Chris Coon, co-founder of Sovereign Assurance and Partners Life, dies

It was awfully sad to hear the news that Chris Coon has died. I can think of no words better than those by Chris Coon's friend and colleague, Naomi Ballantyne, in the following announcement:

It is with a heavy heart that I let you know about Chris’ passing yesterday morning after a lengthy illness.

For those of you who never had the pleasure of meeting and working with Chris either at Sovereign or in the early years of Partners Life, you missed something special.

Chris was the person who forever changed the NZ Life insurance market – first as the co-founder of Sovereign and then alongside his brother Richard and I as co-founder of Partners Life.

He brought the NZ industry into modern times with modern products and pricing structures and created a market where IFAs became important and appreciated.

Chris was an exceptionally intelligent Actuary but was also extremely kind and very funny.

As his first employee at Sovereign, he gave me as a very young girl, the opportunity of a lifetime to create a brand-new company – something that has set me up for the career that I have been blessed to have. He taught me almost everything I know about Life Insurance – he was always so generous with his time and with sharing his knowledge.

While Chris retired from working in our business many years ago, his presence is everywhere in our business and will continue well into the future.

I am heartbroken to have lost such a special person in my life – and I am so sorry for his wonderful family, that their brightest of lights has now died.

Thank you Chris for Partners Life – I hope you are proud of us!

As a very young commissions clerk I met Chris and can definitely reiterate Naomi's comments that Chris was kind and funny. It was only later that I would come to appreciate his intelligence and persistence. He was generous with everyone in the business, from his fellow founders to the cleaner, Owen, and his family. He will be missed. My condolences to his family and friends.

 


From Rob Stock: a thought provoking article on the value of advice

Rob Stock has a great piece on the value of advice. Do check out the full article at the link here, but I have also pulled out some quotes that illustrate the differentiation available within advice contexts. 

"Within 30 seconds an independent insurance adviser identified Dion Knill​ how to trim 30​ per cent off his life insurance premiums without reducing his cover."

This is a tough one - after all, advice isn't all about price, but the willingness to do a comparison tends to be a hall mark of a full service adviser, and acts as a major proof point for the client. They are impressed when advisers are happy to engage in the pros and cons of different solutions, and, as the article progresses, you can see that the discussion broadens out later on. Many banks do not give their staff the ability to produce fast comparisons - fearing that comparison invites switching. It doesn't need to, that's kind of the first use case, but overwhelmingly it is really about demonstrating that you are conversant with the market. 

Much of the savings turn out to be in the form of discounts and benefits from an additional service. I feel that proves my point about comparison. This adviser was creatively repackaging a basic life insurance contract with a wellbeing service. The client obviously got on board with that because they achieved some goals and got some extra rewards: 

"The savings came from applying a multi-policy discount, which he had not been getting, and by joining the Vitality health scheme run by AIA, which bought Sovereign from ASB's parent company in 2017 in a $4.15 billion deal, and took over its policies.

“In the last 87 days I have received about $100 in Airpoints, and 15 per cent off my insurance premiums (through the Vitality scheme), and I will keep saving money based on my fitness levels. None of this stuff has been pointed out to me over the last three or four years,” Knill said."

I can appreciate why ASB did not offer the service - many full-service advisers also choose not to offer AIA Vitality - but different advisers are welcome to package their services in different ways. That can have a big impact, especially on smaller policies, which are more common in a bancassurance context. In this case it wasn't a simple price comparison plus switch. In fact, it seems like there was probably no switch at all, but the addition of some services, and a powerful brand story about the value of full service advice.

I felt it also underlined a consequence of the place that legislators have drawn the line between no-advice and advice. Many bank services are categorised as advice within the meaning of the law, but there can still be a large difference between the advice offered by a full-service adviser and a low-service one. That's something that Cecilia Farrow talks about in her comments near the end of the article. It is a place where independent advisers can really exploit their advantages: being agile, access to a wider range of tools and services, and creating new packages of value for clients on a truly individual basis. Instead of grumbling about the advantages that the 'big end of town' have, some small advice businesses appear to revel in the joys of asymmetrical competition. 

Grateful thanks to the adviser who drew this article to my attention. 

 


AIA: Underlying premium rate changes

AIA have announced that effective 8 October there will be a number of minor premium increases to AIA products issued from 1 January 2003, and effective from 20 October 2019 for Sovereign products issued from 1 February 2001.

AIA Living premiums have already taken account of these product enhancements and will not be impacted by these pricing changes.

