moneyblog

Why Liability Insurance Doesn't Always Work

Liability cover can only apply where there is actual liability. This heartbreaking case shows how it can be limited. A loophole in Australian law meant there was no insurance payout for this family after their son suffered horrific injuries and permanent disabilities. 'The driver had suffered a heart attack behind the wheel, meaning the accident was not as a result of his negligence and therefore, under the law at the time, his insurer was not liable to pay compensation to Layton Smith and his family - despite the fact they were utterly blameless themselves.' Click here to read more.

Trevor Slater Appointed to Fairway Resolution

Congratulations to Trevor Slater for his new appointment to Fairway Resolution. Click here to read what David Whyte has to say about it.

Adviser Dress Codes

A good discussion of the application of dress codes by adviser businesses -  this article is US centric, and focused on investment adviser businesses, but many of the issues remain the same. In New Zealand there are definite differences between regions in approach. Also, more investment advisers - a generalisation, I know - tend to dress more formally than insurance or mortgage advisers. Counter staff in banks have gone through different corporate uniform fashions as well, with some well-known commentators mocking the dress code as 'polo-shirt-wearing advisers', but for all that, they are trending back towards more formal attire at this time as well. The article also includes an acknowledgement of the fact that the occupation of investment adviser tends to be dominated by older men, although this is changing, slowly. Link. 

Latest Goodreturns Column

Is it desperately old-fashioned to call a piece of writing a 'column'? Maybe. This article is about how you define your role as an adviser. Link. 

Cygnus Law View of Proposed Robo-advice Exemption

Cygnus Law has a summary of their submission on the proposed robo-advice exemption at this link. 

The Peer Group Test - UPDATED

The role of your peer group has a huge impact on what you consider to be an acceptable risk - and that applies as much to your career, hobbies, diet, and even your approach to crossing the road, as it does to your view of  life insurance.

Put simply, a very common planning technique used by many people is this: what do most people do? 'Most people' in this case usually means 'people I know' It can be a great shortcut - the wisdom of the crowd, is the term sometimes used to describe it. The only problem is, it depends heavily on 'the crowd' being 'wise'. 

In business we sometimes talk of bench-marking. If we're a laggard we can confidently adopt an approach taken by the average business - even without looking too hard at the costs, you know they won't be too high. Then there's aiming to achieve the same as the best in your peer group. Tougher to do, but still imaginable. There is still comfort in the thinking 'if they can do it, surely we can do it!'

But what if you want to do better than the best in your group, or circle of friends? What if your peer group is just wrong? You may not even know what's possible!

That is the limit of the peer-group test. You could say, that is when you need advice - or at the very least, a new idea.

Our compliance guru, Rob Dowler, just contributed this gem over coffee this morning (coffee, I find, is a vital ingredient in any conversation about compliance): if New Zealand had taken a 'benchmarking' or 'peer group' approach to the right of women to vote, they would have been waiting decades longer. 

Capital and Income Needs Analysis

Having just re-read Dr Michael Naylor's book, Insurance and Risk Management in New Zealand, I wondered whether any advisers would like to email me and tell me if they use his detailed approach to income and capital needs analysis (either in part or in full) with clients? What about his suggested approach for assessing the marginal value of adding more of one cover compared to another? Again - just drop me an email and let me know if you take this approach and when you do, how much explanation you give to clients. 

Jake Bailey on Euthanasia

A good article by Jake Bailey on Euthanasia. Well worth the read, if nothing else because Bailey does not fall for the idea that it is somehow a binary choice between palliative care and a choice to die. Bailey points out the value of the choice to die at some point as an option that in itself (even unused) can help ease the worry about what happens should a person find life unbearable. Link. 

Not all deaths are equal: how many deaths does it take to make a disaster newsworthy?

Take a look at these great data visualisations of how many deaths it takes to make natural disaster newsworthy in the United States. Some parts of this are predictable: their news tends to focus more on Southern and Central America than, say, the Pacific Islands - that's probably because there are many more personal relationships and family connections, and a common language with many of the countries.  Other items make sense when you  think a little more - food shortages emerge slowly, whereas, a Tornado creates sudden havoc, with good pictures, making it apparently more newsworthy. Other charts remain shocking: only one European death will result in coverage, but to get in the US news, 45 African deaths is the average. It's outrageous all round - not just in deciding what to cover, but also because death is so much more common in African countries due to all sorts of factors: development level, and often, nasty governments. 

