Medical insurance premium rates usually go up - but a few have gone down

In the most recent update to our medical premium comparison database (v83) we have the details of medical insurance premium rate changes by AIA and Southern Cross, both implemented on 1 November. Subscribers to the medical insurance premium comparison database will see that while AIA's increase is fairly uniform, the Southern Cross changes are more varied. One group of coverage has got cheaper, with a very small decrease. That was the rating for basic policies with no additional features (the most common example being specialists and tests). Even within this group for a few ages the premium rose, a few rates were very minor adjustments, but for a good slice of the most basic cover there was a small reduction in price. The reasons for the price change in this particular group will be explored in more detail in our Quarterly Life and Health Sector review, which we plan to have available to subscribers in the week before Christmas.  


Fidelity Life discuss up front commission changes, and more daily news

Fidelity Life chairman Brian Blake noted that the Government missed an opportunity to reduce life insurance policy commissions through CoFI. In a market that is highly competitive, Blake says that a voluntary reduction in upfront commission is unlikely, although Blake said that Fidelity Life is confident that it has adopted changes that meet guidelines. Fidelity Life is set to launch an online adviser product accreditation programme and an adviser quality assurance programme. Similarly, it has developed good customer outcomes principles to ensure compliance.

“Fidelity Life chairman Brian Blake says the government has missed an opportunity to force down commissions on life insurance policies.

Blake says: "The failure to address high upfront commissions in the Financial Markets (Conduct of Institutions) Amendment Bill was a missed opportunity in our view.

"In a highly competitive market like ours, without regulatory intervention it’s unlikely anyone will significantly reduce upfront commission levels and risk losing market share," he says in the company's annual report

He says Fidelity Life is confident it has adopted conduct and culture changes which meet the requirements of the Financial Markets Authority/Reserve Bank of New Zealand conduct and culture review.

The company will shortly be introducing an online adviser product accreditation programme, an adviser quality assurance programme and it has also developed good customer outcomes principles to help ensure Fidelity continues to meet the needs of its customers.

Further enhancements to its adviser proposition will be announced from early 2021, including some digital initiatives resulting from its Project Watson IT development.”

Although total comprehensive income and commission payments decreased, Fidelity Life experienced premium revenue increased. Fidelity Life has noted that it is looking to comply with RBNZ’s guidelines on prioritising capital protection. To comply, Fidelity Life would not be paying dividends this year.

“In the year to June 30, total comprehensive income fell from $20.7 million to $17.9 million. However, profit rose from $11.6 million to $17.0 million.

Insurance premium revenue increased from $275.47 million to $269.49 million and claims paid out rose from $125.7 million to $139.7 million.

However, commission payments fell from $57.37 million to $53.42 million.

The company’s earnings per share increased just over 10% from $8.73 to $9.62.

Fidelity says because the Reserve Bank has clearly advised all insurers that protecting capital should take priority over paying dividends, no dividend would be paid this year.

The Reserve Bank "expects insurers to take steps to protect, if not build, their capital positions to ensure the industry remains in a strong position to support New Zealanders through Covid-19 and this time of economic uncertainty."” Click here to read more

In other news:

FSC: Generations Digital Conference now available on demand

Southern Cross: Southern Cross have moved from Level 1 EY Building to Level 1 Te Kupenga, 155 Fanshawe Street

AMP: AMP receive buyout offer from US investment company

FMA: Consultation: Recognition of Australian adviser qualifications

Southern Cross: Hip replacements add to health insurer's bill


Fidelity Life appoints new CEO, and more daily news

Fidelity Life has announced the appointment of Melissa Cantell as the new CEO. Cantell is set to come into the role on 25 January 2021. Cantell will leave her current role as Chief Operating Officer at IAG NZ. Cantell has held various managerial roles and has experience in different areas of business. Until Cantell’s appointment, Simon Pennington and Adrian Riminton will continue as acting CEOs.

“Melissa Cantell has been appointed chief executive at Fidelity Life, replacing Nadine Tereora who left in May 2020.

Cantell has strong executive leadership experience running successful commercial operations across a range of industries. She joins us from IAG NZ where she held the role of Chief Operating Officer, and prior to that was the Executive General Manager Transformation.

She has accumulated a broad range of experiences over her career, from mergers and acquisitions strategy and business transformations to senior general management roles with Fonterra and Coca-Cola Amatil. She loves building great customer, adviser and people experiences, especially in times of change, and is passionate about the role insurance plays in the New Zealand community.” Click here to read more

In other news:

FSC: Understanding conflicts of interest and managing gifts and incentives webinar

Southern Cross: Travel Insurance: Are your clients failing to understand this insurance policy?