Below is a snippet of the changes:

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AIA new offer updates

Advisers with AIA agency agreements will already have received many details - a commendable level of detail - from AIA in advance of the launch of their new AIA Living offer. I will only summarise it here for news purposes: 

From 5 August this will be AIA's Living range: 

Life Insurance

  • AIA Living Life Cover
  • AIA Living Family Protection
  • AIA Living Accidental Death

Trauma Insurance

  • AIA Living Critical Conditions
  • AIA Living Progressive Care

TPD Insurance

  • AIA Living Total Permanent Disablement

Income Protection Insurance

  • AIA Living Income Protection
  • AIA Living Mortgage and Income Protection
  • AIA Living Business Continuity
  • AIA Living Rural Continuity
  • AIA Living Business Income Support
  • AIA Start-Up Income Protection

Health Insurance

  • AIA Private Health
  • AIA Private Health Plus 

Accidental Injury Insurance

  • AIA Living Accidental Injury Cover

That omits certain less-used products, such as the 'essential' version of IP and Trauma, and the specialists and tests add on (when not part of medical).

The multiple benefit discount is significant: 

Our new tiered Multi-Benefit Discount will apply to AIA Living risk products (excluding health) based on the number of products held by the customer:

  • 10% for two products;
  • 12.5% for three products; and
  • 15% for four products.

The Multi-Benefit Discount applies within product category levels: Life, Income Protection, Trauma, and TPD. i.e A customer who purchases Life Cover, Loss of Earnings, and Mortgage and Income Protection will receive a 10% discount on the basis that Loss of Earnings and Mortgage and Income Protection fall within “Income Protection” product category.

To qualify for the Multi-Benefit Discount, customers are required to hold a minimum $100,000 Life Cover plus a minimum $75,000 Trauma, $75,000 TPD, or $2,000 (monthly benefit) Income Protection.

This is added to any Vitality discount, which could be 10%. It will be interesting to do comparisons with both discounted and un-discounted premiums.

Commissions have also been updated. I won't repeat the entire schedule here, but I will be updating the commission comparison in the next week, (available to institutional subscribers) if you are keen to see the impact. One thing worth highlighting from that change is the removal of any links to persistency and production levels. Asteron Life has recently made a similar change, and I expect that all commission systems will no longer have these links in the future. AIA's comment is below: 

We have taken the view that volume and persistency related commission bonuses drive unnecessary complexity and risk distracting attention away from the important work that Advisers perform for their clients.

Product enhancement pass-backs are also being extended across the range - to older AIA contracts: 

We are also pleased to advise that we have extended the AIA pass-back benefit to include all risk policies (Life, Trauma, Income Protection, and TPD) issued from 1 June 2001. Previously, the pass-back benefit applied to policies issued since 1 January 2003.

That comes at a cost for some holders of older trauma policies, who will have a series of premium increases to bring their premiums into line with more recent contracts. 

Replacement business rules and details about how to do quotes were also included. 

 


AIA-Sovereign health insurance - a couple of big changes

AIA-Sovereign has upgraded medical insurance and although there are many changes, the two big improvements are in the minor surgery definition and the addition of an obstetric care allowance. These result in substantial uplifts in the product score. They weren't live earlier this week - but they are now. Do take a look. 


Product and pricing changes for OnePath, nib, Asteron Life, Southern Cross, AIA and Sovereign

An absolutely huge couple of weeks of changes: 

Pricing:

  • Updated OnePath Mortgage Protection Prices effective 1 July
  • Updated nib health prices effective 1 July
  • Updated Southern Cross health prices effective 1 July
  • Updated Asteron Life and Trauma rates effective 1 July

New Features:

  • Needs Analysis – added Standalone and Accelerated options for existing Trauma and TPD insurance
  • Research report – added a new page at the end explaining the QPR Research methodology

Research:

Completed a big set of changes, with some quite substantial shifts (see more posts later today and next week)

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Eligibility rules:

  • OnePath - Income Protection, Mortgage Protection and Trauma - changes in entry ages
  • OnePath - Income Protection - age limit changed

Adviser agreements - the ones changing, and the ones that aren't - UPDATED

AIA has updated the financial adviser agreement applicable to Sovereign and AIA advisers. The updated agreement includes a requirement to abide by a code of conduct, a revised series of obligations, and a right to transfer the servicing of clients to other advisers. I have been asked by AIA to point out that there is no automatic transfer of renewal commissions for life insurance in this case. Remuneration can only be terminated under a narrower set of conditions. The new obligations appear specifically designed to give AIA the necessary tools to meet the expected requirement to have effective oversight of the actions of financial advisers distributing insurance products on behalf of AIA. The code of conduct information includes a facility for whistleblowers:

"Don't ignore potential fraud or misconduct. If you see something you believe or suspect could violate the law or the AIA Code of Conduct - speak up.

