New Zealand’s protection gap according to Sharron Botica, and other daily news

A recent report suggests New Zealanders are under-insured by hundreds of billions of dollars. Spinoff asks Sharron Botica from AIA New Zealand to explain why it’s so important to make up the shortfall.

“Customer insight work carried out by AIA has told us that people often feel protected against death, illness and other physical circumstances because they feel they can lean on whānau and community to help out. But this isn’t always realistic, and it can be a dangerous mistake that could leave that support network severely and unexpectedly cost-laden.

According to a Financial Services Council NZ report from 2020, 71% of New Zealanders are under-insured when it comes to life insurance.

….. we drastically underestimate how much financial pressure is created when a household loses half of its income.

In 2018, the retirement commissioner Diane Maxwell said the New Zealand “she’ll be right” attitude could be playing a part. That attitude has major consequences and leaves your loved ones to carry a heavy burden.

While relying on savings is a common plan in case of a significant event causing a loss of income – the proverbial “rainy day fund” – you need to have savings to use. Data from Stats NZ showed New Zealanders typically don’t have great savings, with just 0.4% of income being saved over the quarter ending March last year."

More daily news:

FSC says NZ Income Insurance Scheme needs "more time"

Southern Cross wins Organisational Change & Development award at the NZ HR Awards 2022

Jackie Waddams appointed as General Counsel for AIA New Zealand

FANZ’s 1 June webinar covers key insights, updates and best practice for insurance advisers, register here.

Goodreturns: JP Hale thinks he knows why your clients are unhappy


nib completes purchase of Kiwi Insurance and more daily news

Kiwi Group Holdings Limited (KGH) today announced it has completed the sale of its life insurance business, Kiwi Insurance Limited (Kiwi Insurance), to nib NZ holdings limited (nib New Zealand) for NZ$45 million. More from the Kiwi Group media release:

The sale was announced in November 2021 subject to regulatory approvals which have now been received.  

Under the deal, nib New Zealand has acquired all the shares in Kiwi Insurance and entered an exclusive partnership with Kiwibank (a wholly owned subsidiary of KGH) where the bank will refer its retail customers to nib for their life and living insurance needs. 

Kiwibank Chief Executive Steve Jurkovich said Kiwi Insurance customers did not need to do anything as a result of the sale and that they were in good hands with nib. 

“I’m excited about this new partnership with nib which will allow Kiwibank to continue to deliver on its purpose of making Kiwi better off, whether that’s getting into a home or having the right insurance in place to protect what matters most,” Mr Jurkovich said.  

nib New Zealand Chief Executive Officer, Rob Hennin said they were committed to providing a seamless transition and ongoing great service to current customers including honouring all current policy benefits. 

“We look forward to welcoming current customers into the nib family and offering all Kiwi access to a suite of life and living insurance covers in line with our purpose of your better health,” Mr Hennin said. 

Advisers I spoke with were still not aware of the purchase of a life insurer by a major health insurer and expressed interest in the prospect of the creation of another 'full range' insurer to join AIA and Partners Life.

 

More daily news:

Financial Services Council announced that, in partnership with the Commission for Financial Capability, it had begun “a three-month, pan-sector campaign to take meaningful action to improve the financial wellbeing of our wāhine.” https://blog.fsc.org.nz/media-release-may-2022-fsc-rallies-organisations-to-grow-womens-financial-wellbeing

Vehicle insurers are seeing a return to pre-pandemic claims costs.

ANZIIF has announced two new board members.

 


Brian Klee retires

A truly committed member of the insurance community has announced his retirement: Brian Klee writes:

"I have decided to retire at the end of March this year.  I would like to take this opportunity to tell you how much I enjoyed my 50 years, initially as an Insurance Adviser and subsequently as a special risk and claims consulting role."

While I am sorry to hear of Brian's decision to retire, all good things must come to an end. Brian has been such a wonderful contributor – in consistency, commitment, and creativity – to this industry. I, of course, have witnessed roughly the last half of that, and I am sure there is much that I have missed. Notable in my list is his long service to the life underwriters association, to MDRT, special risks insurance, and more recently with projects such as Lifeinfo. Always Brian has worked for the advancement of the industry, helped to mentor and support people new in the industry, and has provided many valuable services. I have always been grateful for his advice input into a wide range of insurance subjects, such is the breadth of his experience, which will be missed.

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Asteron Life pricing update - live on Quotemonster now

On Friday 25th Asteron Life announced to advisers some changes which will go live on Monday 28th February.

Premium rate reductions are included in the changes. While we have some more detailed analysis to conduct the summary is that from age 50 up there are life rate reductions of between 9% and 13%.

Asteron's announcement also includes:

"Aside from the rate changes, the other exciting piece of news we have is an extension of our Best Doctors offer to even more customers. Currently Best Doctors is only available to our Income Protection customers, and select legacy product customers; we’ll be extending this to customers with Trauma cover as well."

The rate changes have been made live on Quotemonster now.

