – removal of limitation for concurrent Mortgage Repayment Cover and Income Cover claims

Assurance Extra Income Cover

We’ve removed the limitation (added in April 2019) under all our Income Covers which reduces the Income Cover benefit after 6 months if the life assured is also getting a Mortgage Repayment Cover benefit for the same disability.

  • Recurrent Disability Benefit – Extending period of recurrence from 6 months to 12 months

Assurance Extra Income Cover, Mortgage Repayment Cover & Premium Cover

We’ve extended the period of recurrence to 12 months under all Assurance Extra Income Covers, Mortgage Repayment Cover and Premium Cover regardless of the selected payment term. Previously the period of recurrence had to be 6 months if a payment term of 2 years or 5 years was selected under Income Cover or Mortgage Repayment Cover.

  • Return to Work Benefit – adding an additional scenario for claim

Assurance Extra Income Cover & Mortgage Repayment Cover

We’ve added an additional scenario for claim, where, if the life assured has been accepted for a Vocational Retraining or Rehabilitation Benefit that resulted in them returning to full time employment or self-employment, they may now get extra financial support under the Return to Work Benefit

  • Premium Cover – Refund premiums paid during the waiting period upon acceptance of a Disability Benefit claim

Assurance Extra Premium Cover

Going forward, if a Disability Benefit claim has been accepted, the premium waiver would be applied retrospectively from the first day of the life assured’s disability. This means that at the end of the waiting period, we will reimburse any premiums paid in respect to coverage during the waiting period.

In other news

Does New Zealand really need four dispute resolution schemes?

Why do so many clients go without income protection?

nib: nib talks 2019/2020 results

 


What could be the IP impact of "long-COVID"?

A back of the envelope forecast for "long-COVID" impact on IP claims: 

Start with cases - about 1,950 if we are considering current known cases, or whatever number your modelling predicts for whole of pandemic. Assuming very good containment, not much more, let's hope it stays that way. The apply your estimate for "long-COVID" I am using 20% at the moment which gives us about 400 cases in New Zealand. But not all of these will be in employment and own income protection. In fact as 42% of cases are 'imported' we can assume that most of those do not own income cover issued by New Zealand insurers. That leaves us with roughly 240 cases. FSC underinsurance research showed income protection cover at about 20% of the market - or a possible 48 cases of 'long-COVID' where a claim may be possible.

Well, well, within the capability of the industry to manage. Economic impacts on people that have claims from other causes are likely to be more problematic. 


Science behind high Income Protection premiums, and more daily news

Recently we reported that Income Protection prices are on the rise as a result of the Australian market and COVID-19. New Zealander insurers are now being urged to amend processes and premiums before regulators intervene and introduction mandatory guides. Partners Life begun the conversation when revealing that it has increased IP premiums by 12% and made policy changes. Kris Ballantyne, chief marketing officer, has said that Partners wishes to offer affordable policies that customers can maintain for as long as they need. AIA and Cigna have both noted that they aren’t looking to introduce significant premium increases.  

“It took insurer Partners Life to break the silence last month when it revealed a brave plan to start publishing the content of discussions with the Financial Markets Authority.

 

In doing so, it revealed it lifted its income protection premiums by 12 per cent in the past year, and had made policy changes, including not allowing self-employed people to any longer select an “agreed value” of income to be covered, instead limiting cover to actual loss of earnings.

 

Partner’s Life’s chief marketing officer Kris Ballantyne said the company was a “first mover” on income protection, driven by wanting to provide policies they [consumers] could afford to keep as long as they needed it.

 

It was a big challenge as there were a lot of agreed value policies covering self-employed people, and owners of small businesses.

 

Neither of its two big rivals, AIA nor Cigna, was expecting to make such large premium increases, though AIA had stopped selling new policies in which the income covered automatically increased by 5 per cent a year.

 

AIA chief product officer Len Elikhis said that over time, “the insured’s benefits would creep up and approach the insured’s income”.

Shane Burdack, senior underwriting consultant as Swiss Re Australia highlighted that customers with significant wealth had very little incentive to return to work when on claim, resulting in increased premium prices.

“Swiss Re senior underwriting consultant in Australia, Shane Burdack, said that in New Zealand insurers gave little thought to the net wealth of policyholders.

 

Yet people with significant wealth – sometimes through investments, sometimes because of payouts from other insurance policies – had a low incentive to go back to work, and stayed “on claim” for longer driving up costs.” Click here to read more

  

In other news

nib: nib takes place among top 100 most diverse firms worldwide

Southern Cross: Southern Cross is offering members a $149 voucher when they join Snap Fitness on a minimum 12-month term

Southern Cross: Southern Cross is offering members 10% off the retail price of a monthly LES MILLS On Demand subscription

 

 

 


Fluctuations in Income Protection prices, and more daily news

The New Zealand Herald have reported on Income Protection price increases. Financial advisers have credited the changes to IP to the Australian IP market although COVID-19 has played a role in the change in pricing and the underwriting process. During the FSC digital Generations 2020 Conference, Kimberley Robinson from Swiss Re Australia warned that it was important that New Zealand insurers make amendments. Robinson highlighted that in Australia the regulator had to step in after losses totaled A$3 billion in a five-year period. Robinson said that the losses were a result of an increased focus on sales volumes, cross-subsidisation, a competitive market, and in some instances, insurers providing more benefits on claims before claim time.

