New Zealand's shameful road toll and more daily news

Long weekends always mean a spate of road deaths. I pray that this weekend there are few. Recently the New Zealand Herald published this article on the issue of people sitting in the right hand lane on multiple lane highways or passing lanes preventing speeding cars from overtaking. Who is right? New Zealand's Automobile Association (AA) says that this is one of the most-often asked questions. But buried inside the report are these shocking statistics, of great relevance to those of us that care about life and death, and New Zealand's shockingly high rate of road traffic accidents:

New Zealand averaged just under eight road deaths per billion km - worse than more than 15 European countries and the US. In comparison, Australia averaged just over four road deaths per billion kilometres. Denmark, a similar-sized country to New Zealand, registered around three road deaths per billion vehicle kilometres travelled.

If we managed to get down to the level of Australia? What would that do?

The Auckland Road Safety Business Improvement Review 2021 found that if New Zealand's road safety conditions matched the state of Victoria in Australia - which has a population of around six million - approximately 124 fewer New Zealanders would have died on our roads in each of the last three years.

That's a lot of people who we could save and it isn't all about lower speeds either - after all, several European countries have better road safety than us and permit higher speeds.


Other daily news:

  • A client base in the north of the South Island is for sale, contact us for more details
  • Have you recently worked in the UK as a financial adviser? If so, we would love to talk with you
  • Gen Re is hiring, seeking a pricing actuary to join their Sydney team



Income protection concerns for the self-employed and other daily news

In the UK, where the gig economy is more developed than it is here, policy makers are worried that varieties of social protections designed for full-time employment are not going to work so well in the 2st century labour market. These include pensions (to us, superannuation), holidays, and insurance. Income protection in particular is under the spotlight because, at the same time as self-employment is growing rapidly, it seems that income protection is shrinking rapidly. Income cover has become more and more restrictive for the self-employed as insurers have grappled with long-term claims with hard-to-pin-down signs and symptoms. This sounds familiar. In fact, it sounds like our future if the APRA changes mandated to ensure the sustainability of income protection eventually end up being adopted here. The essence of the problems with income protection for the self employed is a lack of flexibility in the product. That is exactly what insurers are struggling with too. If both want more flexibility it looks like there is room for a new kind of IP product for the self-employed. 

Other daily news

Fidelity Life rolled out August Lockdown mix-tape on Spotify – some fun and simple initiatives for people working from home. Link here:

Fidelity Life has advertised a new role for Head of Risk and Operational Compliance. More info and the link here:

Asteron Life providing product innovation by listening to customers and advisers. Link here:

Stuff published a handy guide to the interaction between ACC, health insurance, and harm if you get an allergic reaction to the vaccine against COVID-19 (a very rare eventuality, but there are some instances of this). Essentially, you are covered by ACC and your personal health insurance is unaffected. Link

But are they just little lies?

Stuff has this great article by Nile Bijoux about people being willing to lie to their insurer. Those are general insurers, but it seems a stretch to believe that the same people happy to lie on their car insurance application would suddenly become gravely honest when filling in a life application. Perhaps people don't really think of lying to their insurer as a big deal - so many do it. This is borne out in other markets too - in the UK it is estimated that it adds the equivalent of about $60 a year to every insurance policy. If that margin were applied to the 2.5 million life, trauma, IP, and TPD, policies in New Zealand it would mean about $150 million in fraud costs each year. 

UK: Coronavirus could cause 35,000 extra cancer deaths

The BBC features this story pondering the impact of slower detection and delayed treatment on expected numbers of cancer deaths. The shorter period of restrictions on movement should make it possible for us to avoid quite the same experience - although it will take time for us to understand exactly what the impacts have been, and whether New Zealanders are back seeking tests, examinations, and treatment at the same levels that they were. 

DAILY NEWS: Global COVID-19 effects on insurance industry, and more stories

Lloyds of London has reported that COVID-19 will likely cost the global insurance industry over NZ$336 billion (US$200 billion). It is predicted that the industry will experience a greater loss if lockdowns around the world continue into the next quarter. 

“The pandemic will cost the insurance industry over US$200 billion (NZ$336 billion), according to Lloyds of London, who estimated that its own payouts are now on a par with the Sept. 11, 2001 attacks or the combined impact of hurricanes Harvey, Maria and Irma in 2017.