A Sad Case of A Lapsed Policy and Claim Decline

The insurer in this case is being asked to make a special case for payment (in this case, details) where a policy was lapsed due to four unpaid premiums. The case is heartbreaking - and many emotions come up - but I am not sure (based on just the article) that it can reasonably be said that the insurer should pay out, on the contrary, in fairness to their other policy holders, they probably cannot. Several thoughts occur, firstly, of course, sorrow for the family. But also a reflection that policy design these days - with pure risk insurance - leaves no room for a cash value to ensure that a policy cannot lapse during a period of problems caused by illness. 

PAA Special General Meeting

In case you overlooked this in your email, this notice from the PAA to members of the special general meeting:

This is important. This is your opportunity to attend and vote on the establishment of Financial Advice New Zealand. If you haven't yet registered to attend the meeting, register now and make your vote count.

When: Thursday 27th July, 9.30am registration, 10.00am kick-off and finish by midday
Where: Sorrento on the Park, 670 Manukau Road Royal Oak, Auckland.

Purpose:
Member vote to proceed with the ongoing establishment of Financial Advice New Zealand

What If Everyone Lived to 100?

RBNZ: Videos of Bank Notes Security Features

The RBNZ of have released videos in English and Te Reo Māori to help the public identify the ‘real deal’ Brighter Money banknote. The videos can he found at this link.

What to Call the Time of Life Between Work and Old Age?

'WHAT do you call someone who is over 65 but not yet elderly? This stage of life, between work and decrepitude, lacks a name. “Geriactives” errs too much on the side of senescence. “Sunsetters” and “nightcappers” risk being patronising. Perhaps “Nyppies” (Not Yet Past It) or “Owls” (Older, Working Less, Still earning) ring truer.' Click here to read more.

Why is it important? Well, you don't want to keep referring to people who are merely 68 years old as 'elderly' or 'retired' when these days most of them are neither - in the literal sense of those words. 

Partners Life Launches a Further Shadow Share Scheme to Reward Advisers

Partners Life have launched an enhanced, new version of the "Shadow Share" scheme. Click here to read more details.

Diana Clement: Honesty is the Best Policy, Insurance Fraud Found

Diana Clement has written this article in NZ Herald discussing many of the ways people try to make fraudulent claims and the ways in which technology are helping them get caught. 

'Technology streamlines how easily these cases are identified and reduces the legwork needed. For example, predictive modelling systems are now used to compare claims against known fraud indicators. The system spits out numerical rankings according to how likely a claim is to be dodgy.'

Click here to read more.

Fidelity Life e-App

Fidelity Life have an easier, faster and smarter way to complete application. Click here to read more about their e-App

What's a meaningful difference?

If I was out buying a car, and my partner wanted to buy a demonstrably worse car, for a reason I didn't like much, we would have a discussion about meaningful difference. The last two cars I have bought have not had a rear windscreen wiper. My view: the rear windscreen wiper doesn't matter a damn. Her view: it is essential for backing in the rain. What other features of the vehicle would I be happy to compromise on in order to get this feature next time? 

It depends. It's about the customer. 

Say you're our car adviser. You might be passionate about, say, carbon emissions - and try to overcome either one of these objections on that score. Or it might be acceleration, and you can argue on that basis. But sooner or later a choice will be made, and all you could do as our 'car adviser' is provide information, maybe some research, then an opinion or recommendation, and try to help us nicely as we go through the debate. Oh, and whatever choice based on our argument about an irrelevant feature we decide to make, you should make sure you documented it all. 

Research Shows Insurers Reluctant to Cover Mental Illness

Research shows that NZ health insurance policies offer minimal cover for mental illness. Susan Edmunds has written this article about a study conducted on 36 different policies from five different insurers in NZ and the findings.

Nib falls into line with cost control

Nib has launched a change to tackle the top-end of medical costs with the addition of the 'First Choice' policy. You can read the details of how that works at this link, and here is Rob Stock's take on the upcoming changes. The changes are not effective until 30 September, and so have not been rated on Quotemonster.