At an industry conference held online this week by the Financial Service Council insurance underwriter Swiss Re warned that New Zealand insurers also needed to make changes.

Kimberley Robinson, product solutions leader at Swiss Re in Australia, said Australian regulator APRA had intervened after big losses in the sector which added up to around A$3 billion over five years.

"We have suffered losses on individual income protection on an unsustainable level."

Robinson said factors contributing to those losses included an increasing focus on sales volumes over profitability, cross-subsidisation of the product and a fiercely competitive market.

"In some cases we were providing customers with more benefit on claim than they earned before claiming."”

To tackle issues relating to sustainability and customer support, the FSC recently set up a CEO life insurance forum and ran its first meeting. Although Richard Klipin didn’t comment on the pricing of IP, he noted that the sector is not growing and that it is instead expanding sideways. Klipin highlighted that the challenge for the industry to transforming insurance into something that is relevant, affordable and accessible. He continued by saying that insurers need to focus on having the ability to deliver on the promise of cover

In other news

nib: nib is sponsoring the Norwood and Miraka Limited Charity Golf Tournament for a third year

Advisers on Banks survey results revealed


Cigna: multi-benefit discount campaign details

Cigna has announced a multi-benefit discount campaign for customers over 30. The discounts applies to all new Assurance Extra policies issued on or after 9 September 2020. Depending on a customer’s age and the number of qualifying benefits they choose to take up alongside their Life or Life Income Cover, the discount amount will vary. As a result, policies with multiple people may have different levels of discounts applied. Alternatively, a single policy may only have discounts applied to certain covers.

The discounts available are:

  • 3% for customers aged 30-39 who take out LIFE + one or more other qualifying benefit
  • 5% for customers aged 40+ who take out LIFE + one other qualifying benefit
  • 7% for customers aged 40+ who take out LIFE + two or more other qualifying benefits

To be eligible customers must have a Life Cover in place and have a minimum sum insured amount of $200,000 and have a minimum of one qualifying cover.  Covers selected from the same group will be considered as one qualifying benefit in the discount calculations. Please refer to the table below for more details.

Selection

Benefit Group

Minimum Sum Insured

Covers that qualifies under the benefit group

Mandatory

LIFE

$200,000

Life Cover

Life Income Cover*

Optional

TRAUMA

$100,000

Trauma Cover - accelerated

Trauma Cover - standalone

COMPLETEDISABLE

$200,000

Complete Disablement Cover - accelerated

Complete Disablement Cover - standalone

MONTHLY DISABILITY

$2,000 per month

Income Cover - Agreed Value

Income Cover - Indemnity

Income Cover - Loss of Earnings

Income Cover - Loss of Earnings Ultra

Mortgage Repayment Cover

 


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

 


Insurer wins argument over chronic pain claim, and more daily news

The Court of Appeal revealed its verdict on the case between Asteron Life and financial adviser Peter Taylor. According to the story: Peter Taylor made an Income Protection claim in 2010 saying that as a result of his bone cancer he was suffering from chronic pain. Peter was able to get payments after supplying the required information on his medical condition and ability to work, but in 2014 Asteron Life suspended the payments stating Peter’s earnings made him ineligible for payments.

"The Court of Appeal released its judgment on Wednesday.

Taylor first took an Asteron Life income protection policy in 1994 and made a claim in 2010, saying he had bone cancer and suffered chronic pain.

Taylor was required to provide progress reports to Asteron describing the current state of his medical condition, whether he had been able to work, what income he had earned from working, and certain other matters.

He received payments until September 2014, when Asteron suspended them. It was concerned that he was earning at a level that would make him ineligible.”

Unhappy, Peter went to court arguing that he was still entitled to payments.  Asteron Life stated that he was no longer entitled to payments and counterclaimed for repayment of the amount paid out to Peter. The court noted that Peter used the payments for holiday homes, cars and overseas trips and ruled in favour of Asteron Life. The insurer was awarded $371,286.70.

“Taylor went to court seeking a declaration that he was entitled to continuing benefits under the policy, and wanting arrears of payments.

Asteron denied he was entitled to any further payments and counterclaimed for repayment of all sums previously paid.

It said he had made false statements about the extent to which he worked while on claim.

The High Court sided with Asteron and it was awarded $371,286.70. That court noted that he had used his insurance payouts to fund a holiday home, cars and overseas trips.”

Peter then took the case to Court of Appeal. The judge again ruled in favour of Asteron Life saying that Asteron Life was entitled to a reduced counterclaim payment of $51,835.64.

”The Court of Appeal said Asteron was entitled to succeed in its counterclaim but could only recover payments made in respect of the periods about which Taylor was found to have dishonestly provided false information.

“The judge declined to find that the initial claim made in July 2010 involved false statements that breached Taylor’s obligations in relation to making claims. So Asteron’s claim as pleaded, which was founded solely on the allegation of breach of utmost good faith, could not succeed in respect of the initial period from January 2010 to July 22, 2010.

“There may well have been another basis on which the payments made in respect of that period could have been recovered. But they were not pleaded by Asteron, and Asteron did not give notice that it intended to support the High Court judgment on grounds other than those accepted by the judge.”

That reduced the amount owed to Asteron by $51,835.64. Taylor has since sold his insurance broking business. Click here to read more

In other news:

Financial Advice webinar: Economic Update by Economist Tony Alexander

Financial Advice: 2020 Conference registration

AIA: COVID-19 UPDATE


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.


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?