The AIA Ethics and Compliance Hotline is available via telephone or internet 24 hours a day, 7 days a week, worldwide. It is operated by an independent third party, so you can feel comfortable voicing your concerns or reporting suspected violations."

Fidelity, on the other hand, has recently written to advisers to re-assure them that they need not be concerned about changes to either commissions or their financial adviser agreement between now and the end of next year. 

"Commissions won’t be changing ... We’re pleased to say that, unless required by law or regulation, Fidelity Life has no intention of changing our commission structure during the next 12 months to the end of June 2020... Agency agreements remain as is for now... And finally, we currently have no plans to change our agency agreements before January 2020 - at the earliest."

I could happily argue for either proposition. While we have a pretty good idea of the likely requirements of the new regime, it could be said that one should wait, and then make the change. On the other hand, as so much must change with AIA's acquisition of Sovereign, and with many international standards in place - like the whistleblower facility - why not make changes as you are ready to do so? 

No one should expect that adviser terms will remain unchanged for the long-term, however. The Chatswood team has done a gap analysis between several current sets of agency terms and what would be required to meet the FMA's current guide to conduct. Changes to most sets of terms will be required at some point. 


Quotemonster updates

A monstrously big few weeks of development and change on the Quotemonster platform. Here is a list of recent updates: 

Research Updates:

  • AIA Life new policy wording May 2019
  • Sovereign Life new policy wording May 2019
  • Sovereign Mortgage Protection new policy wording May 2019
  • Sovereign IP Indemnity Value new policy wording May 2019
  • Sovereign Loss of Earnings new policy wording May 2019
  • AIA Medical new policy wording May 2019
  • Asteron Remediation Special Events and Child Benefit
  • OnePath Remediation IP, Trauma, TPD

New:

  • The Statement of Advice report now displays an expiry date
  • Asteron Life Trauma now defaults to ‘Trauma Cover with Early Trauma Benefit’ in the Settings window
  • Improved usability on small Apple screens
  • Changed the way company selections work on the Research screen. If you select companies under a single benefit it will not save this selection for other benefits . However, if you choose ‘Package’ first and then select companies it will save this selection for each of the benefits.
  • Added a new option for printing prices from the Benefit Details screen. If you click on the price for a particular company the price details screen now has an option to print out the price for that single company as well as an option to print all price

Improvements:

  • If you are combining providers for Life and Health benefits the health premium will now displays on the Head to Head report
  • Clarified the wording on the AIA Trauma Early Cancer Upgrade option to make it clearer that it is female early cancer
  • Made the Income and Expenses section of the Statement of Advice match the Needs Analysis screen
  • Improved the Needs Analysis Life and IP cover amount calculations
  • Fixed a problem with Adviser Comments on the Statement of Advice
  • Fixed an issue with Head To Head on existing quotes and tidied up the report printout
  • Made improvements to the way customer logos appear on reports
  • Fixed a problem with the research report not displaying the same companies as those selected in the Research screen.

 


AIA update

Since acquiring Sovereign, AIA have been working to market existing AIA and Sovereign products under the AIA brand. It has been announced that AIA/ Sovereign is going to start communicating important brand and product information directly to customers from 20 June. 


Recent AIA Sovereign Product Enhancements

Here is a summary of some of the product enhancements AIA and Sovereign have recently released:

Sovereign Income Protection

  1. Updated the 'Total Disability Income Benefit' definition
  2. Enhanced the 'Partial Disability Income Benefit' definition
  3. Introduced a 'Childcare Support Benefit', a 'Waiting Period Reduction Benefit', a 'Return to Home Benefit' and more

Sovereign Life Insurance

  1. Introduced a 'Counselling Benefit'
  2. Broadened the 'Financial and Legal Advice Benefit'
  3. Increased the 'Special Events TPD / Trauma Facility'

Sovereign TPD

  1. Increased the 'Partial Permanent Disablement Benefit'
  2. Introduced an 'Assistance Benefit' and a 'Suspension of Premium Benefit'
  3. Improved the 'Special Events Increase Facility'

Sovereign Health

  1. Introduced a 'Mental Health Support Benefit', a 'Public Hospital Cancer Treatment Cash Benefit' and an 'Obstetric Care Allowance', plus more
  2. Improved the 'Cancer Care Benefit'
  3. Updated the 'Minor Surgery Benefit'

Sovereign Trauma

  1. Introduced a 'Severe Illness or Injury Benefit'
  2. Updated 40 medical definitions
  3. Added a 'Medical Advancements Protection Provision'