moneyblog

Blog Anniversary

Eighteen years ago on Saturday I started this blog. I'm glad I did, there has never been a better marketing strategy. It has required me to engage more, to track more news, and to do that with a purpose: to learn and interpret and share some of the thoughts that came from the process. Of course, I do that for my Quarterly Life and Health Sector report, and for many other pieces of work I do each year. But there is something important about the day-by-day commitment to content creation and engagement with you, readers, clients, colleagues, and friends.

Each year on the anniversary I usually write something to try and encourage the 'lurker' - out there, possibly reading this right now - is someone who has thought about blogging on a regular basis. This message is for you: please do, I recommend it. The occasional embarrassing post and spelling error is far outweighed by the benefits of the practice of writing, answering comments, and talking with people who also care to engage. If you are wavering and want to talk about the creative process, do give me a call. I am always pleased to catch up and talk. Your process may be different anyway - video? podcasts? who knows. It is all worth looking into. Today there are several advisers producing great content, corporate managers tend to be less free to publish in their own names, but there are many of them who do write and publish in the form of their own newsletters or through industry news sites online. If you write, I've probably read some of it, and I congratulate you.

 

AFR also ponders morals and other reasons Australian-owned insurers lost out to expanding Asian-owned insurers

The AFR has an interesting article which reviews the recent history of the life insurance sector and ponders the reasons a theoretically strong Australian-owned industry struggled, and is now being sold, often to insurers based in Asia. It is a worthwhile read, but I haven't posted the link as you need to have an AFR subscription to read the content. It was intriguing that they should identify advisers as a major area of failing, even going so far as to effectively blame advisers engaging in 'legal but morally wrong' behaviour. They were referring to churning policies from one insurer to another. Something not shown to be a major cause of product replacement by ASIC's surveys.

It was an interesting echo of Naomi Ballantyne's defence of advisers recently where Ballantyne said that the FMA report on replacement business highlighted a few individuals with bad morals. Personally, I found it astonishing that, without quoting any supporting evidence, so much blame was laid at the feet of advisers. To be fair the AFR did identify surprisingly high claims from TPD and income protection policies as another major driver. What I think was left out was the cost of capital, the blow the GFC gave many banks that owned life insurers, and the extent the spectre of digital disruption caused some non-specialist owners to take fright.

The Remarkable Fall in China's Suicide Rate

In the 1990s China was among the highest suicide rates in the world, but in recent times the rate has declined more rapidly than any other country. This article from Human Progress discusses the reasons for this and also outlines in the chart below the correlation between suicide rates and people leaving rural areas to seek employment in urban areas. 

How stress echoes down the generations

According to this article from The Economist emerging evidence suggests that the consequences of mistreatment in childhood may persist down the generations, affecting a victim’s children or grand-children, even if they have experienced no abuse themselves. When underwriting changes away from a focus on medical history and current treatments I bet that family history will remain an important factor.

Travel insurance story incomplete

Abby Hartley seriously ill in Bali after a number of medical events which are outlined in this article. The family have been hit with medical bills totaling $75,000 so far and there are likely to be more. Travel insurance have declined the claim so the family have set up a Givealittle page to help fund it. What astonished us in the office is the complete absence of comment on why the claim was declined. Is it enough to simply leave this out of the story?

Vaping 'can damage vital immune system cells'

According to this article from BBC a recent study suggests that vaping can damage vital immune system cells and may be more harmful than previously thought. Click here to read more. So perhaps insurers are right to be slow to distinguish between vaping and smoking cigarettes. Of course, it is worth mentioning the unspoken, yet universally acknowledged truth that not vaping or smoking is obviously better for everyone, and saves you a lot of money too.

Partners funds paramedical visits

Partners Life is to fund paramedical visits (for underwriting purposes) for clients applying for policies with a premium of $1,800 or more. Details:

Partners Life will now be making Medscreen Paramedical Services available for all clients for whom traveling to the doctor or lab is difficult. While we have facilitated advisers requesting this service for some time, it has been at their own cost – but not any longer. From now on our underwriters will be able to order paramedical services, where required, at our cost.

