The biggest threat to the life and health insurance sector:

An insurable event is one which can be defined, measured, and is uncertain. Uncertainty is crucial. Things that are certain cannot be insured. Another feature of an insurance contract is asymmetrical information – we know general risks – like how likely cancer is – the insured knows specific risks – like how their health is. We have an obligation to each other, defined in law as utmost good faith.

But of course, you know all that.

Some people don’t, and some of them are actively working to break down the essential elements of the insurance process. One of those is the right to underwrite. We need to defend that. If a person knows that they are much, much more likely to suffer a critical illness such as cancer, they will be much, much more likely to seek insurance. This anti-selection causes headaches for both insurers and everyone else in the same risk pool: people with normal risks who end up paying over the odds for their cover. Pricing for risk is vital. Does this make me heartless about the problems of the person who is far more likely to develop cancer – not at all – I am glad to contribute to the costs of their care and support them, as we do through our health service and welfare benefits if they are needed. But some people believe private insurers can be compelled to cover people without pricing for the risk to the general good of all. I wish this were the case, but if we do compel insurers to take uninsurable risks, we are likely to see insurance enter a swiftly downward heading spiral: as costs rise the healthier and wealthier lives head for the exit, relying on higher savings and family to help. When that happens the remaining pool must be re-priced higher, which in turn makes the cover un-affordable for all but the worst risks. Then the risk pool fails – and no one has cover. A valuable risk sharing tool is lost.

If the aim is to destroy the insurance industry, depriving millions of a valuable risk sharing tool, the best way to do that is to deny the right to price risk. That takes all sorts of forms: the most common we have heard of recently is that we should not be able to price for mental health risks, or that we should cover cosmetic procedures in health, or that policies should always return the whole of the premium paid, or that we can’t ask all the questions we need to when underwriting, or that it is okay for the insured to withhold medical information. We must always push back against the idea that each of these would be a cost-less decision to take and would not harm other New Zealanders. Each would have consequences. Things that are certain - or very nearly certain - like events in the past or inherited conditions which emerge in later life, are not suited to insurance. As a society we need to look after people who suffer in this way - and that is probably the role of government, not insurance.

Of course, when it comes to underwriting, insurers could do more around education. Looser underwriting rules may have an adverse claims impact. Most clients cannot know that.  Material non-disclosure is not very common, normally it’s a genuine mistake. Mistake or not, some of the non-disclosure can be driven by fear or shame. Being clear about the benefits of underwriting can help reduce these a lot - as can smart question design.

 

In other news

From Good returns: 'Hole in one' cover and the design of insurance products

AIA has announced data can be passed from Iress’ Risk Researcher tool to AIA’s Quote Builder and eApp. Click here to read more

Health insurer nib has replaced the free travel insurance cover feature that was part of Ultimate Health with some additional mental health coverage. Details are to come.

 

Not vaccinated yet? Click here to get it done: https://bookmyvaccine.covid19.health.nz/


Partners Life underwriting process updates, and more daily news

Partners Life has announced that there will be several changes made to the underwriting process from 27 September. The updates include the removal of certain requirements for large sums assured cases, changes to Monthly Disability non-medical limits and Trauma Cover non-medical limits, making questionnaires available on MyPartnersLife, and making the latest Adviser Underwriting Guide available on MyPartnersLife.

“The following changes were implemented into our systems over the weekend, and are effective today, Monday 27 September 2021:

Removal of some requirements for large sums assured cases
We have reflected on what value each of our limit requirements give to us, and have identified that a number have rarely affected the outcomes in the past. As such, we have removed the following from our standard limits requirements:

  • Resting ECG’s. This means that the Code C Medical Examination is no longer required to be completed by a Senior Physician, and a GP medical will now be sent in its place
     
  • HIV and Hepatitis C blood tests from Code B blood tests
     
  • HIV, Hepatitis C, Full Blood Count and ESR blood tests for Code C and above, where Life Cover does not exceed $5,000,000 and TPD Cover does not exceed $3,000,000

Changes to Monthly Disability non-medical limits
We have reflected on our non-medical limit sums assured for monthly disability cover, and have heard your comments around clients issuing cover at either $7,999 per month or $14,999 per month.  As such, we have changed the limits by $1 as a quality of life change, so you can now issue up to $8,000 per month on the personal statement only and between $8,001 and $15,000 per month with an additional Code B blood test and PMAR.

