Policy Upgrade Features

Policy upgrade features, the practice of updating in-force policy terms and conditions with upgraded features is relatively new. Some long-standing providers have only but recently adopted it. Due to the gradual incorporation of this feature by companies that distribute through primarily through financial advisers, many have shadowed competitors’ policy wording, and an increasing number of in-force policies now have the same terms as those issued new. Also, many benefit terms and conditions are very similar.

There are however two fundamental standards to consider:

  1. When did the upgrade benefit come into effect; and
  2. To what specified policy issue date (if any) does this benefit retrospectively apply.

We have summarised these in the table below:

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For those companies with pass-back provisions  extending to 2001 as a proportion of in-force books only a small minority of policies in-force will have products that do not auto update, but these may still number in the tens of thousands.

Most providers choose to extend this feature only to policies issued since the feature was introduced. Moreover, where the feature has been ‘passed-back’ to existing policy-holders, a limit has been fixed to how far back it applies. Consequently, the oldest in-force policies may be excluded from qualifying for this feature. Insurers have maintained this is a result of contractual obligations with reinsurers wherein older policies were approved on the basis of different terms and conditions than to those of newly-issued ones. Valid though it may be - insight conveys that clients who have been paying premiums for lengthy periods are, perhaps, disadvantaged. On the other hand some of these older policies retain some features that may not be available in a modern policy.

Outwardly the upgrade policy wording benefit emerges as a generous feature accentuating insurers’ commitment to recompense the loyalty of policy-holders. However, it also serves a purpose of synchronising existing products’ content with developments in the macro-environment. An insurer benefits as much as existing clients from the upgrade benefit, which enables insurers for example to:

  • curtail anti-selection (where the healthier lives in an in-force product abandon it and update their cover with a competitor, leaving only an aging in-force client base)
  • consolidate IT platforms where all system developments designed to manage enhanced products can also accommodate all in-force clients
  • eliminate varied pricing segments for the same products - facilitating a streamlined pricing strategy
  • avert excessive administrative costs which can spur from mass policy conversions by existing clients wanting enhanced products
  • simplify operational processes by transferring older policies to current terms of administration
  • relay consistent brand messaging and product-related publications

Updated Premium Comparison Databases

Premium Comparison V82 has now been distributed to all subscribers, this version included the following changes:

  • Updated OnePath Income Protection and Mortgage Protection rates effective 1/12/15
  • Added OnePath LOE Ultra to Income Protection Indemnity tables
  • Added Class 4 to Mortgage Protection for all companies
  • Updated Co-op life and trauma rates effective 23/11/15
  • Added Southern Cross Trauma (Standalone)

The Bancassurance Premium Comparison V11 has also been released and includes these changes:

  • Added AA Life rates
  • Updated Co-op life and trauma rates effective 23/11/15
  • Added Southern Cross Trauma (Standalone)

OnePath and nib - it's Official

The Reserve Bank of New Zealand has approved the sale of OnePath's medical insurance business to nib NZ Limited. This from OnePath on the news: 

From the 1 December 2015, nib is the insurer for all medical policies, although our OnePath Life team will continue to manage the day-to-day operations of the medical business for nib for around six months to ensure a seamless transition for customers. As a result of this, OnePath Major Medical Cover and OnePath Major Medical Guaranteed Insurability Cover is no longer available to new business.

OnePath has asked Quotemonster to remove medical premium rates from QuoteMonster (and the Premium Comparison Tool, for institutional providers) as well as any policy wordings and/or marketing collateral for the products above. Quotemonster will do that. 

Several advisers have already asked us whether Quotemonster will quote OnePath and nib together. We think that would be a good service to offer, and Quotemonster does provide a similar facility for Fidelity and nib. However, there are decisions to be made about exactly how it works, how brands are treated, and there is some programming work to be done. Quotemonster will be discussing that with nib and OnePath when they are ready - so it is likely that there will be a bit of a gap during which you may need to quote them separately. 


OnePath Changes

OnePath has made some changes to pricing for selected business insurance and medical insurance contracts. Also announced are some technical wording changes, changes to quote software, and a package of price comparisons. Quality Product Research Limited will review the product documentation changes in detail and update ratings where required, but no rating change is anticipated based on the release notes. 


