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Conduct and culture review of insurers to report back in December

The FMA's recent newsletter tells us the their review of conduct and culture at insurers should result in a report available in December.

Southern Cross Health Society: medical policy changes

Southern Cross has published details of their 2018 benefit review. A series of changes are planned for implementation on 10 December, to apply to Wellbeing One, Wellbeing Two, and Ultracare. These include:

• Frequency limits for specialist consultations. Which excludes oncology, excludes skin-related specialist consultations, but these are subject to the skin lesion services benefit. It also excludes psychiatric consultations (which remain in their own existing benefit).
• There are a series of measures included in the skin lesion services definition with a reduced benefit limit, and skin surgery eligibility criteria.
• Limits on tooth extraction and obstetrics will apply to most plans.
• Some benefits are also being removed from some plans entirely, including: obstetrics benefits from First Cover plans, and the sterilisation allowance from most plans except Ultracare. The public hospital cash allowance, funeral allowance, and waiver of premium are being removed from all plans.

Extensive documentation of the changes, and plan types affected, can be found by for advisers in the Adviser Gateway section of the Southern Cross Medical Society. 

Outsourcing Your Clients’ Claims? The Pros and Cons

A recent poll done by RiskInfoNZ asked advisers to consider outsourcing clients' claims to an advocacy service in order to devote more time to building their business.

• 74 percent answered 'No',
• 14 percent answered 'Yes'
• 12 percent answered 'Not Sure'. 

This is quite a sensitive subject, with strong feelings on different sides of the debate. For example, at the recent Financial Advice New Zealand conference Jane Eschenbach made it clear that she feels advisers should handle their own claims.The benefits, in a small advice business, of handling your own claims are significant.

• Closing the circle from recommendation to claim, creates a positive feedback loop: you get to see exactly how well the product and company perform when it really counts.
• The benefits of engaging with the customer again, delivering on the promise of the product, are powerful.
• Providing process help - navigating the tasks required to make a claim, for example - is highly valued by the client at a time when their personal resources are probably at a low point.
• Obtaining referrals from the resolution of the claim.

On the other hand, specialisation has always been a factor in increasing efficiency of businesses. Larger advice businesses routinely have specialist claims teams. You might say that scale and specialisation tend to go hand in hand. What are the benefits?

• Specialisation allows deeper learning - some one who deals with claims all day, gets better at them
• Specialists have more familiarity with rarer claims types and events
• Where a generalist may need to seek legal advice, a specialist may have already received an opinion on this type of situation
• Avoiding handling claims allows for more specialisation in advice-giving

There are some reputational risks to consider - in the UK some claims management businesses have become associated with poor practice. They have chased business from policy-holders that may be eligible to receive compensation for policies that were sold badly by banks. While some would argue that this is a valuable service allowing consumers that may otherwise be unaware of the compensation available, there have been some systematically poor practices associated with them.

The field in New Zealand, however, is wide open. Advisers that do not have to opt for an all or nothing approach. You might handle most claims yourself, but call in support for review and backup on more demanding cases - or if you just need the help due to workload issues.

You can Click here to read more on the Risk Info article.

AA Launches Pet Insurance

On the 10th of October AA launched a new suite of pet insurance products. 

How wealthy?

Apparently more than half the world is middle class or wealthier - and for every person escaping extreme poverty, five are leaving the 'vulnerable' group to enter the middle class. Link.

Partners Life announces an end to offshore conferences

Naomi Ballantyne, CEO of Partners Life, has announced an end to offshore conferences. Link. Describing the recent media focus on revelations from the Australian Royal Commission, and then referring to the recent reports and commentaries by the regulators (RBNZ and FMA), the email explains that the current conference incentive, involving travel to Vietnam and Cambodia, will be the last.

Financial Advice NZ Group Scheme

Financial Advice NZ are inviting members to participate in an exclusive member-only Group Life and TPD insurance scheme. The offer is valid until the 30th of October and eligibility rules can be found here. 

What is good advice?

The heart of the advice process is advice. Essentially we have to answer the question 'what is good advice?' and then answer 'how can I make sure that happens?' the more rigorous and provable the answers to those questions, the easier the whole process gets, after which answering the question 'how can I prove that did happen?' becomes easy. For everyone: advisers, clients, insurers, regulators, and so on. This is the bit of the work that interests me most. Most advisers have a kind of theory of advice, a vision of 'ideal', and a great gut feeling for 'the best job in these circumstances'. These skills, formed by long years of working with clients are usually excellent. But most advisers are best at face-to-face communication with clients, not documenting their advice process. That may require some help.

Understanding your version of 'good advice' is difficult. I've even heard corporate lawyers struggle to define it with vague 'I think you know it when you see it' types of answer - but we really have to do better than that. Although houses may vary in size, style, configuration, and location - and many other characteristics - we also know that there are some criteria we can use to determine poor quality housing: overcrowding, lack of insulation, heating, ventilation, security, and so on. Understanding those criteria and how we check them is essential.