Changes to Trauma Cover non-medical limits
Previously our guidelines considered industrywide standalone Trauma Cover, while the rest of our non-medical limits only considered the risk held by Partners Life. We have updated this to now reflect all Trauma risk held by Partners Life, and have increased the non-medical limit from $1,500,000 to $2,000,000.

Questionnaires available on MyPartnersLife
Historically when clients have had to provide additional disclosure after you have submitted an application, our underwriting team has requested relevant questionnaires be completed from the application form.

With the continued growth in MUM, we recognise the use of our paper application form is fast becoming a thing of the past. As such, we have digitised all of the manual application form questionnaires, which are now available on MyPartnersLife’s forms section.

Adviser Underwriting Guide
We are also pleased to advise that the latest version of our Adviser Underwriting Guideline is available on MyPartnersLife. This updated guide incorporates all changes to our product offerings made since March 2020, including the addition of our new Moderate Trauma Cover and Income and Expense Cover. It also reflects the updated non-medical limit requirements indicated above.”

In other news

Asteron Life: Feedback improves Asteron's trauma cover

From. Good returns: [The Wrap] It's time to check in on advisers' wellbeing

AIA:

GRTV Adam and Sam.mp4 from Good Returns TV on Vimeo.


Fidelity Life announce lockdown new business underwriting approach, and more daily news

Fidelity Life has announced the approach they are taking for managing new business and underwriting processes for medical examinations, tests, and occupational and financial underwriting requirements under different alert levels. Below are the different approaches.

Medical.

Level 4.

For all Auckland based customers we need to revert back to asking a series of medical questions. These questions will be different for each case, and therefore our underwriters will contact customers to telephone underwrite prior to issue.

Level 3 and 4.
Medscreen paramedical services are unavailable in Alert Levels 3 and 4. Nurses will be able to resume visits to customers for medical exams and blood tests at Alert Level 2.

Where medicals and bloods are required due to non-medical limits (refer to our underwriting guide), you do have the option to consider reducing levels of cover to no longer require these. However, you should consider this in line with advice provided to the customer and review the levels of cover once the situation changes.

Occupational and financial.

The Covid-19 lockdown may be having an impact on the financial stability of some customers’ business or employment. Our underwriters must take a prudent approach to the underwriting of disability cover where there are signs of financial impact due to Covid lockdown and for applicants in continued ‘at risk industries’ such as travel and tourism, retail and hospitality.

We’ll be taking a ‘case-by-case’ approach to the underwriting of disability cover and aim to contact all customers to telephone underwrite and try to gather the information we need.

Customers who can’t work during Alert Level 4 may require a short deferral of disability cover until restrictions are lifted and we can ensure that their employment or business continues without serious impact.

In other news

September 10 is World Suicide Prevention Day

Fidelity Life: no current policies have an exclusion for Covid-19 or the effects of the Covid-19 vaccine. Customers are fully covered according to their policy’s terms and conditions.

Southern Cross: Chris White set to be new CEO after Terry Moore retires on 1 October 2021

From Good returns: Insurance industry complaints on the rise


nib report on financial growth, and more daily news

nib New Zealand recently reported on the financial results for the 12 months to 30 June 2021. nib announced that it had experienced good results despite COVID-19 related uncertainties and disruptions. Premium revenue was $277.8 million (NZD), a 9.8% increase from the same period last year. The increase in premium revenue has been credited to strong policyholder sales and pricing adjustments.  An underwriting result of $26.8 million (NZD) was achieved, this is up 3.6% from the same period last year. Click here to read more

“nib New Zealand today announced its results for the 12 months to 30 June 2021 (FY21) with premium revenue lifting 9.8% to NZD$277.8 million and underwriting result1 of NZD$26.8 million up 3.6% on the same period last year (FY20: NZD$25.9 million). 

nib New Zealand Chief Executive Officer, Rob Hennin said the business delivered another good result despite the uncertainties and disruptions caused by COVID-19. 

