Connecticut and Massachusetts healthcare workers on the front lines of the COVID-19 crisis are being given the ability to apply for free life insurance. MassMutual has committed to offering three-year term life policies. Eligible workers will not be expected to undergo medical testing. MassMutual has said that they could accommodate 140,000 policies and plans to offer policyholders aged 18 – 50 a $25,000 death benefit and $10,000 to policyholders aged 51 – 60. 

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MassMutual has innovated in the provision of life insurance as a charitable tool in the past and now appear to be making a habit of it. It is a strategy that could be picked up by insurers or advisers, it just takes a little creativity to develop an attractive program and knowledge of who to talk with. 

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. 

Life insurance can be abused - without some care on the part of insurers it is possible to apply for sums insured which can provide a motive for murder. It is especially heartbreaking when the victim is a child. A recent example, from Maryland, United States, is detailed at this link. Maryland has no legal limits on the amount of cover that can be bought on the life of a child, but as a result of this case is currently debating a new law which would do just that.

New Zealand has tough limits on the amount of cover that can be bought, which effectively prevents this from happening today. It is awful to remember, but it must be remembered: fraud is real, and sometimes crimes are committed in order to conduct insurance fraud.

If you are already a large employer, dealing with a large cost, sometimes you think 'darn it, why don't I just do this myself?' So the news that Amazon, Berkshire Hathaway, and JP Morgan Chase have decided to launch a healthcare company is perhaps unusual, but in a longer time-frame, it does happen every now and then, and is perfectly understandable. Captive insurers, or captive providers, are a good solution for some groups, and particularly some employers. It can cut layers of cost from the provision of a benefit. I know of one large New Zealand corporate that used to self-insure its vehicle fleet, even employing its own assessor, but still using existing suppliers of panel-beating for example.

The real question is whether the three can create something more than that. Given the innovation record of Amazon, that is the part of the news that could be really exciting. When you think about it, JP Morgan Chase, is also in the business of managing some efficient markets and exchanges. Perhaps they both have an eye on reducing the eye-watering cost of the US healthcare market, not just for their employees, but maybe their customers as well.

An epidemic in addiction to opioid pain-relief drugs in the United States is cutting life expectancy - it is most unusual for a rich-world economy to have falling life expectancy, but the US has managed it for two years in a row, and a third looks likely based on provisional data, according to this report from The Economist. The article, sub-titled 'not great again' partly an indictment of US government lack of organisation and wider health policies: 

"Lives in America are already two years shorter than the average in the OECD group of 35 rich and soon-to-be-rich countries: life expectancy is closer to Costa Rica’s and Turkey’s than to that of Britain, France and Germany. If the administration cannot reverse this then—at least when it comes to longevity in the Western world—its policy might be described as America Last."

Given that opioid addictions typically start post-operatively this might be an opportunity for the United States to embrace modern thinking around addiction treatment - and realise that it is simply a public health problem, and choose treatment over a more 'judge and punish' approach which has been the hallmark of many failed 'war on drugs' types of initiatives in recent years. For more data on health and longevity you might pop over Max Roser's 'Our World in Data' - this link takes you to the section on life expectancy. 

A major US insurer is reported to have sent thousands of letters to HIV positive clients containing information and options about filling prescriptions for the virus. Unfortunately content in the letters may have breached of privacy as some of the content was visible through the envelope window. Click here to read more.

That's a worthwhile reminder that privacy breaches don't just happen with new technology: leaving data by the side of the road in little paper bags also has security problems. Although it may not be as easy to lose hundreds of thousands of records to hackers, sometimes it only takes one person knowing your private information for it to be a very big problem. 

Here is a not-for-profit organisation in the US called 'Life Happens' which has a range of tools to 'inspire the public to take personal financial responsibility through the ownership of life insurance and related products.' As this month is Life Insurance Awareness Month in the States the site has many useful resources for consumers.

One of my favourite insurance bloggers tells a story about a customer that said 'why would I need disability insurance when I've never been disabled' - seriously. It goes to show that even with apparently intelligent clients, one should never assume even basic levels of knowledge about insurance. The article is great fun, and a quick read - do read it all. 

Hat tip to Tony Vidler for the reference to this piece (from his newsletter) - an article about a commission insurance agent of Northwestern Mutual in Kentucky who started a new business as a fee-only retirement income adviser. It is interesting because the process is richly described, including some of the financial details, and the steps through the process.

There are limitations, though, and anyone contemplating a transition process will need to undertake a lot more investigation and planning. Aside from the obvious difference in jurisdiction, there are other variations: the introduction talks about making the transition in only a few months, yet the founder is yet to pay himself a salary. The transition was not like-for-like advice - I would be interested to see a successful example of a transition to fee-only insurance advice. But well worth a read. 

Lemonade is the new name in P2P insurance. It has launched offering homeowners and renters cover for New Yorkers. The way in which it is P2P doesn't seem quite the same as the way, say, Harmoney, is P2P. We shall follow their development with interest, however, as we share their interest in the future. Link.