Co-op Money NZ Insurance Transaction with Pinnacle Life

Gareth Vaughan has an excellent article, rich with detail, on the Co-op Money transaction with Pinnacle Life. First, let me be clear - Co-op Money NZ is not the same as Co-operative Life, often abbreviated to Co-op Life, a subsidiary of The Co-operative Bank.

Co-op Money NZ has sold a book of life business to Pinnacle Life, and non-life business to Provident. My understanding is that this is a move that has been contemplated for some years. The sale conclusion, however, was timely, as pressures from systems changes at Co-op Money NZ have been affecting the balance sheet. Lots of detail in Vaughan's article. Link.

Industry Response to ‘Succinct’ Draft Code

The draft Code of Conduct released last week has been commented on by many and RiskInfoNZ have shared what some have to say here.

PAA: End of an Era

The PAA have completed their final SGM on the 4th of October to wind-up the PAA.

The Financial Advice NZ Advisers Conference was held a few weeks ago in Rotorua and on the last day of the Conference the PAA board carried out a commemorative tree planting ceremony in recognition of the PAA. In Blomfield Gully - a spot designated by the Rotorua Council for regeneration - 'we planted a Miro tree as a lasting, living memory of the PAA. It was a lovely and appropriate gesture as the very first PAA (then PLUA) conference was held in Rotorua in 1953.' Click here to watch the video.

Click here to read the last piece of correspondence sent out from the PAA thanking its members.

Sovereign Life + One Campaign Extended

Sovereign's Life + One campaign which was launched in July has now been extended until the 31st of December 2018.

To qualify for the 10% discount clients must take out at least $100,000 of Life Cover and one other Sovereign TotalCareMax risk benefit with a combined annual premium of at least $1,000. You will need to update your Sovereign quote software to have the discount applied. Get step by step instructions here. 

Or just use Quotemonster: because quotemonster automatically applies the rules required and the discount if the case qualifies.

National Adviser Quotemonster Competition Winner

Thank you to all of those who came and visited us on the Quotemonster stand at the recent Financial Advice NZ Conference in Rotorua. We had a great response to our 'Take a Selfie with the Dinosaur' competition and the winner has since been announced.

A huge congratulations to Jacqui Robertson who was the winner and she selected the Samsung Galaxy Note 9 as her prize.

 

 

Latest Goodreturns Article

My latest piece, on trauma cover sum insured setting, is available on goodreturns at this link.

New Financial Advice Code

The new, slimmer, fitter, Financial Advice Code is quite an update on the consultation document we saw last. The much more focused style, using plainer language, and pitched at the level of principles makes it a much more accessible document. That is ideal. The financial advice industry can spend a lot of time arguing over how to meet these principles, but the document should be readable by clients, and allow them to use it to judge whether the service they are getting meets the Code.

The broad approach to treating clients fairly, and acting in their interests brings in wider business practice, not just advice given. This approach is present in several of the standards, but show up especially well in standards one, two, and four. That fits well with the current conversation about conduct, especially some practices highlighted by the Australian Royal Commission.

There is quite a lot of detail to unpack in each section. One worth spending time on is the subject of conflicts of interest. Here the entire wording is 'standard' not 'commentary' and there is a direct quote from the relevant section of the law. Along with all the debate around the law, MBIE's long review, and their recent comments on commission, we should see clearly the role of commission in this standard, and the importance of avoiding conflicts where possible, and managing them where it is now. That connects really well with the next standard, which is headlined as dealing with client understanding, but under that heading then correctly identifies that explaining the risks and consequences of scope limitation as the main task in meeting that standard.

I was delighted by the use of an insurance example, but disappointed by the detail in the example. Apologies to Code Working Group members that may feel this is nitpicking, but my compliance consultant and I went over this one, and … the example is flawed. It states that a comparison is excluded, but then goes on to state that there ARE things in the current policy that MAY NOT BE covered under the new policy, thereby implying that the old policy has been reviewed and, worse, the adviser is uncertain of the cover being offered under the new policy being recommended. Surely, if no comparison is being done, this wording should be the other way around, along the lines of, “It is possible that the new policy may not provide cover that is provided under the old policy but, because no comparison has been completed, such circumstances, if any, have not been identified.” I also note that the example doesn’t include any comment on what limitations on the product range, if any, that apply, being the first bullet point under the Code Standard – another major omission, I suspect, noting that this point is explicitly covered in the bank term deposit example provided under Standard 5. I note that Katrina Shanks and Simon Hassan picked up the same point as you can reference at this link.

