moneyblog

Entrepreneurship is NOT a job

I love this post from Seth Godin, titled "Entrepreneurship is not a job". A quick read.

ASIC on Fees for No Service

ASIC has made this statement on the 'fees for no service' situation in Australia:

• ASIC is and has been investigating AMP's conduct in relation to 'fees for no service' (FFNS) as raised in the evidence given at the Royal Commission.
• This investigation has involved the FFNS conduct and related false or misleading statements to ASIC. ASIC has, as part of its investigation, received many thousands of documents and undertaken 18 examinations of AMP staff. ASIC is also ensuring that compensation is paid to impacted AMP clients.
• ASIC has been cooperating with the Royal Commission on a range of matters that include both current and previous investigations.
• More broadly, all financial institutions need to understand the importance of co-operating with the regulator and complying with the law when providing information to ASIC. Making false or misleading statements to ASIC can result in civil and criminal sanctions.
• In accordance with our general policy on public comment we will not make further public statements about our investigation of these matters at this time.

It is the second-to-last dot point that should be considered with most pause. The Australian situation is different to the New Zealand one, laws are different, the superannuation environment is different, and the advice companies are different. People do make mistakes, and even make mistaken breaches of the law, and often, in commercial arrangements mistakes can be corrected - fees repaid, for example. I guess what ASIC is underlining here is that co-operation with the regulator is the best policy when such problems are found. I am aware of situations in New Zealand where companies have dobbed themselves in to the regulator, and have had situations dealt with in ways which successfully resolved the problem. 

http://asic.gov.au/about-asic/media-centre/articles-and-responses/asic-statement-on-amp-fees-for-no-service/

Surgery cancelled with just 40 minutes notice

Here is one woman's story of how her surgery was cancelled 40 mins before it was due to begin leaving her very upset. 'Smith's experience is symptomatic of public hospitals' struggle to keep up with elective surgery needs.'

'District Health Boards (DHBs) are supposed to treat all patients within 120 days of a procedure being confirmed, but since June 2017, none have met the Ministry of Health-set target.' Click here to read more. 

Although cancellations can happen to anyone - and happen in the private sector too, of course - the real story here is how long the journey has been from diagnosis to treatment in total. It is that struggle which has led to the outpouring of emotion when the surgery was cancelled at late notice. In the article this woman talks of her life 'being on hold for six years'.

Consumers still confused by trauma policies

Kiwis are still confused by their Trauma insurance not covering what they expect it to. According to this article on stuff.co.nz New Zealanders spend $427 million on Trauma premiums per year and account for 5 percent of the Insurance and Financial Services Ombudsman's complaints.

It was fascinating to see that the article highlighted that consumers - presumably who have not read the policy document, or even much of the sales material - think that a payment will be made for an event that is 'traumatic'. This assumption is based on the modern use of the word 'trauma' to mean anything really unpleasant or shocking - i.e. psychological trauma. In fact the original definition of the word is based on physical harm. Of course, the policies actually pay out on specific listed events, some are related to physical harm, some to diagnoses, but the loose definition 'trauma' is used to cover them all. It illustrates that the 'name on the tin' is often as far at the consumer will look, or remember.

nib Ultimate Health Travel Insurance

nib have introduced a complementary travel insurance benefit to their Ultimate Health and Ultimate Health Max products. Travel cover applies for all lives insured on the Ulitmate health insurance policy and cover multiple overseas trips of up to 38 days each, taken during a maximum 12 month period.

The cover includes a range of benefits including, emergency medical and dental expenses incurred overseas, cancellation costs, damaged luggage, personal liability and more. Below is a summary table of some of the limits.

 

nib Product Enhancements

nib have announced a number of enhancements to their Ultimate Health, Ultimate Health Max and Easy Health cover.

The changes will apply to new and existing Ultimate Health Max, Ultimate Health and Easy Health business and there is a complementary travel insurance cover for new Ultimate clients.

Below is a table of the new benefits and upgraded benefits to Ultimate Health Max.

You can click here to read more and access the brochures, policy docs and application forms. 

Compliance applies to everyone: surgeon failed to provide services with reasonable care and skill

Good records and note keeping is also a key theme from the recent FMA enquiry. This surgeon was among other things, specifically criticised for inadequate and illegible notes: "The surgeon did not inform the man of this diagnosis or discuss management options with him. The surgeon then noted that the white lesion had returned, and that an additional biopsy would need to be performed under general anaesthetic," the report by the Health and Disability Commissioner said. Click here to read more. 

