OnePath has made some changes to pricing for selected business insurance and medical insurance contracts. Also announced are some technical wording changes, changes to quote software, and a package of price comparisons. Quality Product Research Limited will review the product documentation changes in detail and update ratings where required, but no rating change is anticipated based on the release notes.
The Australian Prudential Regulation Authority (APRA) have released its Quarterly Life Insurance Performance Statistics publication for the September 2015 quarter.
Key performance statistics for the life insurance industry in the year ended 30 September 2015:
This table and more information can be found at this link.
On the weekend I got to read the ‘Review of Retail Life Insurance Advice’ report prepared for the Financial Services Council (FSC). Prepared by MJW, the report does not, in my opinion, meet the goal of reviewing the conflicts of interest in the sale of life insurance across channels.
Like AIA, Asteron Life, and Partners Life, and the PAA, I feel that the report does not present a balanced view. It seems a decision was taken early in the development of the report to focus on one aspect of one channel: commission paid to RFAs. Average commissions are, in fact, substantially lower than the example given, when you look at it top–down from company accounts or bottom up from the mix of business advisers actually sell. That selection means the higher margins in vertically integrated channels which must logically also be a conflict, were ignored, for reasons unexplained.
I was disappointed that a report which is supposed to review advice shared no data or discussion on what constitutes good advice or bad. A comparison of premiums and policy features between commission-bearing channels and those that pay no commission would have been a useful test of whether commission-paid advisers add value. Such a comparison would show that advisers do add value.
Likewise absent was any example of actual customer harm. The report also ignores problems which have been identified around customer confusion over labels. Others have already labelled this single focus as bias. It also appears contrary to the idea of being ‘customer-centric.’ A comparison like this would focus us on exactly what kinds of switching needs to be regulated.
The report focuses on one piece of data: switching rates. In passing it notes that not all switching is bad, but doesn’t offer any definition of a ‘good switch’ or a ‘bad switch’. Many switches help customers save money or get better policies.
Evidence which could have been included on a comparison of channels was either not considered, or left out. These gaps make it difficult to do any cost/benefit assessment of the recommendations.
I like Rod Severn’s comments from the PAA:
"Some good recommendations, but let down by unbalanced view of replacement business and the value of advice."
Like Rod, I agree with some of the recommendations. Here’s your digest of links to commentary on the report:
Goodreturns "Philip Macalister scores the report a 'D'
Goodreturns: 'the report that tore the FSC apart'
Also goodreturns: 'Report slams life insurance conflicts of interest'
Another goodreturns 'Advisers replacing policies are doing their jobs'
All by Susan Edmunds
The New Zealand Herald: 'Conflicts of interest shown in insurance commission report' by Tamsyn Parker
Investment News New Zealand: 'Seven Ways to Improve Life' by David Chaplin
The PAA Response, and their table of commentary on the actual recommendations.
This article by Jon-Paul Hale discusses the need for medical insurance in NZ including topics such as waiting lists, NZ Herald's 5 part series on a number is illnesses and much more.
The most powerful moment of the Mind The Gap campaign launch yesterday was almost missed, but Diana Clement, our host for the event picked up on it.
Lynda Smardon from the Ministry of Social Development joined us to outline the state help available in the event of disability arising from illness. She pointed out that help is means tested. The level of a partner's income at which no main benefit is payable is $30,212. Other help, such as accommodation supplements can be available but these depend on circumstances and vary regionally.
Our research shows that these are rarely paid. The single biggest issue is that the market for insurance is dominated by two-income households. As soon as your partner earns more that $30,212 you receive no main benefit. We developed an info-graphic to illustrate a case study and the levels of state help available and wherever we went the content was challenged, because most of the numbers were "$0" - many advisers could not believe how little help would be available.
The FMA published its first monitoring report on practices in sales and advice within NZ's financial services sector.
The report covers sales and advice practices for RFA's AFA's and QFE advisers.
The report shows the FMA has found inconsistency in the quality and maturity of systems, and the practices in use across the industry. The main issues highlighted in the report are:
- Lack of comprehensive governance systems – which allow firms to establish the right culture in sales and advice practices from the top of an organisation. Insufficient reporting to senior management on sales and advice outcomes, and inconsistent attention to managing conflicts of interest in sales and advice practices
- Inadequate attention to ensuring that consumers have access to appropriate information and advice, relative to their specific needs and the types of products on offer
- Lack of comprehensive compliance systems that can provide firms with reassurance that they are addressing all of their regulatory and conduct risks in sales and advice
The report findings, Russell says, are 'eerily familiar' to people that have had to work as an expert witness. Readers interested in building cost-effective but suitable advice review processes should talk to us.
Did you know you can get a handy table of the lifetime risk of death, trauma, temporary disablement, and total and permanent disability included in your Quotemonster pdf report?
Personalised to the primary life in your quote it is a handy third-party piece of research which helps support the case for income protection and trauma benefits in particular.
You do not need to do anything additional when creating your report - it will appear as the last page.
Quoting Health Insurance? Instead of re-quoting different excess amounts you can get a table showing all the premium variations for difference excess levels included in your client report. Go to 'Step 4: Report' and put a tick in the 'Insurer Package Breakdown' box. Select your preferred insurer from the drop down box and put a tick in the 'Health Insurance Table' box (pictured below).
You will then get a page in your pdf report which will include the premiums for all excess options your preferred insurer offers as pictured below.
Sovereign has updated its TotalCareMax product range over the last few months.
Announcing changes in phases probably makes it easier to focus, educate, and update the range – and we have picked up on some of the enhancements as they were released. Now that process is complete we can consider the range as a whole.
An enhancement that has been added across the range is the Special Events Increase Facility. This allows your clients to increase their existing Life, Trauma and TPD cover, or add a limited amount of Trauma and TPD cover to their existing Life cover, when a special event occurs in their life.
Adding the TPD as a rider on Trauma is a very cost effective way to include TPD in a risk plan. Industry data shows that there isn’t much TPD sold. Life plus Trauma is quoted much more often than Life plus TPD, yet recent discussions with advisers suggest that more are contemplating adding TPD in the Trauma add-on format. It is a good effective catch-all. (We will provide a separate post with a detailed review of TPD add-on features early next week).
A new Specified Terminal Illness benefit pays an early partial payment immediately on diagnosis for some specified terminal conditions, regardless of life expectancy.
The addition of a series of children’s benefits to trauma reminds me of when our first child was born and after a few months required some special tests for a suspected medical condition. That moment when you think all is not well is a good reminder that covering your kids, and having eligibility for cover for them is valuable.
Sovereign’s Income Protection enhancements move to paying in advance for total disability (and bridging for partial disability, which effectively meets the gap) now makes payment in advance the standard for the industry as a whole.
The benefits are added automatically to all policies sold on or after February 1st 2001.
Quoting Income Protection and/or Mortgage Protection? Instead of re-quoting different wait periods and benefit periods for your preferred insurer you can get a table showing the premium for all the wait and benefit period combinations included in the report. On 'Step 4: Report' put a tick in the 'Insurer Package Breakdown' box and select your preferred insurer from the drop down box (pictured below).
You will then receive a page in your report which will look like that pictured below showing the waiting and payment period options for your preferred insurer.