Clearly a great deal of discussion has focused on the shift in competence requirements, dealt with in standards 9 through 12. However, given the, now extended, timetable for implementation in conjunction with the reduced requirement, and the transition period, there is plenty of time to meet the required standard. It is compliance with the first eight Code standards, and particularly standards three, four, and five, that should be the focus. More on those soon.

A more detailed reflection on the draft is available to Chatswood clients to contribute to the work they may be doing in formulating their contribution to the consultation process.

 

 

NZFSG launch new quote tool

New Zealand Financial Services Group has launched a new quote tool to integrate with MyCRM. Advisers will be able to quote and pass the details from the quotes into the CRM for further work. Covering an extensive range of life company products and options the tool joins a number of existing tools for advisers: IRESS, Strategy, and of course, Quotemonster all provide quoting.

At this point it makes me wonder at the distant past where the prices of insurance (along with the policy documents) were sometimes considered a closely-held secret. Today prices are widely known in the market, freely on Lifedirect's website, and several others, and insurers often make them available on their own websites. Most banks now have public quote tools, and all share their policy documents freely.

Insurance and fee-based remuneration

The International Association of Insurance Supervisors feels that commission is probably an integral part of insurance advice. Like most of the people I know, I think the same way. But fee-based remuneration is bound to get a bit of attention due to the new, draft Financial Advice Code. I shall write more on that later today. But quite a few advisers already see a role for fees as a part of a balanced remuneration strategy. If you would like to explore that world, please drop me a line. I am aiming to get a few of us together for lunch and ideas sharing.

Activity levels and sales

I love to get talking with advisers about how they engage in marketing, because this is the area where our work is most similar: finding people with problems that need to be solved. I was privileged to have three of those conversations over the last week.

The core of sales is, of course, activity. One of the best conversations was about how to shift up a gear in terms of activity. It reminded me of the very early stages of working on sales strategy with my business coach. The rule stronger than iron, which absolutely cannot be broken, is that when you need to step up one activity - you have to reduce another. After all, last week you had 168 hours, and this week you will have the same.

The starting point for allocating the right amount of time to what you want to do, is to figure out what you're spending it on now, reduce some other tasks, and increase this one. Once you have the time allocation right - and I personally work on about 45 hours a week for work and related stuff - then you can start to figure out how to make it work best.

Dying to be loved on social media

Apparently more than 250 people have died while taking selfies in dangerous locations, worldwide. Of course, sadly, tourists manage to kill themselves in all sorts of misadventures - everything from failing to understand warning signs to driving on the wrong side of the road. It is sad, but it is worth remembering - sometimes the best thing to do is to care less about the photos, and more about experiencing the place and time you are in.

Update: sale of OnePath Life to CIGNA

Christine Laverty, Senior Manager, Adviser Distribution, at OnePath has issued the following statement to update us on the sale process:

 

Sale of OnePath Life (NZ) Limited to Cigna New Zealand

Hi Everyone, as you know we recently announced that ANZ Bank New Zealand Ltd had agreed to sell its OnePath Life (NZ) Ltd insurance business to Cigna Corporation.

I’m incredibly excited about the opportunity this represents to you - our valued Advisers, our Industry as a whole and our OnePath team who have all been offered roles with Cigna. A great outcome!

You may be interested in knowing that Cigna Corporation is currently ranked 61st in the Fortune 500, operating in 30 countries. Their New Zealand business (Cigna NZ) is a leading life insurance company that has operated in New Zealand for 100 years, so you can be rest assured you and clients are in safe hands.

In New Zealand, Cigna is looking forward to the opportunity to diversify their distribution network and is committed to investing and growing our Adviser channel.

We recently held a small series of Adviser feedback sessions with Gail Costa CEO of Cigna and some of her key management team. For those of you who joined us, thank you very much, your insights were invaluable and greatly appreciated by the Cigna team. We’ll be seeking even more feedback and ideas in the future but if in the interim, there’s anything you’d like to contribute, please drop me a line, I’d love to hear from you.

Keeping you & your clients up-to-date

We’re absolutely committed to keeping you up-to-date on the progress of the transaction, and making the transition as easy as possible for you and your clients.

As well as these updates we’re working on a number of FAQs which will provide you with all the information you need to know. We’ll send these to you well before the change of ownership takes place.

We’ll also be contacting your clients closer to the time of the sale being completed, to advise them of the change in ownership of OnePath to Cigna NZ and that OnePath remains the underwriter of their policies. We’ll also reassure them that, while the ownership of their insurer is changing – there will be no change to the terms and conditions of their policy as a result of the sale.

Rest assured, we’ll provide you with a copy of any client communications before your clients receive them.

We’re here to help

In the meantime, it’s business as usual as we work through the details of the sale, however if you have any questions, concerns or feedback please don’t hesitate to contact your Regional Sales Manager or myself who will be happy to help.

Regards,

Christine Laverty
Senior Manager - Adviser Distribution, OnePath