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Minister promises process of review of sales incentives

In this piece on RiskInfo Minister Faafoi and the Honorable Grant Roberston appear to outline a separate consultation process to run alongside the insurance contract law review process, later this year. This process is to review sales incentives in the light of the recent report on the life insurance sector. Link.

Minister of Finance, Hon Grant Robertson, highlighted four changes the Government wishes to see:

• Clearer duties on banks and insurers to consider a customer’s interests and outcomes, and to treat customers fairly
• An appropriately resourced regulator to monitor the conduct of banks and insurance companies, with strong penalties for breaching duties
• Changes applied to both banking and insurance, since the issues identified in both are similar. There are also overlaps between the sectors, with banks often selling insurance products.
• A strong response to internal sales incentives and soft commissions

“We will consult with the public and industry on these changes, but we are going to move as quickly as possible on this because New Zealanders need to have confidence their rights and interests are being protected,” said Robertson.

Faafoi noted that the consultation will run alongside the insurance contract law review currently in progress.

Outsourcing Your Clients’ Claims? The Pros and Cons

A recent poll done by RiskInfoNZ asked advisers to consider outsourcing clients' claims to an advocacy service in order to devote more time to building their business.

• 74 percent answered 'No',
• 14 percent answered 'Yes'
• 12 percent answered 'Not Sure'. 

This is quite a sensitive subject, with strong feelings on different sides of the debate. For example, at the recent Financial Advice New Zealand conference Jane Eschenbach made it clear that she feels advisers should handle their own claims.The benefits, in a small advice business, of handling your own claims are significant.

• Closing the circle from recommendation to claim, creates a positive feedback loop: you get to see exactly how well the product and company perform when it really counts.
• The benefits of engaging with the customer again, delivering on the promise of the product, are powerful.
• Providing process help - navigating the tasks required to make a claim, for example - is highly valued by the client at a time when their personal resources are probably at a low point.
• Obtaining referrals from the resolution of the claim.

On the other hand, specialisation has always been a factor in increasing efficiency of businesses. Larger advice businesses routinely have specialist claims teams. You might say that scale and specialisation tend to go hand in hand. What are the benefits?

• Specialisation allows deeper learning - some one who deals with claims all day, gets better at them
• Specialists have more familiarity with rarer claims types and events
• Where a generalist may need to seek legal advice, a specialist may have already received an opinion on this type of situation
• Avoiding handling claims allows for more specialisation in advice-giving

There are some reputational risks to consider - in the UK some claims management businesses have become associated with poor practice. They have chased business from policy-holders that may be eligible to receive compensation for policies that were sold badly by banks. While some would argue that this is a valuable service allowing consumers that may otherwise be unaware of the compensation available, there have been some systematically poor practices associated with them.

The field in New Zealand, however, is wide open. Advisers that do not have to opt for an all or nothing approach. You might handle most claims yourself, but call in support for review and backup on more demanding cases - or if you just need the help due to workload issues.

You can Click here to read more on the Risk Info article.

Industry Response to ‘Succinct’ Draft Code

The draft Code of Conduct released last week has been commented on by many and RiskInfoNZ have shared what some have to say here.

Quick Profile - Peter Sobels, FSC Conference Speaker

One of the great things about conferences is getting to spend time with people not routinely available. Peter Sobels runs RiskInfo.com.au, which has recently established riskinfonz.co.nz. Peter was also a speaker on our panel on customer engagement.

Peter Sobels has worked in the financial services industry for thirty years, working with life insurance companies and research groups. In 2008 he founded Riskinfo as a dedicated online news and information resource for the Australian life insurance and financial services industry, particularly for advisers.

RiskinfoNZ was launched earlier this year, with similar aims to serve the news and information needs of all financial advisers, but particularly risk-focussed advisers, operating in the New Zealand financial services market.