 


When Consumer becomes anti-consumer

Sonnie Bailey at Fairhaven Wealth has written the article that needed to be written on Consumer's coverage of life insurance. When I read this article I particularly resonated with this line:

"I’m consistently disappointed with Consumer when it talks about insurance."

I believe a lot of financial advisers would agree, along with many in the insurance industry, and many clients that have had good claims paid or felt the limitations of insurance products bought on, say, price alone. Some advisers would put it less politely. My concerns have been such that I wonder about the value of their other research - what technicalities about which I am unaware, are being missed? The article is significant, an 18 minute read, but excellent on every point. Every time Consumer writes about insurance I think I shall write a detailed review of their stance. Now, I don't need to, as Bailey has written it for us. Do read it.

 

 


Legal and regulatory update for the life and health insurance sector

  • Private health insurance statistics

https://www.apra.gov.au/news-and-publications/apra-releases-quarterly-private-health-insurance-statistics-for-september-3

  • Life insurance statistics

https://www.apra.gov.au/news-and-publications/apra-releases-life-insurance-statistics-for-september-2021


Kiwi Group Holdings to sell Life insurance business to nib

Kiwi group holdings has announced that it will sell its life insurance business to nib for $45 million (NZD) in early 2022. nib will enter into a partnership that refers all existing Kiwibank retail customers to nib. Kiwibank CEO Steve Jurkovich has said that he is delighted that Kiwibank and nib are entering into a long-term partnership to support New Zealanders.

“Kiwi Group Holdings announces sale of life insurance business; Kiwibank and nib to enter strategic partnership.

Kiwi Group Holdings Limited (KGH) today announced the sale of its life insurance business, Kiwi Insurance Limited, to nib nz holdings limited (nib) for NZ$45 million.

Under the terms of the deal nib will purchase 100% of the shares in Kiwi Insurance Limited and enter an exclusive relationship with Kiwibank Limited (Kiwibank – a wholly owned KGH subsidiary) which will see the bank refer its retail customers to nib for their life and living insurance needs. The sale is subject to regulatory approvals.

Kiwibank Chief Executive Steve Jurkovich said he was excited about today’s announcement which delivers on Kiwibank’s growth strategy by simplifying its business, building the bank’s partnership capabilities, and providing great outcomes for customers.

“Life insurance plays a vital role in providing financial security from the unexpected, and I’m delighted that Kiwibank and nib are entering into a long-term partnership that will support Kiwi to be better off,” said Mr Jurkovich.

nib Chief Executive Officer, Rob Hennin said there was a strong alignment between the values and mission of the companies making the acquisition and new partnership a great fit.

“We’re all about supporting our members better health and we’re looking forward to providing them access to a suite of health, life and living insurance covers,” Mr Hennin said.

Kiwi Insurance policyholders don’t need to do anything and will see no change to their current policies as a result of the sale.

Customers will receive further information ahead of the completion of the sale to nib in early 2022. In the meantime, it’s business as usual for the Kiwi Insurance team who remain committed to providing a great service to customers.”


Will life insurance costs rise due to COVID-19?

Will life insurance costs rise due to COVID-19? Will vaccination status make a difference? Back at the start of the pandemic both regulators and the industry scrambled to assess the impact of COVID-19 on life insurers. The good news was that the mortality profile of the disease tended not to hit the insured population so hard. While we still believe that these estimates are fundamentally right and insurers are capable of managing the expected claims as the disease spreads throughout New Zealand, there is some evidence from overseas (such as this company in the US) that there could be some cost impacts. The results of the vaccination campaign may be big factors in whether we see these changes here. Our vaccination effort recently saw us overtake the US and the UK for the share of people that have had at least one jab - and that level looks likely to rise further over the coming months - but that still leaves the question of the un-vaccinated. Rob Stock writing for Stuff.co.nz has a good article on that at this link. I expect that vaccination status will be a factor in underwriting soon, and therefore on price.


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


QPR: group life and health product research

Many advisers come across clients who have cover with a major employer group scheme and would like to be able to access research to support recommendations to either retain, replace, or dispose of this cover. "Wrap-around cover" with very high excess levels so that benefits such as good non-Pharmac drugs coverage can be offered is a common component of advice - but understanding what is actually covered already is a key part of making any effective recommendation. As many of these groups have terms and conditions specific to them, or are at least based on a different 'foundation' product to current retail offers, it is not simply a matter of looking at current retail policies. Therefore, we are often asked if we compare group life and health insurance on Quotemonster as part of the quality product research service. QPR does not, although at times Chatswood does, offer bespoke comparison to larger adviser groups and insurers - this is not an economic solution for most advisers. However, we are now defining the scope of work to add group life and health comparison to the site. If you would like a say in how the new service works we would be delighted to hear from you. In particular we would like to know what the most common group schemes you come across are and which you would most like us to provide research on. Please send your comments to either Treena Jordan, Doreen Dutt, or me.