Life price comparison database update

We have updated the life price comparison database, version 113, to reflect the changes to Cigna's pricing, which were extensive. Corporate subscribers should examine the update notes that have been sent with the database and the change report function. Advisers should check out comparisons on Quotemonster to see the effect of the changes which involved some increases - but also some notable decreases - which tended to favour larger cover amounts and the 90 day wait period for IP / MP. 


Westpac Withdraws Gold Term and Gold Disability Income Cover

As of 15 March 2021, Westpac no longer offers Gold Term Cover (death, critical trauma, TPD) and Gold Disability Income Cover (Indemnity Income Protection). Existing policy holders, however, can continue to make amendments (i.e. increase and decrease cover amounts). Westpac Life continues to offer term life, TPD, critical illness and Agreed Value income protection in other products. For further information please click here


Cigna premiums to increase, and more daily news

Cigna has announced that from 15 April 2021 there will be changes to underlying premium rates on Life, Trauma and Disability covers across Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra. Changes to Life, Trauma and Disability cover are a response to feedback and market developments. The price changes represent the changes. The price changes will be applied for new customers but current customers will have the new rates applied on their next premium review date after 15 April 2021. Applications that are submitted  before 15 April 2021 and issued before 15 May 2021 will not be immediately affected by the price changes. All changes are listed below:

 

·     Life cover rates on Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra are increasing by 3% for yearly renewable, 5-year level and 10-year level premium structures.

·     Alongside this we’ve increased our large sum assured discounts for customers with over $500,000 of life cover.

·    Trauma cover on Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra are increasing by 3% for yearly renewable premium structures.

·    Accelerated Complete Disablement Cover on Assurance Extra, Business Assurance and Agribusiness Extra are increasing by 3% for yearly renewable premium structures.

·    Disability covers including Income Cover, Mortgage Repayment Cover and Premium Cover are increasing dependent on factors including age, gender, wait period and benefit period. The increase will generally vary between 1-10%, however in some cases customers will experience a decrease.

 

“We wanted to give you a heads up about upcoming increases to the underlying premium rates on our current Life, Trauma and Disability Cover pricing across Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra.

 

The new underlying rates will come into effect on 15 April 2021.

 

Over the past year in response to feedback, and in line with market developments, we’ve made a number of enhancements to our core Life, Trauma and Disability cover to make it easier for customers to access support when the unexpected happens.

 

These new competitive rates reflect the recent enhancements and will contribute to the long-term sustainability of our products while remaining good value for your customers.

 

For new customers: The refreshed rates come into effect on 15 April 2021 for all new policies.

 

For existing customers: The new rates will be applied to existing customers at their next premium review date from 15 April 2021. Customers will receive notification of their new premiums via the renewal letter which is sent prior to their premium review.

 

Any applications submitted before 15 April 2021 and issued before 15 May 2021 will be honoured at the old rates and will not be subject to the new rates until the first premium review.” Click here to read more 

In other news

FMA: the FMA has issued a public warning to Roger David Gannon of Gannon Insurance

Cigna: Simon Prentice to join Cigna as Business Partnership Manager based in lower South Island

Cigna: Sharon Duffell new Christchurch Senior Underwriter in the New Business & Underwriting Team

Cigna: Multi-Benefit Discount extended until 30 June 2021

 


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

 


Westpac change decision on claim, and more daily news

Rob Stock, reporting at stuff.co.nz tells us: After Joe Lobban’s death his partner Sam Robertson was informed by Westpac Life that they wouldn’t pay out the $480,000 life insurance claim as the insurer believed that Joe had failed to disclose medical information when applying. After seeking legal help Sam was able to ensure the claim was paid out.

“A year after her partner died of a heart attack, a New Plymouth woman and her two school-age daughters have finally been told by Westpac Life it will pay out on his life insurance.

Westpac Life told Sam Robertson in May this year that it would not pay the $480,000 claim, alleging Joe Lobban had failed to disclose medical information when he applied for the policy in 2014.

It was a blow for Robertson and her daughters who were scraping by on benefits, living in a rented house.