 

“From the onset of the pandemic our key focus has been on the health and wellbeing of our members, travellers and employees, which is why we swiftly enacted our member support package that, to date, totals AU$45 million across the nib Group,” Mr Hennin said. 

 

The full year result includes the full release of the initial NZD$9.0 million COVID-19 provision, matching the expected claims catch-up for deferred treatment.

 

“While there was some initial impact on healthcare access, claims have quickly bounced back which means our members have been able to get the healthcare treatment they need,” Mr Hennin said.

 

Premium revenue growth for the period was driven by strong policyholder sales and pricing adjustments. Net policyholders increased 1.6% impacted by the decrease in inbound international students due to COVID-19 travel restrictions.

 

“Excluding international students, policyholder growth was 5.0% supported by the performance of channels including group, adviser and our whitelabel partner, the New Zealand Automobile Association. Since we acquired the business, we’ve grown policyholders by 50%,” Mr Hennin said

Mr Hennin said growth in nib’s net promoter score (FY21: 34 vs FY20: 33) reflected nib’s digital transformation progress, with investment in system modernisation improving the member experience.

 

“We’re big advocates of digital healthcare as it addresses many of the barriers that prevent people from accessing healthcare. That’s why we’ve teamed up with digital-first providers like Tend to make it easier for our members to see a GP, coupled with Zoom pharmacy which improves medicines adherence by delivering prescriptions direct to a patient’s home or work,” he said.

 

Mr Hennin said nib also continues to work with its key partners and members to roll out population health initiatives that deliver significant health and wellness benefits to the community. 

 

“For example, we’re supporting Ngāti Whātua Ōrākei’s Body Warrant of Fitness programme which helps members to access quality healthcare providers and increase their health knowledge and literacy. By providing free primary health checks, the programme aims to improve their health outcomes through early detection and diagnosis of any potential disease,” Mr Hennin.

 

“We’re also actively developing solutions to expand these initiatives to other iwi,” he concluded.

 

nib New Zealand Chairman, Tony Ryall said FY21 also demonstrated the importance of good health and the role private health insurance plays in helping Kiwis to achieve better health outcomes.

 

“The pandemic has heightened community awareness of disease risk and the need to better manage that risk. Our partnership with Honeysuckle Health reflects this thinking as we look to deploy advanced data science to more precisely predict and treat health risks, moving towards prevention over cure,” Mr Ryall said.”

In other news

AIA: Rosalyn Lambert will be on leave until mid-next year with Anna Biss stepping into her role.

From Insurance Business Mag: What does 'fairness and integrity' mean in the advice journey?

Pinnacle Life: Should health and life insurers change the way they underwrite policies?

Cigna: Cigna appoints experienced lawyer, Jeremy Valentine, to its leadership team; Valentine was formerly of Co-op Bank


Asteron Life underwriting enhancements, and more daily news

Asteron life announced that as of 5 May 2021 enhancements have been made to the Underwriting Rules Engine (URE) within AsteronConnect. Asteron Life has said that the implementation of these new rules will mean more new business applications will be issued immediately through AsteronConnect.

Changes include:

  • Improvements to straight through acceptance rate for both advisers and customers
  • More assessments and acceptance of mental health conditions
  • More acceptance of Covid-19 related answers

“At 9pm on Wednesday 5 May we’re making some enhancements to our Underwriting Rules Engine (URE) within AsteronConnect. With these enhanced URE rules, more new business applications through AsteronConnect will be able to be issued immediately.

Some of the key changes you will notice are:

  • The Straight Through Acceptance rate for Advisers & customers is being improved - including both standard and substandard outcomes (exclusions, % loadings and combinations thereof).
  • More Mental Health conditions will be assessable and accepted by the URE, rather than referring to an Underwriter.
  • We are enabling more Covid-19 related answers to be accepted through the URE, especially
    1. For employee applicants requesting income protection.
    2. For self-employed applicants impacted by Covid-19 related trading restrictions.
  • For applicants not currently receiving a Government Covid-19 wage subsidy or other business income support and not working in the hospitality, travel, tourism or the international student education sectors.
  • For applicants with intended foreign travel plans that do not require a 14-day quarantine period upon their return to New Zealand. 