Lloyds, which as an insurance market pays out to insurers affected by disasters, said it expects to pay between $3 billion and $4.3 billion to insurance companies to help them cope with the COVID-19 pandemic.

Losses could widen if lockdowns continue into the next quarter, which would push the overall cost to the insurance industry to $203 billion. Unlike the storms, for example, the pandemic's impact is global, systemic and long term.” Click here to read more


While most of those impacts are for catastrophe cover, there will be impacts on life insurers, especially in those markets where control measures were less successful.

In other news:

Applications show small advice firms still see future: FMA

Leading Adviser explains why a group's actions need to speak louder than words

Association CEO joins Trustees Executors board

Financial Advice NZ welcomes Budget 2020

Advisers back wage subsidy extension

Does robo-advice worsen bias and can AI fix that?

There is a concern among regulators that robo advisers do not make their selection process clear to customers - so algorithmic advice may be biased, especially in those cases where there is a choice of product providers. There are several ways such sites can lead clients to believe that their choice is perhaps wider and the process fairer than it might be. One is simply the way the starting set of companies is selected - if you have a mid-market product and you want to favour that one then it is easy to only select products that are in some obvious way 'worse' - say more expensive or offering less cover. The manner in which you apply selection criteria can affect outcomes too. If you apply selection criteria in a series of 'rounds' where you eliminate products you can imagine that if you knock out, say, all the products that are more expensive first, then in the second round you may find it easy to win on a coverage criteria. Even considering criteria in a balanced scorecard can be  gamed in some ways - such as the weighting applied to each factor. That is why the Financial Conduct Authority in the UK is interested in how robo-advice works, and in particular how they meet requirements to check suitability, but also other advice safety issues.

It is not just bias in sales that concerns us - it also happens in underwriting and probably in claims. Humans are prone to bias in favour of groups to which they belong, and by implication against the others. That can reinforce existing societal prejudices and make life harder - more expensive policies and more declined claims - for minorities. Is there hope? This article from Daniel Schreiber, CEO & Co-founder at Lemonade explains how he thinks an AI we may never understand can eliminate discrimination and bias in insurance. Of course, I note that he isn't talking about bias in insurer selection - Lemonade is a single insurer offer, not a marketplace. 

UK: Half of people surviving advanced melanoma due to immunotherapy drugs

UK Doctors say in this article that over half of melanoma patients are now surviving the disease that was considered untreatable a decade ago. Immunotherapy drugs are making a big impact on survival rates and quality of life. A clinical trial was done and had side effects like fatigue, rashes and diarrhoea, and after the trial the decision to make these drugs available worldwide was one of the fastest in NHS history. It is paying dividends. 

United Kingdom: Damages Act discount rate review begins

In the UK, where private insurers must meet most claims for accidents, the discount rate applied to settlements for lifetime loss of income has been a major problem for the last couple of years. The formula for the discount rate never envisaged the market conditions that followed the global financial crisis of 2008. The consequence of that was a negative discount rate: -0.75% applying to future income losses. This saw the capital cost for settlements balloon. So British Insurers are cheered by the review of the discount rate currently underway.

"We welcome today’s announcement. Insurers remain committed to paying 100% compensation and want to see a process for setting the Discount Rate that delivers a fair outcome for claimants, motorists and taxpayers. The outcome of the review must deliver this, and we will continue to play our part to ensure that it does." says James Dalton, Director, General Insurance Policy, Association of British Insurers of a recent announcement made to the London Stock Exchange. Click here to read more. 

Obesity and cancer

Obesity is a factor in cancer, this article explains how that works - and the changes necessary to reduce risks. My favourite part of the article is where they explains the action of a drug trial:

Prof Lydia Lynch said: "A compound that can block the fat uptake by natural killer cells might help.

"We tried it in the lab and found it allowed them to kill again.

"But arguably a better way would be to lose some weight - because that is healthier for you anyway."

You mean a better diet and more exercise? Dammit, I was hoping for a pill!

Reflecting the communities we serve

The Association of British Insurers has hosted a Dive In event in Edinburgh recently to highlight diversity and inclusion in the insurance industry. There are lots of good resources to be found at this website. Below is one, a few minutes with a partner of a major law firm talking about the importance of having a team that reflects the wide range of clients that they seek to serve.