The role of a CEO in driving diversity and change


Science behind high Income Protection premiums, and more daily news

Recently we reported that Income Protection prices are on the rise as a result of the Australian market and COVID-19. New Zealander insurers are now being urged to amend processes and premiums before regulators intervene and introduction mandatory guides. Partners Life begun the conversation when revealing that it has increased IP premiums by 12% and made policy changes. Kris Ballantyne, chief marketing officer, has said that Partners wishes to offer affordable policies that customers can maintain for as long as they need. AIA and Cigna have both noted that they aren’t looking to introduce significant premium increases.  

“It took insurer Partners Life to break the silence last month when it revealed a brave plan to start publishing the content of discussions with the Financial Markets Authority.

 

In doing so, it revealed it lifted its income protection premiums by 12 per cent in the past year, and had made policy changes, including not allowing self-employed people to any longer select an “agreed value” of income to be covered, instead limiting cover to actual loss of earnings.

 

Partner’s Life’s chief marketing officer Kris Ballantyne said the company was a “first mover” on income protection, driven by wanting to provide policies they [consumers] could afford to keep as long as they needed it.

 

It was a big challenge as there were a lot of agreed value policies covering self-employed people, and owners of small businesses.

 

Neither of its two big rivals, AIA nor Cigna, was expecting to make such large premium increases, though AIA had stopped selling new policies in which the income covered automatically increased by 5 per cent a year.

 

AIA chief product officer Len Elikhis said that over time, “the insured’s benefits would creep up and approach the insured’s income”.

Shane Burdack, senior underwriting consultant as Swiss Re Australia highlighted that customers with significant wealth had very little incentive to return to work when on claim, resulting in increased premium prices.

“Swiss Re senior underwriting consultant in Australia, Shane Burdack, said that in New Zealand insurers gave little thought to the net wealth of policyholders.

 

Yet people with significant wealth – sometimes through investments, sometimes because of payouts from other insurance policies – had a low incentive to go back to work, and stayed “on claim” for longer driving up costs.” Click here to read more

  

In other news

nib: nib takes place among top 100 most diverse firms worldwide

Southern Cross: Southern Cross is offering members a $149 voucher when they join Snap Fitness on a minimum 12-month term

Southern Cross: Southern Cross is offering members 10% off the retail price of a monthly LES MILLS On Demand subscription

 

 

 


Pinnacle Life unpack life insurance discussions, and more daily news

Pinnacle Life has published tips on how to discuss life insurance with a significant other. Pinnacle Life begins by encouraging those that have never discussed money or life insurance with their partners to do so as it is an important part of planning for the future.

“Talking about life insurance means talking about death. No-one finds that easy. Pinnacle Life has some tips to get you started with talking about money and life insurance with your partner.

Not many of us have been taught how to have conversations about financial decisions. In fact, financial literacy hasn’t been on the school curriculum for very long at all – at best, it’s still optional for most schools today. There seems to be an underlying assumption that financial literacy is something you can learn yourself or pick up from your parents. But evidence suggests it’s not that easy; New Zealanders are notoriously underinsured and ‘under-saved’.

In a time when the news is filled with death rates, recessions and industry failures and many of us are facing reduced incomes, it’s a reminder that it’s never too soon or too late to start having conversations about our finances and insurance. We know that it's not easy to talk about money openly and honestly; talking about life insurance can be even harder because it means talking about what will happen if you die.”

Tips include:

  1. Conducting independent research
  2. Choosing the right time to have the discussion
  3. Taking your time to plan and execute
  4. Start by looking at the big picture before honing down to the details
  5. Embrace the emotions that arise
  6. Discuss your money objectively
  7. Seek advice from a professional

Click here to see all the details

In other news

nib: new customers that sign up for Ultimate Health Max, Ultimate Health and Easy Health policies using nibAPPLY will have 2 months free until 31 January 2021

Southern Cross: 72% of all claims were paid out in 2020

82% of customer channels are now fully digitised and over 96% of claims now submitted digitally

The power of social media- Russell Hutchinson writes on goodreturns


Asteron Life premium increases, and more daily news

Asteron Life has made changes to premiums effective 21 September 2020. The introduction of premium increases has been in response to claim costs being higher than expected. The premium increases will only impact customers on a stepped premium. Depending on customer segments, increases will be between 0% - 6%. Please refer to the table below. 

“These increases are in response to higher than expected claim costs observed in our most recent claims experience review. Based on this, we have adjusted our long-term claims outlook and updated premiums to ensure that our business will remain sustainable to support our customers both now and in the future. We perform regular reviews to keep any increases small, and as manageable as possible for customers.”

