IP ratings under review

Product scores for income protection products are under review. We need to consider how to take into account temporary measures being applied to contracts with some disablement components - IP, Trauma, and TPD - such as the recent restrictions being applied by Partners Life. In the meantime, you need to familiarise yourself with what those restrictions are and whether they apply to the cases you are submitting. We have a schedule of COVID-19 impacts available for subscribers in the quarterly life and health review, which will be issued today. 

Asteron Life mixing and matching options for IP and Mortgage Protection Insurance

Asteron Life has recently made a number of changes to IP options based on SME research and also adviser feedback. See more details from them below:

Ability to Mix and Match different Income Protection options
One enhancement we made was the ability to offer new clients a range of flexible cover options which combine MLC and IP to tailor cover which suits your client. All new business has the option to combine Loss of Earnings (LOE) or Loss of Earnings Plus with Mortgage and Living Cover.

New Ten-hour benefit
We have also introduced an optional Ten-hour benefit which allows customers to work for up to 10 hours without it affecting their Living support benefit payment under Mortgage and Living Cover. This benefit provides a great option for customers who are self-employed and may work hours which don’t generate an income. 

Product Research

The Quality Product Research database V130 has now been distributed to all subscribers. This version includes the following changes:

  • Southern Cross and nib added to Standalone Trauma
  • Partners Life documents and rating update V14.5 – effective 09.12.2019 (personal and business)
  • Fidelity Life remediation of booster benefit

Asteron Life: Changes to Mortgage and Living Cover

Asteron Life have announced a number of changes to their Mortgage and Living Cover, as well as the ability to quote it alongside Income Protection.

As of Monday 9 December Asteron announced they have introduced:

  • The ability to combine Mortgage and Living Cover (MLC) with Income Protection (IP)
  • An optional Ten-hour benefit on Mortgage and Living Cover
  • Enabling bundling discounts across Personal and Business
  • Adding level Life Cover projections to age 100

Here is an example of combining Mortgage and Living Cover with IP: Combining MLC and IP may be suitable for clients who want the advantage of not offsetting ACC benefits as well as some tax deductibility of premiums; or for self-employed clients who could manage basic oversight of their business in less than 10 hours a week; or for self-employed clients who are used to meeting regular tax obligations.  

Here you can download a case study helping explain the optional ten-hour benefit on Mortgage and Living Cover. Download MLC Case study



Partners Life announces a long list of product enhancements

Partners Life has an impressively long list of policy wording changes made. Arguably, each of the individual items is small, and some merely clarify, but in sum the changes are significant, and clarity is good and should always be an aim. I particularly liked the change to the intensive care benefit, as an example, as I saw a particularly unfortunate claim where the client failed to meet the strict definition, but should have qualified. This change makes that unfortunate circumstance less likely. I also liked the changes to definitions of income and full time. The addition of the change to include removal of a major portion of the colon is a valuable addition to the loss of a major organ schedule, and increasingly common in the case of bowel cancer. 

You can find full details of the changes at this link here.

Partners Life have released this video summarising some of the most significant product changes made effective 9 December.

The missing customers, the missing new business

This article from The Economist discusses how companies from Silicon Valley are creating products that are much more suited to males than females, alienating half of their potential customers. This is in some surprisingly obvious ways: most mobile phones and gaming devices are simply too big for most women's hands to use with as much comfort and utility as the average man using the same device. This is my my wife persists with her ancient, but correctly sized, iphone SE, rather than choosing to upgrade. It's a huge lost opportunity. If you read the article you can easily feel smug - as I did - about the silly mistakes these silicon valley geniuses make - like trusting the design decisions to teams that are 75% male. But there's another part of me worrying - what are we missing? Here are two examples: 

We're missing out on women. Looking at several hundred thousand quotes, 43% of quotes arose from couples and 57.4% arose from quotes for single adults. Men were quoted for insurance on their own at a rate twice that of women. Increasing the engagement of women quoting alone to that of men would be a 20% boost to quotes for the industry. In the advised channel we are not quoting single women as often, and when we look at cover levels for women, they remain lower than for men. Remember that with declining marriage rates women tend to remain single, or if in relationship, financially independent, for longer, which expands the impact of this industry weakness. There is nothing like this skew in direct insurance.