Premium Comparison V81 - Tableau Version

A Tableau version of the latest Premium Comparison Database is now available to all subscribers. It has the same data as Premium Comparison V81 that was sent out a couple of weeks ago.

You will need Tableau Reader 9.1 to open it, which can be downloaded for free here:

http://www.tableau.com/products/reader


ANZIIF Award Winners: Partners Life Wins

Congratulations to Partners Life for winning the ANZIIF Life Insurance Company of the Year. Also congratulations to Naomi Ballantyne for winning a lifetime achievement award - the strong performance of Partners Life year after year is being recognised in that award, along with her career achievements with OnePath Life, and Sovereign Assurance. 

Asteron Life won Women's Employer of the Year. DLA Piper New Zealand won Professional Services Firm of the Year. We think they are great too. 

You can check out the full list of winners at this link

 


HFANZ: Health Insurance Coverage Rises

HFANZ released figures yesterday confirming that the number of New Zealanders with private health insurance cover has continued to increase over the past year, along with the total value of claims paid.

The release read:

'Despite paying healthcare claims of over $1 billion in the year to the end of September, the industry says it could be playing a much larger role in funding New Zealand’s healthcare costs if the Government was more open to recognising its strategic value.

HFANZ chief executive Roger Styles said successive governments had largely ignored the potential contribution from private health financing, despite increasing public funding difficulties.

He said recent research by NZIER suggested that health insurance could be funding up to $2-3 billion per annum in healthcare costs if New Zealand could match the levels of countries with similar health systems who harnessed private funding better.

 

“Given the current and forecast state of public health funding, it would seem obvious that some strategic thought should go into growing alternative health funding sources. Looking to develop more robust private funding of healthcare can only help relieve public funding pressures and improve overall health outcomes,” Mr Styles said.

He said he believed the Government’s draft health strategy, released last week, needed to give more prominence to growing private health funding to help counter the looming public funding shortfalls.

“If we had a more strategic approach to health financing, then we’d already be looking at the type of initiatives in the Affordable Healthcare Bill – a NZ First member’s bill currently before Parliament – such as getting rid of fringe benefit tax on employer-funded health insurance for their staff,” he said.

HFANZ statistics for the September quarter showed an increase of 3400 lives covered, bringing the total number of New Zealanders with health insurance to 1.337 million. On an annual basis, lives covered increased by 4600, or 0.3 percent, for the year ending September 2015.

Total claims paid amounted to $1.023 billion for the year ending September 30, 2015 – up 4.9 percent on the previous 12 months. Claims paid for the September quarter were $274 million, up 4.1 percent.'

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Difficulty Comparing Policies Highlighted by Interest.co.nz

Jenée Tibshraeny, at interest.co.nz, has a good piece about "navigating the road blocks preventing you from comparing 'apples with apples' when shopping for life insurance." As we spend a lot of time comparing policy documents we agree. The article is well worth a look. 

Tibshraeny highlights: 

"Of the 20 life insurance providers I’ve looked at, only half have published their policy documents on their websites.

These include AA Life, ANZ, ASB, BNZ, Cigna, Co-op Bank, Countdown, Kiwibank, Pinnacle and Westpac.

Those that haven’t include AIA, AMP, Asteron, Fidelity, MAS, OnePath, Partners Life, SBS, Sovereign and Volo."

Although I have to point out that AIA, AMP, Asteron, Fidelity, OnePath, Partners, and Sovereign do make their documents available publicly online: through sites like LifeDirect, KiwiCover, and others. If you google them, you can get several links to their policy documents. 

Tibshraeny then moves on to highlight the differences in wordings. This is trickier territory. There's a difference between "bad" differences which are merely confusing and make it hard to compare policies and "good" differences which make a policy demonstrably better than the others. There is a difference between documents that have a lot of superfluous words and details for cover that you did not buy, and those that have lots of long words because they cover more medical conditions. 

There have been some interesting developments in the UK to help raise consumer confidence in wordings.

But it all starts with a policy document.

Of course, most consumers do not read the document before they buy, but it is hard to argue that they should not have the opportunity to do so.