Medical Insurance Premium Comparison

The latest medical insurance premium comparison database is being distributed to Chatswood Consulting data subscribers right now. Recent changes include:

• The Accuro price changes from 1^st August,
• Data points for all ages from 16 to 60, not just 5-yearly (use the Excel reports to see the new data points),
• Simplified and updated Main Menu,
• Simplified database structure to enable easier data analysis,
• Changing options such as include / exclude policy fee is much faster to execute,
• Product definitions have been moved to a set of external PDF documents

After a major change such as this, you might consider it timely to get an update on how to use the data to best effect. Drop me a line if you would like to make a time to do so.

The female of the species (should be protected like the male)

In this article, head of national accounts from iPipeline, Stephanie Hydon says 'Women are significantly behind men when it comes to financial resilience'. Although she believes there is a definite move in the right direction there is still plenty to be done as she discusses here.

We have noticed gender differences in insurance offered by financial advisers too. You might be interested to see the chart below which compares the gender of quotes for some of the most commonly quoted benefit combinations. Can it really be that men require more than two times as much income protection, life, trauma and waiver than women? Or about 40% more life insurance? Or are women being insured for many fewer benefits in a mis-allocation of the insurance budget?  It is possible that with the stage at which insurance is applied for, perhaps more women at working at home raising children then men - explaining some of the IP differences, but the gap appears large, and persistent even in life cover, that it suggests another explanation.

FMA: four things you have been asking...

The FMA has a post on their site titled "Four things you have been asking..." which really should be subtitled "...and why we can't answer them yet, so please stop!" Link.

Solid End of Year Result for Asteron Life

Asteron Life release:

AMP New Zealand - options process recommences

David Chaplin and Investment News NZ has an article detailing the re-start to the process of considering options for assets AMP 'manages for value' - which includes the New Zealand financial services business. More details at this link. The article also places the number of financial advisers in the AMP networks at 557.

Latest Goodreturns Article: wearable tech and insurance

My latest piece at goodreturns is on wearable tech and how it can help insurance. Link.

Asteron Life not affected by Australian changes

Asteron Life release:

Standards versus the need for differentiation

Achieving a common, compliant, standard is a necessary pre-requisite to differentiation. Achieving standard and failing to move on could be a recipe for disaster - as merely doing what everyone else does is likely to likely to lead to diminishing returns.

If you are some way off implementing the six-step advice process in your business, and you want to get licenced in the new regime, then you probably need to focus on that. It is a standard, and achieving it is a baseline for entry into the new regime. JP Hale has an article highlighting it at this link. It is necessary and good.

But when do standards fail us?

When we assume that the standard is all we need.

Differentiation is needed to stand out from the crowd. In a whirlpool of websites, listings, and minor brands the consumer has so many choices of provider. For insurance, consumers have many options: go direct with one of many providers, seek advice from one of many advisers, they can even just sit at home and ignore the problem for another year - and many choose just that. Speaking to different markets in a way which is unique and compelling should be the advisers' marketing goal.

A good practice is underpinned by effective standards, but it can be trapped by them if it fails to break out from that small beachhead. Tony Vidler develops this theme in his recent post. I like Tony's belief that many advisers have an advice philosophy, it is just that they may fail to articulate it.

I encourage advisers to explore their advice philosophy, identify it, and turn it into a vision for their business. Starting with a review of recent cases, and then a workshop with your people, you can quickly draw out the invisible rules that define 'how we do things here' and turn them into a charter for your customers. If documenting process sounds like so much busywork, when there are real clients to be seen, then the call to use your philosophy as a basis for marketing your difference is the antidote.

Being clear about what makes your business good makes finding new clients easier.

 

 

 

Most of us are wrong about the world...

...and that is a good thing. Max Roser charts the disconnect between what is actually happening, and what people in countries like ours think is happening. Link. This time with a focus on infant mortality. Hans Rosling, in his book (co-written with Anna Rosling Ronnland and Ola Rosling) explains the reason why infant mortality is such a good metric to focus on. Infants are so fragile that their successful journey in the first year of life tells us all sorts of things about the provision of healthcare, warm housing, nutrition, to effectively daily hygiene.