Advisers using paper applications will still need to complete the Covid-19 supplementary questionnaire when applying for cover.”

In other news

Russell’s piece in Good returns: Sharing is caring - consumer data rights for the advice sector

RBNZ: The Future Is Māori

Strategi: top tips for FAPland

Screen Shot 2021-05-06 at 10.50.03 AM


Cigna set to implement number of new processes, and more daily news

Cigna is set to implement several changes, including a new commission structure, a new specific injury product, new eApp and online Adviser Hub, and new underwriting processes. The announcement was made during Cigna Live. During the livestream, David Haak, General Manager of Distribution, discussed the changes to commission by noting that advisers would no longer be paid on a 13 month basis, instead payments would commence from month two. Cigna will also offer an 'as earned' payment option that will allow advisers to spread out commission payments.

During the session Alison Manning, Head of Product, announced that a new specific injury product would be introduced. The product will focus on offering financial support to customers that suffer injuries such as fractures or burns. Unlike other products, this product will offer cover up to $5,000 for single injuries and more for multiple injuries, regardless of age and smoker status. Cigna will not consider any offsets due to ACC payments. Payment will be a lump sum and will provide cover for surgery after an accident. Customers will be able to include this product as an add-on to other policies.

Chris Hand, North Island Regional Manager, noted that Cigna has been developing a new eApp and online Adviser Hub for the past 12 months. Hand said that the new hub is intended to offer advisers and customers more data security. The new hub is also set to streamline the quoting and application process.

Similarly, Cigna is set to improve underwriting processes. Chief Operating Officer Debbie Eyre highlighted that the new underwriting approach will ensure disclosure processes are made easier. This change includes shorter questions to increase completion rates. Cigna plans to have a single simplified underwriting process for all products. 

“Cigna's top brass made the announcements during a live webcast to more than 1200 advisers and industry commentators this morning.

General manager of distribution, David Haak gave some information about Cigna's new commission structure but did not cover specific rates as that information would be sent to advisers at a later date.

However, Haak did say the new commission structure would be simplified and tailored to individual advisers.

He says renewal commissions will be paid from month two, instead of month 13 and 100% of documented commissions would be paid out.

We understand this to mean that commissions are paid to the financial advice provider, who may pay them on to dealer groups or service providers. The payment of renewal commission from month two has the effect of increasing the commission paid in year one, but not at month one, clearly. 

"There will also be an 'as earned' payment option where you can spread out commissions over a longer period, instead of a lump sum."

Cigna head of product, Alison Manning also announced a new specific injury product that would provide more financial support for injuries like fractures or burns.

Manning says cover is not determined by age or smoker status and would provide up to $5000 of cover and a higher payment for multiple limb fractures.

It will also cover second and third-degree burn cover and can be used as an add-on to any other policy.

Accidental injury cover is a valuable addition to the product range - there are now three insurers offering similar products, so we shall be adding the rating to research subscribers (available at quotemonster.co.nz). 

She says the new product was called for by advisers and "Cigna had listened and tailored the product on feedback from the industry".

Cigna's specific injury cover will not take into account any offsets due to ACC payments, will be paid out as a lump sum and will also provide cover for surgery after an accident.

Cigna's North Island regional manager Chris Hand gave a brief overview of the company's brand new eApp and online Adviser Hub that has been developed over the past 12 months.

He says the new hub will provide more data security for advisers and their clients as well as streamlining the quoting and application process allowing advisers to send questions to clients directly before any face to face meetings.

"In many cases, this will lead to instant cover and allow advisers to amend quotes on the fly."

Cigna's chief operating officer Debbie Eyre commented on the company's new underwriting approach that she says will make the disclosure process easier and clearer for its customers.

This will involve a new, shorter set of questions designed to increase disclosure rates and "maximise completions at point of sale".

"Regardless of the level of cover...there will be just one ruleset and one questions set...and will apply to almost all of our products - income protection, mortgage cover, trauma, life cover and waiver of premiums.