The new rates will not apply to quotes created before 21 September, but the quotes will be valid for only 30 days. The premium changes will affect existing customers after their next policy anniversary or after 21 October 2020.

“The new rates will apply for new customers from 21 September 2020 and will be reflected in policy documents. Quotes created before 21 September will be valid for 30 days.

The changes will apply for existing customers from their next policy anniversary on or after 21 October. Customers will not see any specific reference to the change in rates, but renewal notices will continue to mention that premiums can increase due to changes in market conditions.”  

 

The increases are higher, generally, for female lives than for male lives in trauma. They are also higher for both younger lives and older lives, across all product types, while the changes for lives at the main ages of acquisition (between about age 35 and 50) are more limited, probably constrained by competitive pressures. More details will be given in the forthcoming quarterly life and health report. 

 

Product 

Benefits 

Increase 

Personal Insurance 

 

Life cover 

0-6% 

Trauma recovery cover
Life cover buyback benefit Trauma reinstatement benefit Continuous trauma benefit 

Standalone 0-6% Accelerated 0-4% 

Income protection cover Mortgage and rent cover Mortgageandliving cover Immediate assist package Specific injury support benefit 10-hour benefit 

0-6% 

Business Insurance 

Life cover 

 

0-6% 

 

Trauma recovery cover
Life cover buyback benefit Trauma reinstatement benefit Continuous trauma benefit 

Standalone 0-6% Accelerated 0-4% 

SmartLife 

 

Life cover 

 

0-6% 

Trauma recovery cover Trauma (standard)
Trauma deluxe
Life cover buyback benefit Trauma reinstatement benefit Continuous trauma benefit 

Standalone 0-6% Accelerated 0-4% 

Mortgage repayment option (disability) 

 

0-6% 

SmartLiving 

SmartLiving value SmartLiving deluxe 

0-6% 

SmartBusiness 

 

 

Life cover 

 

0-6% 

Trauma recovery cover Trauma (standard)
Trauma deluxe
Life cover buyback benefit Trauma reinstatement benefit 

Standalone 0-6% Accelerated 0-4% 

 

Income Protection 

Income protection (personal and business) Specific injury support benefit 

0-6% 

 

 

 

In other news

Southern Cross: AA Insurance and Southern Cross recognized for diversity efforts

Southern Cross: Coronavirus: Did lockdown actually make some of us happier?

nib: nib outlines strategy of 'data-driven personalisation'

FSC: register for Generations 2020 digital pass


Southern Cross experience a surplus, and more daily news

Southern Cross has reported a surplus of $32.4 million for the year ended 30 June 2020. This financial reporting comes after the $50 million return to members. $972 million was returned in claims in the last financial year, this equals to 85 cents in claims being returned for every dollar received in premiums.

“Southern Cross Health Society Group has today released its annual financial results, posting a surplus of $32.4 million for the year ended 30 June 2020.

The announcement follows Southern Cross Health Society’s pledge during the Level Four lockdown in April to return $50 million to its members.

In the last financial year, the Society returned $972 million in claims and received $1.138 billion in premiums.

For each dollar received in premiums, it returned 85 cents in claims to members, compared with an average of 62 cents in the dollar among other New Zealand health insurers.”

“The business paid out 72 per cent of all private health insurance claims, significantly more than its 62 per cent market share based on Health Funds Association of New Zealand data.

Nick Astwick said that Southern Cross was focused on members during the last financial year. This included pledging to return $50 million, setting up employees to effectively working from home and ensuring the business digitisation process is on track.

Chief Executive Nick Astwick said the Society’s focus during the last financial year was on taking care of its members: “We were with our members from the start of the pandemic, returning $50 million to them, and introducing a significant range of options for those in need of hardship relief.

“At the same time, our workforce was very quickly set up to work remotely, ensuring service levels were seamlessly maintained.”

Astwick said cost-saving digitisation of the business had continued at pace, with 82 per cent of customer channels now fully digitised, and more than 96 per cent of claims submitted digitally.” Click here to read more

In other news

Southern Cross: Woman who lives in fear of jaw dislocation determined to get replacement

Southern Cross: Southern Cross gives support to students' mental health programme

AIA: Depressed man wins $173,000 battle with insurer AIA - there will be more discussion of media claims coverage in the forthcoming quarterly life and health sector report. 


Southern Cross offering domestic travel insurance, and more daily news

Southern Cross Travel Insurance has announced that it will be offering customers domestic travel insurance product.