Although I am very sorry for the patient in this case, and I know every professional has lapses from time-to-time, but I did want to highlight the importance of the basics: needs analysis is our equivalent of examination, recommendation is diagnosis and prescription, and note-taking is vital.

None of that is rocket science.

I saw an adviser on Tuesday that showed me outstanding fact-finds and statements of advice that are built using nothing more complicated than a form, in a $12 piece of software (notability) run on an Apple ipad. It includes the ability to record the interview, and then they prepare the SOA in a Microsoft Word document. Sure, there are opportunities to make this better, save time, reduce errors, and improve. There is also no reason that a fully compliant business cannot be run using basic tools, at low cost, using a high level of care and attention.

Terminally ill dad saves more than $200k bringing in cancer drugs from India

Baden Ngan Kee was diagnosed with terminal lung cancer in 2016 and it has now spread to his brain. He was told the drugs he needed were going to cost $23,000 a month and were not funded by Pharmac. Ngan Kee turned to Google and found the same brand-name drugs were available cheaply in India and there was a generic version which would cost even less. All three drugs he needed from India cost less then $1,300 per month. Concerned about quality, he had them tested:

'Using mass spectrometry, a contact tested both the brand-name and generic drugs he'd imported. They were chemically identical to the branded version available here.'

He even did a reasonable job of making sure that he could import the drugs, and meeting the requirements to do so. The whole process is remarkable. I bet very few people would have the intelligence, tenacity, and time required to do this. Even though I do not know this man I have some sense of what we will lose when he dies. New Zealand will be poorer without him.

Click here to read more. 

How and where growing numbers of Americans are taking their own lives

New Zealand is not alone in having a problem with a high rate of suicide. The United States has a bigger problem with gun ownership, and it generates a lot of headlines. What amazed me, however, was how much more prevalent suicide is because of the easy availability of guns. Although murder and misadventure are given many more column inches, two times as many people in the US die from self-inflicted gunshot wounds. Those deaths, too, are preventable.

33 people took their own lives last year but jumping off the Golden Gate Bridge last year, a suicide-prevention barrier has now been agreed on and will be completed in 2021 at the cost of $204m USD. 

'Though jumping is a relatively rare way to end one’s life, it is on the rise. There were 1,123 such deaths in 2016 compared with 788 in 2010. The same trend holds for suicides by gunshot, overdose and hanging, according to an analysis by The Economist of mortality files from the Centres for Disease Control.'

Click here to read more. 

Pricing for risk is a privilege for the insurance industry, and a valuable price-signal for society

Tower is looking at increasing premiums on properties which are earthquake prone or are in high-risk earthquake regions. Some people don't like the idea of risk-pricing, and see it as a 'backward step for society'. Click here to read more. 

I believe that risk pricing is one of many ways that the price signal helps to shape behaviour in ways that are helpful to individuals and society as a whole. I find that it is interesting that pricing for risk is condemned when it is conducted by insurers, but is considered a valuable good when applied to, for example, the tax on cigarettes.

Wind back the clock, if you like, to a time before any additional tax on cigarettes. Tax was neutral in the question of whether to buy an apple, or a cream bun, or a cigarette to enjoy at afternoon break. Should we return to such a situation?

Now consider the cost for insuring buildings that are more earthquake prone, or are built in areas that are more earthquake prone. I am not arguing for the relocation of Christchurch away from the fault-lines, but is it fair on someone who has built their property to a high standard to have to subsidise someone who has not? The price signal insurance sends can help to distribute development more sensibly. Earthquakes are just one issue. What about developments along an increasingly flood-prone coastline. Should inland dwellers (most of us) subsidise the increasing cost if insuring coastal mansions against climate change?

Risk-pricing is a privilege the insurance industry enjoys, and it happens to benefit many, indeed society as a whole, including those that have to pay a higher premium, through the signals it sends.

Quotemonster Heads to New Plymouth

Quotemonster are heading to New Plymouth on the 5th of June! Popular demand said we had to go to Taranaki, and I am very pleased to say I will be presenting that session myself. I love Taranaki and have friends there. Click here to register for the workshop. We also have have these events coming up in the next couple of weeks too and it's not too late to register:

• Queenstown – 23 April
• Invercargill – 24 April
• Dunedin – 24 April
• Rotorua – 1 May
• Whangarei – 3 May

Underinsurance: a significant cause of disputes

Underinsurance has always been a significant cause of disputes, and litigation, in general insurance - the Canterbury Earthquakes have just made it much more visible, with this case being just one more example.