In Auckland we're also missing out on adequately serving the multi-adult household, which now accounts for 30% of all households in this region, by featuring mainly traditional families. We're missing out on women, big time. The  We're missing out on genuine connection to client needs - by talking about insurance all the time, and not about health, risk, or the great purpose of financial risk transfer. Where there are people with a financial dependence on each other, there is usually a need for insurance. Marketing to that segment with a new solution to the challenge of making sure the benefit goes for its intended purpose would help. 

There are more, and they require detailed evaluation. The solutions to accessing ignored segments is not straightforward. All change is difficult. It's an example, however, that the industry needs to change to reflect changes in society around us. While it might be embarrassing to be talking about selling more to single women in 2019, it would be even more embarrassing to be still talking about it as a problem in 2029. While the housing crisis has been in the news almost every week for the last five years, we do not appear to have recognised one of the most obvious consequences: more shared housing. 

More details will be in the Quarterly Life and Health Sector report. 


Product Research Database Update

QPRV12_9 is now live, this version includes the following changes:

  • Updates to policy documents and ratings for the below:
  • Accuro SmartCare ACC7124 08/2019
  • Accuro SmartCare+ ACC7125 08/2019
  • AMP RPP NZPD00291 TraumaPlus 2017
  • AMP RPP NZPD0305 Trauma 10/2019
  • Asteron Continuous Trauma accessible through TBB

Product creep should be named as a source of medical inflation

Aon’s 2020 Global Medical Trend Rates Report shows that the global average medical trend rate – the percentage change in medical plan costs – is 8 percent, compared to the average general inflation rate worldwide is projected to be 3.1 percent. Click here to read more. They blame bad habits, rising drug prices, and ageing populations for driving health care costs higher. Of course, these things are real. Bad habits definitely play a part. We also seem to have forgotten the importance of getting vaccinated. But inflation is a tricky beast to pin down. At a conceptual level, it is the rise in price solely due to increase in money supply with no corresponding improvement in value. Yet value in healthcare is improving - after all, lifespans are lengthening, and measurements like disability adjusted life years are generally positive. 

Equally, the health insurance of today is not exactly the same as the health insurance of, say, five years ago. It isn't even very close to the health insurance ten years ago. If I compare - and I can - the most popular product of today with the most popular product of that time there is a considerable change - and that change has been to the customer's benefit, but also comes with a cost.

A common product cycle, therefore, is to gradually see incremental improvements until the product has migrated out of its segment. When that happens, a new product must be launched to replace it. Take the Honda Civic. Once upon a time this was a tiny hatchback. It has grown and grown, literally, the first generation measured 3550mm in length and weighed 680 Kgs. For the tenth version those measurements are 4519mm in length and a minimum of 1277 kgs, although it is frequently heavier. These cars have the same name, but they are very different. 

The same goes for insurance product. Wherever you look, mortgage protection, income protection, trauma insurance, and especially medical insurance, there has been incredible change. 

Car manufacturers realise what happens with product creep, and sooner or later they respond to it. Honda has a new small hatchback in its range to replace the spot vacated by the Civic. It isn't the same and the original Civic, and no-one would want it to be. But it is a new offer to the same segment. That often needs to happen. 

Product Research Database Update

We have uploaded the latest product research database (version 12_7) onto Quotemonster and distributed it to subscribers. This version includes the following changes:

  • Asteron Life policy wording added and rating changes applied effective 30.09.2019
  • BNZ LifeCare 01.04.2019 policy wording added and applied rating changes
  • Unimed Hospital Select 01.09.2019 policy wording added and applied rating changes
  • Fidelity Trauma Multi 08.09.2019 wording added and applied rating changes
  • AA Life and Funeral cover 01.08.2019 wording added and applied rating changes
  • Kiwibank Home Loan and Life & Living 01.08.2019 wording added and applied rating changes

Product Researcher: Doreen Dutt

I am so glad to have Doreen as part of the team. With us for several weeks now, Doreen has been learning fast and picking up the product research baton really well. We are looking for some advisers and underwriters to help us out with a research advisory board at some stage. If you check back here you will see a profile posted soon.