Real networking means taking risks

The Harvard Business Review has an excellent article on networking. Hat tip to Linda Hendry for posting this on LinkedIn.It  seems that casual interactions don't really do much to build meaningful connection - and besides, we aren't very good at them anyway. Below is the most telling quote, but it is well worth reading the whole lot, and then pondering - how do I get those high stakes activities? I volunteer, and yes, I sell.

“Potent networks are not forged through casual interactions but through relatively high-stakes activities that connect you with diverse others.” In other words, schmoozing at a mixer is far less likely to lead you to a powerful network than jumping into projects, teams, or activities that draw a diverse set of people together.

Link.

Insurance Contract Law Review - general background

General background on Insurance Contract Law Review is below. More detailed comments and exploration of the issues is available to subscribers to Chatswood's Quarterly Life and Health report.

The Insurance Contracts Law Review (ICLR) is an important process which has been on the legislative agenda for nearly twenty years since a Law Commission report in 2000 advocated for reform. Insurers, too, generally support many of the issues raised in the consultation document which has been circulated recently. You can find the document at this link: http://www.mbie.govt.nz/info-services/business/business-law/insurance-contract-law-review Submissions have closed, but if you haven’t read it already, you may as well add the document to your reading pile, to get a head start on the next load when submissions are released.

Consumer groups are lobbying for changes to disclosure rules, and other contract terms which they say will pay claims payments fairer. While insurers are concerned that if they lose the right to void a contract based on broad definitions of non-disclosure, they may be forced into the more difficult area of proving fraud. Some form of change is likely, but we need to keep working to defend our right to underwrite and manage claims effectively.

ICLR is a complex set of issues bundled together. Some affect general insurance more than life insurance. ICLR will take some years. That’s good – because it is very complicated, and some choices might pose a major threat to consumer ability to obtain insurance.

The recent claim decline case on Fair Go programme offered Minister Faafoi a good platform to launch the review, but it is an example of how simplification masks the real, difficult, issues in the review. It does not illustrate the central point around the duty of disclosure – that a client is required to disclose anything that might be relevant, even if they are not asked. They were asked. It now turns out that their medical records were incorrect (see this story). Insurers are frustrated by this, they want the right to rely on information they receive from either clients or doctors, which seems fair enough to me.

Reforms in other markets usually leave the applicant with the responsibility to answer questions truthfully, and do not usually require insurers to collect medical evidence in every case.  What most insurers want is to retain the right to underwrite, be fair, offer a good product efficiently. To do that we need to be able to ask questions and rely on the answers.

That’s just underwriting. But perhaps a bigger challenge comes from the review questions around contract terms. Many words could be offered on this subject, but I shall choose only these: unlike other aspects of insurance law, in this area New Zealand is relatively up to date, and Australia is contemplating using our approach as a model for their reform. I would argue to keep our approach.

Another important area is conduct of insurers. While conduct, and how it supports expectations of the community, has been given plenty of media attention there is some legal and regulatory plumbing missing. The RBNZ is the prudential supervisor, but arguably New Zealand lacks a conduct regulator for insurers. You might consider some recent FMA reports as an audition for the role.

Interest.co.nz raises questions about Momentum Life

Jenee Tibshraeny raises questions about Momentum Life in her recent column at interest.co.nz.

UK: 'We have to change the conversation' around illness - AIG Life

[In the UK...] The number of deaths from sepsis have soared, rising by more than a third in two years. Nicki Plews, senior propositions manager at AIG Life says (quoted from cover magazine):

"We need to talk about the prospect of encountering a serious illness like sepsis and raise awareness as our industry wants to be there to help people deal with the impact of serious illnesses like sepsis. It is something that can strike any of us as the UK Sepsis Trust notes 25,000 children are diagnosed with sepsis every year and five people die from it every hour in the UK."

Plews then proceeds to list a number of enhancements to AIG Life's trauma product. Well worth a look for product managers.

Click here to read more.