But Robertson, aided by lawyer Tim Gunn, got Westpac Life to reverse its decision, though he said was “unfortunate that this has taken the intervention of an insurance lawyer to have Westpac honour their policy"”

Sam made the claim in May 2019 after Joe died of a heart attack but was informed of Westpac’s decision to decline the claim in May 2020. After Sam’s lawyer Tim Gunn challenged Westpac’s decision, the insurer informed Sam of its decision to pay out the life insurance in July 2020.

“Lobban died in May last year of a massive heart attack, aged just 30.

The fit and active share milker had an un-diagnosed congenital heart condition.

Robertson made the claim to Westpac Life two weeks after Lobban’s death, but it took the insurer until May this year to indicate its intention to decline the claim.

After Gunn challenged the legality of Westpac Life’s decision, it reversed its decision in a letter dated July 14.” Click here to read more

We would like to highlight that we do not know the entire story. Overwhelmingly the industry has a great record on claims, but of course, a few claims can be either paid when they should not, or denied when they should not. 

In other news:

Asteron Life: TalkBack feedback programme introduced

sigma 4/2020: World insurance: riding out the 2020 pandemic storm

Financial Advice: Adviser Peer Support registration


Free cover for customer in financial stress

In a previous quarterly report we highlighted the case of Ms Earea, after having seen the story published in Stuff. Stuff has now published a follow-up to the story, as Westpac Life has waived her premium payments:

“After Earea’s story featured on Stuff, Westpac Life wrote to her to tell her: “No further premium payments will be required from you.”

“We are concerned that you have been making difficult decisions that involve personal sacrifice,” the letter said.

Earea had a $280,000 terminal illness claim declined by Westpac Life last year, with the insurer deciding her medical condition did not meet the criteria under her policy as it was not a condition the insurer believed would result in her death within 12 months.”

“Westpac Life is standing by its decision to turn down the claim, though Earea has sought legal advice and intends to challenge that.

Earea took her case to the Banking Ombudsman, which found the insurer had a right to decline the claim.”

This is a generous decision by Westpac Life which allows Ms Earea to retain the cover which she was finding difficult to afford. The dispute about the claim may be ongoing. We only have the information in the two Stuff stories to consider, so it would be unwise to comment more on that. In general terms, however, insurers asked for claims on compassionate grounds also consider their duties to other policyholders to only pay claims that meet the product terms and conditions. 

Click here to read more


Making a living will

Insurance is, of course, about planning for a future event before it happens. For life insurance, it is often described as a fundamentally altruistic purchase: you buy it to benefit someone else. Of course, the holder does enjoy a benefit, which is peace of mind. The planning helps us to relax a bit about the future, a future we know is coming for us: one day our life will end. Making a living will is also a kind of plan. A way to say some of the more difficult things, or put in focus some of the things you would most like to be remembered for. At this link you will find a beautiful article about a living will and what it meant to the family. https://www.huffpost.com/entry/ethical-will-legacy-letter-why-you-want-one_n_5eeb7a09c5b6c8594c7f2d03 About a ten minute read and well worth it. 


Age and population standardised mortality data for 2020 compared to 2019

Following the article by Farah Hancock we had our new data specialist Ed Foster take a look at mortality data. They standardised the mortality rate per capita and also for age and gender demographics. By those calculations New Zealand experienced 116 fewer deaths than would be expected. Within the context of a year in which we would normally see about 30,000 deaths, this is a very small number. But what it show is a continuing absence of excess mortality seen in other markets.

Cause of death is not officially released until 6 months after the event, but we do know for sure that there have been fewer road and work related deaths - this may go some way in explaining the gap. Also, we know that rates of 'flu and 'flu-like illnesses have dropped due to the recent lock-down - and these cause some deaths too, and that number will be much lower. There is still plenty of bad news to wash through the economic system, and hit people's lives: as headlines about redundancies show. There are also the consequences of deferred treatment to examine. We shall be reporting on this in more detail in each of the next two or three quarterly life and health sector reports, as there is still more to be learned. 

We are happy to share data tables if you would like to take a look. 


Daily news update: Cigna price changes introduced, and more stories

Cigna has made price changes to a number of products. The range of the changes are detailed in the table below. You can tell from the variety of changes that this is a complete repricing exercise - not merely an increase or decrease of a blanket percentage. Some prices will be much more competitive. Some segments are being increased. The only way to know for certain, is to do a comparison for each life. That's why a price comparison across the market is vital if you wish to offer help to clients seeking the most competitive products. Quotemonster still offers free price comparisons for financial advisers with an FSP number and an email account. 