But how significant has it been in life and health insurance? Historically, nothing like as significant. But as a cause of complaint it has been growing, and needs to be considered as a number of forces are making it more of an issue:

1. Information - in times past a new cancer treatment developed in the US or Europe took years to reach New Zealand. Now, courtesy of the internet, consumers are able to search for treatments, drugs, and research easily (like this case). The increased awareness has focused people on the limits of the public health system - which helps to push some towards buying insurance. At the same time it will make them more demanding as customers.
2. Education - consumers are better educated and more aware of their right to check, complain, and seek legal redress if they feel unhappy about something. Although, at the time, the focus of ABC's Four Corners investigation was more about definitions, Jame's Kessel's case could be seen as one of underinsurance: his policy paid out, it is just that the amount paid for the type of heart attack that he had, was low. If that had been a policy sold by a financial adviser, that may well have been the approach taken.
3. Product - in the past you either had income protection insurance, or more likely, you didn't. Today sales of modest sums of mortgage protection are very much more common. In the past  products offered a full payment for a trauma event, or nothing. TPD did not used to have partial payment features. The growth in options which pay out at a lower level increases the risk that clients will look at the headline number, and be disappointed when the payment is lower.
4. Media - a modest grumble in social media can quickly be picked up mainstream media and creates good copy.

I am a believer that you can safely offer affordable packages and products that obey the principle of indemnity, but they do require a good advice process. Sometimes less means more - you may have to do more work to ensure that an incomplete solution is not going to result in a complaint from the client.

 

Kepa takes a stake in the Financial Design Group

Risk Info NZ has this piece on Kepa taking a stake in the Financial Design Group. Link.

Waikato men told to see their doctor after being screened at health event

Over half of the men who attended a recent health event in the Waikato were referred to go and see their GP's after undergoing some screening tests. Click here to read more. Taking care of yourself isn't a form of self-indulgence, it happens to be one of the best ways to help the people you love. Go and get checked guys.

QPR Update

QPR V110 has just been uploaded to Quotemonster and the database has been distributed to institutional subscribers. This version includes the following changes:

1. Special Events incidence - change to 3.00% for Life & TPD.
2. AMP Essentials (Non-UW) life cover rated.
3. AMP Essential (Non-UW) trauma (standalone) cover rated.
4. AMP Esssential (Non-UW) IP Indemnity rated.
5. Sovereign Agreed Value / Indemnity / LOE - Enhancements rated.
6. Sovereign Mortgage Protection - Enhancements rated.
7. Review of Financial Planning and Legal Benefit

 

UK: ABI Publishes Gender Pay Gap Data

The Association of British Insurers has published diversity and gender pay-gap information which you can check out at this link. They have also published details of the gender make-up of their management team.

New Health / Medical Rates Comparison Update

We have just published a new Medical Comparison on Tableau Server. V64. The only company updated since v63 is nib, with rates update from 1^st April.

Why have my compliance people gone all surly?

Well, my compliance people haven't gone surly, because Rob Dowler is a reliably cheerful person. But if you are wondering why your compliance manager has gone surly, it might be because they are buried in work. Here, courtesy of Rob Dowler, is a list of all the current consultations.

Summary Consultations list – 17 April 2018 - Paper prepared by: Rob Dowler, Red Owl Consulting Ltd
Format: consultation on, notes, due date:

Government Tax Working Group – Submissions sought on the future of tax – Background paper released 14 Mar 2018. 30 April 2018
CWG - Financial Services Legislation Amendment Bill, Code of Professional Conduct – High level principles. 30 Apr 2018

NZX – Consultation on NZX Participant Rules covering:
• Off-market crossings
• Bringing orders to market
• International crossings and other
Due, 11 May 2018

Financial Services Legislation Amendment Bill, MBIE regulatory consultation on addressing misuse of the Financial Service Providers Register. 11 May 2018
FMA - Consultation on including an annual declaration of compliance in regulatory returns and updating the standard regulatory returns condition. 14 May 2018
FMA - Length limit exemption for dual-language PDS. 17 May 2018
Privacy Bill – Submissions to Select Committee. 24 May 2018
Financial Services Legislation Amendment Bill, MBIE regulatory consultation on Disclosure. 25 May 2018
NZX – Consultation on Main Board/Debt Market Listing Rules – Phase 2. 8 June 2018

There is a long list of consultations awaited, but I'll post that in a day or two.

Apologies for the outage

The good folks at Typepad provide pretty awesome service most of the time, but we were down for about five hours today - thanks to those who let me know, but it was scheduled maintenance at Typepad.

Guide to submitting on CWG paper and more

The guide you can find at this link, by Partners Life, is excellent for advisers considering submitting on the Code Working Group (CWG) proposals. I am very happy to publish links to other guides and discussion papers, so please send me them if you think they are worthwhile.