Customers will be offered:

  • Cover for cancellation of your flight and accommodation if you can no longer travel
  • Cover for accommodation and other expenses if your flight is delayed or cancelled
  • Cover for your luggage and other personal belongings if they’re stolen or damaged
  • Cover for excess charges if you have an accident in your rental vehicle
  • Cover for the kids if you’re delayed getting home and need to pay for extra childcare costs
  • Cover for your furry friends at the kennels if you’re delayed getting home

Click here to read more

In other news

Kiwis with advisers end up significantly better off - research

AMP Australia: AMP advisers call for government inquiry over alleged fraud, deception


FSCL complaint foreshadows implications of non-disclosure, and more daily news

After speaking with an adviser a woman proceeded to cancel her $300,000 policy and add a trauma/critical illness policy. After suffering a back injury a month after making the changes, the woman’s claims were denied.

“The woman met with an insurance adviser to review her cover – she already had a $1 million life insurance policy with one insurer and another $300,000 policy with another, but no trauma, critical illness or mortgage replacement cover.

The adviser recorded that she was working 28 hours a week as an accountant in her own company and studying part-time.

It was recommended she combine her life insurance policies with one of the existing insurers and cancel the $300,000 policy. The adviser also said she should include some trauma or critical illness cover and mortgage protection cover in case she could not work for a period of time.

The woman accepted the adviser’s recommendations. She cancelled the $300,000 policy and a new policy providing cover for trauma/critical illness commenced in October. In November she tripped and fell, injuring her back.”

When speaking with the adviser the woman noted that she worked 28 hours and studied part-time, when claiming she told her insurer that she worked 30 hours a week and informed ACC that she worked 40 hours a week. Her insurer discovered that she wasn’t  working and instead was a full-time student. The woman proceeded to lodge a complaint against the adviser stating that she wasn’t informed that she would need to provide financial statements and a result of the advice she’s cancelled her $300,000 policy.

“She submitted a claim under her trauma/critical illness insurance, stating that she had been working as an accountant for 30 hours a week. She also stated on her ACC form that she had been working for 40 hours a week.

When the insurer asked for documents to corroborate her income, she was unable to provide convincing information. The insurer then discovered that she was a full-time student. The insurer declined the claim and voided the new insurance policies but later reinstated the $1 million life policy that she had before the changes were made.

The woman complained that the advice she had received from the adviser caused her to lose the $300,000 life insurance policy that she had cancelled on the adviser’s advice. When the complaint was not able to be resolved directly with the adviser, she went to FSCL.

She told the dispute scheme the adviser had not told her she would have to provide financial statements to support any claim.”

Although the FSCL concluded that the advice given was sound advice, the chain of events highlights the importance of risks of non-disclosure.

““We were satisfied that the advice to increase the cover with one insurer and cancel the smaller policy was sound advice and had not caused any loss,” FSCL said.” Click here to read more

Advisers reading the reports will notice inconsistencies and gaps. The story is plainly larger and more complex than is being shared. As such, there is no real basis for making form judgments. In more general observations we should probably note the increasing likelihood of client complaints and the difficulty of managing disclosures - making sure that clients are really clear about the importance of accurate disclosure and helping them to achieve that - for their benefit and ours. After all, complaints just cost us all money and reputation. 

In other news:

Southern Cross: a Risk Partner – Sales and Marketing role is currently being advertised

Strategi: Strategi are offering remote AML/CFT audits

RBNZ: Reserve Bank extending mortgage deferral scheme

RBNZ: Monetary Policy Statement Explained Q&A with RBNZ Chief Economist and External MPC Member

FMA: Sorted Money Week has begun


Advisers failing to track transitional licence applications, and more daily news

The FMA has revealed that although 400 entities have registered on the FSPR at the companies office to become a FAP, none have initiated the next steps in the process.  During an FSC webinar, John Botica mentioned that an adviser who had received a confirmation email from the Companies Office had mistaken it as receiving his transitional licence. John Botica has urged advisers and groups to follow the application process and assess where there are closely to avoid consequences in March 2021.

“Financial Markets Authority director of market engagement John Botica said there were about 400 entities that had registered for the FAP service with the FSPR but had not yet gone on to the next step.

He told an FSC webinar that he spoke to one adviser who thought that his transitional licence had been granted but he had only received notice that his registration with the Companies Office had been successful.

He said those 400 entities should check back through their processes to see where they were at.

Otherwise they could be in for a nasty surprise next March, he said. “I don’t think you’re going to like the experience if we are rapping on your door [for] operating without a licence.” Click here to read more

In other news:

FSC: Dr Siouxsie Wiles, Microbiologist & Associate Professor MNZM has been announced as the closing keynote for Day 1 of Generations Conference

AIA: AIA has been nominated as Insurance Employer of the Year at the Women in Insurance NZ Awards 2020

Southern Cross: Southern Cross has been nominated as Insurance Employer of the Year in Insurance NZ Awards 2020