YRT Life

11/05/2020

From -12% to +8%

Level Life

11/05/2020

From -24% to +1% Non-Smokers & Female Smokers, from -17% to +8% Male Smokers

Trauma

11/05/2020

From -13% to +10% Non-Smokers & -3% to +15% Smokers

Level Trauma

11/05/2020

From -16% to +10% Non-Smokers, -16% to +18% Smokers

Income Protection

11/05/2020

From -1% to -2%

Mortgage Protection

11/05/2020

From + 5% to +25% Female, from +7% to +20% Male. As per discussion, indexation was previously offered free for the first year.

In other news:

AIA: Mentemia, a mental wellbeing app, is now part of the AIA Vitality program.

AIA: Clients can get one month’s premium free when they apply for a new eligible AIA policy between 5 March 2020 and 31 May 2020 and have the policy issued by 31 July 2020.

Partners Life: The automatic COVID-19 Mental Health exclusion that was applied to disability and business risk benefits has been replaced with more targeted and specific underwriting processes.

Partners Life: Clients who had the automatic mental health exclusion applied will have it replaced with an emergent mental health exclusion.

Partners Life: Underwriting restrictions 2020


COVID-19 Crisis will have diverse impacts on health and insurers

Members of parliament listened to the stories New Zealanders shared about their struggles and hardship during an Epidemic Response Committee meeting recently. No accounting of costs and benefits can be done in full for some years. The purpose of this post is not to attempt that. I acknowledge that a trade-off was made between the numbers that would become sick and die directly from COVID-19, indirectly from a poorly-managed response to the epidemic, against those that may suffer a similar fate because of restrictions due to the control measures. On balance, I prefer the control measures taken - as severely negative effects (more sickness and more death) are associated with a range of alternatives. However, the purpose of this post is rather to explore the impact on customers of insurance companies, and therefore the likely claim impact on insurers.

 

Death claims are much higher in markets where there has been a delayed or poorly managed response to the epidemic. Take the example of Lombardy, detailed in this news. Deaths from out of hospital cardiac arrests rose sharply, as people deferred or tried to avoid treatment, and possibly, some were simply unable to receive emergency treatment in time. Cancer treatment would likely have been affected similarly - as it has been in the UK, with some patients missing chemotherapy appointments, probably, in part, due to fear of visiting hospitals where there are a lot of COVID-19 patients. These all have an impact on insurers - as shown in these reported results from Europe: pandemic takes its toll on insurers’ first quarter results.

 

But that doesn't mean we have avoided all the negative effects of the pandemic. Various tests and treatment were deferred to ensure sufficient capacity in hospitals for the epidemic and they will take time to restart, let alone catch up. See: some DHBs weeks away from restarting breast cancer screening. Take cancer care: delays in diagnosis and treatment, for example, are likely to have some effects. In this news piece one patient explains the treatment delay and how they are now seeking treatment privately so that they will not have to wait. Inevitably in a large pool of people where diagnosis and treatment are delayed there will be some increase in cancers at a later stage and some increase in deaths. The difference between the effect of death claims from COVID-19 and those that may arise due to treatment delays is probably in three dimensions, time, scale, and age of the person affected. A COVID-19 death would tend to happen quickly, soon after the time of infection, compared to the cancer death that will emerge over a period of up to two years. The age of the person affected is likely to be younger, but the scale of people affected should be much smaller than the numbers that could have been affected by an un-managed outbreak. 

 

Three scenarios can be constructed. One was the expected claims budget for 2020 before the pandemic. It is the budget baseline. Then there is the possible scenario without effective management. Then there is the likely current scenario compared to the baseline. It seems clear that the 'saving' due to lower death claims from COVID-19 is probably large. But it not clear that the small reduction in deaths and injury due to fewer road accidents and workplace deaths may not be sufficient to off-set the other indirect affects of the COVID-19 crisis. At present, as explored in this blog post, the death rate is running slightly above last year. I think I would still expect higher claims for 2020 for life, trauma, and IP products as per this post. 

 

In other news:

Pandemic will reset all markets, economist says

Pricing strategy – choices and their meanings

Australia: Financial planners have proven incapable of self-regulation, but can FASEA stop the client rorts?