"This will mean our underwriting team are freed up to talk to you about more complex cases." Click here to read more

In other news

From Good returns: From army life to life insurance - a big gun leaves the industry

Quotemonster: QuoteMonster appoints new general manager


Insurers on transgender health cover, and more daily news

The availability of health insurance for transgender individuals was brought forward to the Finance and Expenditure Committee in June 2019 in the form of a petition. Elizabeth Poucher, the driver of the petition, stated that transgender women are unable to get the same level of cover as cisgender women.

“Elizabeth Poucher brought a petition asking for the House to conduct an inquiry into the availability of health insurance for transgender people's care related to transitioning.

She said that transgender people were often unable to get cover for things such as breast cancer, which were affected by hormone treatment, although a male-to-female transgender person was no more at risk than a cisgender woman. Poucher said that while people could sometimes get cover for other pre-existing conditions if they were willing to pay a premium loading, that was not the case for transgender people.”

In response, Roger Styles, Health Funds Association CEO has said that insurers look to offer affordable products and that transgender care was often excluded due to high costs associated with transitioning. For this reason, Styles says that exclusions are not discrimination against the transgender community.

“Health Funds Association chief executive Roger Styles said insurers had to be able to offer an affordable product that was appealing to people to voluntarily purchase.

Transgender care was excluded because of the high cost of the transition process, he said, and the risk of adverse selection. People who thought they might transition would take out cover that would pay for it, loading insurers with extra risk.

He said insurers did not agree with Poucher that this was discrimination.” Click here to read more

In other news

AA Insurance: AA Insurance is a finalist in 2020 Diversity Awards NZ

Southern Cross: Southern Cross celebrated Matariki

RBNZ: RBNZ announced that it will publish data from the Credit Conditions Survey for the June 2020 quarter on Tuesday 14 July. Usually run biannually in March and Sept, the Credit Conditions Survey asks banks qualitative questions about changes in credit conditions in bank lending markets. The RBNZ decided to conduct an interim Credit Conditions Survey for June 2020 to understand how domestic credit conditions have changed post-lockdown.

Cigna: David Haak has joined Cigna.


Partners Life: Mini adviser conference

Partners Life announce that they are hosting a mini adviser conference online on the 30th of April.

It has been split into two sections:

Business section: Naomi Ballantyne interviews Chief Underwriter Clayton Gardner about his Chief Underwriter role and delve into some of the more interesting underwriting issues he has experienced over his career to date. Register here.

Social section: Compete against your peers in the gigantic Partners Life Adviser pub quiz. Register here.

 


Income protection: a potential casualty of COVID-19

There is a difficulty in rating income protection products at the moment - the market is changing fast, and not all the changes being implemented by the market are yet formal policy. Decision-making is emergent, cases are being reviewed as they arrive. Economic data which may have an effect on the views of underwriters contemplating, say, the financial underwriting aspects of cover on self-employed businesses (even if the case were submitted weeks ago) is not yet available. Just how substantial the impact on the economy has been is yet to be revealed. We are all, to some extent, guessing. 

Insurers are conservative in their views - they must be - and have to protect first and foremost the interests of existing customers, who expect them to meet claims. Income protection is not, for example, a form of redundancy insurance. What that means is that they are taking considerably more care with underwriting new cases than they would. Partners Life has made the most detailed announcements about their treatment of income protection policies and Quality Product Research Limited has adjusted ratings showing (for subscribers) on Quotemonster. However, this plainly fails to take into account the attitudes of underwriters to the cover across the market: Advisers tell me that variety of measures are being employed on a case-by-case basis: referring cover to reinsurers, reducing cover amounts, substituting indemnity contracts for other contract types, applying exclusions by endorsement, seeking additional financial information, deferring, and declining cases. The extent to which this all remains fluid over the next few weeks or coalesces into a new normal which becomes formalised in changes to income protection product ranges will very much depend on events: how soon we emerge from level four restrictions, more data about the impact on the local economy, and because we are a relatively open trading nation, the state of the economies of our main trading partners.

COVID-19 is most serious for people who already had underlying health impairments. Income protection is similar in that it already had serious problems before the COVID-19 pandemic, and the ensuing economic problems. It is in very bad shape now and we cannot say for sure how the product will fare over the next few weeks. It may never be the same again.