Partners to publish company insights, and more daily news

Rob Stock, writing for Stuff.co.nz tells that Partners Life has announced that it will be releasing a publication that reveals insight into many aspects of the business in the coming weeks. Chairman Jim Minto has said that information about complaints, unsuccessful claims, IP premium increases, and withdrawn products will be included in the publication.

“Life insurer Partners Life will begin publishing information about the $2.7 billion-a-year industry which is usually kept from the eyes of the public, and is challenging other insurers to do the same.

In about four weeks, Partners Life’s chairman Jim Minto said the company would begin publishing information including the number and types of complaints the company received from customers, and the proportion of claims not paid.

It will reveal 9 per cent of its claims made were not paid.

Other uncomfortable information it would reveal include the 12 per cent increase in premiums on its trauma and income protection policies, which had seen spikes in claims, and the 314 complaints it had from among its 201,000 policyholders.

It has withdrawn its funeral cover, a type of insurance the FMA and Reserve Bank criticised as poor value, and will reveal details of changes in its underwriting on policies to limit the risk presented by the Covid-19 pandemic when accepting new policyholders.”

Naomi Ballantyne said that the evidence Partners submitted to the FMA and RBNZ should also be shared with customers. Naomi suggested that the publication of such information would encourage competition to offer fair treatment and create a record of insurer promises, minimising backtracking.

“Naomi Ballantyne, Partners Life managing director, said in 2019 the FMA and Reserve Bank told insurers to provide evidence that they were not ripping off customers.

Insurers had to comply, leading to the September 2019 report in which no insurers were named and shamed.

Ballantyne said: “Having done that huge piece of work, and having the regulator know all of the things we do, we said, ‘Well, that’s great to tell the regulator, but no-one else knows’.”

“All that information we provide to them, we felt we should provide to our customers,” she said.

If all life insurers published the information it would encourage competition around good behaviour towards policyholders, but also create a public record of promises from insurers to policyholders, making it hard for companies to backtrack on them.” Click here to read more

This is a valuable initiative. Of course, much of this information is hardly confidential - but the level of detail in the disclosure is new. I know that the industry, working through the Financial Services Council, is keen to develop more data sharing. Meanwhile, pro-active disclosures of this type are valuable, adding to the transparency in the market and allowing journalists and consumers to understand what happens at insurers. 

Common claims payment reporting is a difficult area - defining what counts as a potential claim is critical to establishing an accurate and comparable number. For example: given Partners Life's high levels of income protection and trauma coverage a claim decline rate of 9% does not sound particularly bad, given the usual disagreements, misunderstandings, and that fraud is real. An insurer that issues only life insurance could probably report a much lower number - because death is harder to fake than, say, attempting to stretch out an IP claim because the jobs market is tough right now. An encouraging thought is that having a good conversation about what claims get paid, and what should not, gives confidence to consumers in what they are buying and its sustainability. 

In other news:

Suncorp: Customers only cutting insurance as an “absolute last resort”


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


'Threat multipliers' that turn personal crises into financial disasters

This article by Rob Stock for stuff.co.nz tells the story of one mans unfortunate run of bad luck which financially ruined him. Stock discusses "threat multipliers" and gives his golden rules for reducing them. This scenario underlines the need for an integrated view to be taken of financial planning: these situations show how debt, savings, health, work, and insurance all connect to make a situation either fragile or more resilient. 

Click here to read more. 


Health insurance's 'wait or pay' moments

Rob Stock shares a personal 'wait or pay' story - starting with these telling words: 

"Do you have health insurance?"

Chilling words you never want to hear from a doctor.

They always come just before he or she tells you how long you'll have to wait for your tests or treatment, if you don't.

This article on Stuff.co.nz discusses the 'wait or pay' dilemma people are often faced with when in need of some medical tests or treatment.


KiwiSaver nest-eggs lost for lack of insurance coverage

Rob Stock has a good article in stuff.co.nz explaining that hardship is often caused by disability - these are the essential facts:

"In the 12 months to the end of March, $81 million was paid out of KiwiSaver in cases of financial hardship, with 13,790 people drawing out an average of $5786 to help pay the bills."

Therefore KiwiSaver next-eggs are sometimes lost because they are used up early during a period of disability. This is an important issue which was sidelined from the design of KiwiSaver by politicians who legislated to keep basic levels of insurance out of the superannuation scheme. Well worth a read, and inclusion in client newsletters. 

Another financial planning issue was also identified - and it presages a large increase in people working until they are seventy years old: 

Two years' ago BNZ forecast that based on current payment trajectories, a third of people with mortgages wouldn't have paid them off by age 65.

...or they use KiwiSaver to pay of the balance. 


Insurance and Assisted Dying

Rob Stock published an interesting piece on assisted dying, in particular insurers possible views on the subject. I spoke to Rob Stock on the subject, but you also get comments from several other people involved in the industry as well. Well worth a look if you haven't caught it. Given the publicity associated with the proposed law to permit assistance to terminally ill people to die this is an area it is worth developing a policy on. Link


Financial Products You Can Live Without?

Rob Stock has an article on financial products you can live without. I hope he's right about all of them, and at first glance I agree. Having said that, sometimes people's circumstances are such that they don't have the luxury of the choices that others have. You  can read his article at this link - it's worth a look, and only a two-minute read. His principles are bang on: these products are expensive work-arounds for problems which can generally be solved with a cheap behavioral solution called 'budgeting'. But there is some complexity hidden behind that. Some people can't budget. Some people can, but are lower than the bottom rung in terms of resources. Take payday loans. In an ideal world no-one would ever use these. But this isn't an ideal world. For some people, deciding today what to do, if the car is broken, and needs fixing an overpriced payday loan can do it. The alternative may mean losing your job. Better planning would help, so might better public transport, but that's back in an ideal world, and maybe you're standing in the mechanics workshop trying to make a quick decision before calling a cab to get to work. Low-cost health insurance plans and funeral benefits have similar use cases. 


Southern Cross and ACC scrap over Liability

Southern Cross set up a team of specialists ten years ago because they believed that ACC was wrongly turning down legitimate claims by policyholders, leaving the Southern Cross to pay the cost of treating them. 'The insurer said it scrutinised around 200 cases a month where policyholders had had claims declined, usually older people whose injuries ACC concluded were wholly or substantially caused not by their accidents, but by underlying medical conditions. Usually age-related degenerative conditions.' Click here to read more from Rob Stock. The emphasis was added by me, that is a very large number of claims - something like 24,000 claims since the team was set up by Southern Cross. 

You should read the whole article. There is a wealth of claims data on the number of claims that were subject to some sort of dispute, the number of decisions changed, and the amount of money that is at stake. $4.95 million in payments made by ACC to Southern Cross in the year to June 2016. More than that, is the extent of the process Southern Cross engages in. 


Insurance Industry A Healthier Place to Work Now

Rob Stock has this cool piece on how the insurance industry used to be really unhealthy, but is now getting its act together. It includes comments by Naomi Ballantyne (Partners Life), and references to other CEOs, Ralph Stewart (Retirement Income Group) and Lance Walker (CIGNA), who are also committed to healthier lifestyles. To this I could add Rob Hennin (nib) who is a keen cyclist, and Graeme Edwards (AIA) is also very active. It has been a revolution. I've turned things around quite a bit too from my old self.