moneyblog

Exercise is more important to your mental health than your economic status

According to a recent study by researchers at Yale and Oxford exercise makes you happier than money. More than 1.2 million Americans took part in the study and results found that those who exercise regularly feel bad for 35 days a year compared to those who don't exercise who feel bad for 18 days a year longer.

Click here to read more. 

The Co-operative Bank plan to distribute portion of profit

The Co-operative Bank has announced that it is set to pay out annual rebates to customers.

This year $2.1 million of the Bank’s works to exemplifies the bank’s effort to see through their commitment of doing right by New Zealanders. David Cunningham, CEO of The Co-operative Bank, has stated that the rebates pay out and commitment to prioritising customer needs is the Banks’s way of adapting to customer needs. The remaining profit will be used to fund new product development.

Adviser group and adviser business managers

Inspired by a recent post from Seth Godin, I want to encourage all the managers of larger adviser businesses (say, more than 10 employees) to come along to the FSC conference on the 11th of September. A special one-day rate has been announced, and a unique pathway through a day packed with content has bee put together with you in mind. As Seth Godin recently pointed out on his blog, we like our independence, but when people with different assets, needs, and views come together, they're able to produce more than they ever could on their own. Here's the link to the special one day rate for you. 

 

AMP Life sale hits issues - updated

Release from AMP, 15 July 2019:

AMP Limited today advises that the transaction for the sale of AMP Life to Resolution Life is highly unlikely to proceed on the current terms.

This is due to the challenges in meeting the condition precedent for Reserve Bank of New Zealand (RBNZ) approval.

The failure to meet this condition precedent is exceptionally disappointing as the sale of AMP Life is a foundational element of AMP’s strategy.

Capital position and interim dividend expectations

While the 1H 19 accounts are yet to be finalised, AMP expects to report a Level 3 eligible capital surplus above minimum regulatory requirements and in line with Board limits for target capital surplus.

Given the uncertainty around the AMP Life transaction, the AMP Board expects to continue its prudent approach to capital management and anticipates that an interim dividend will not be paid for 1H 19.

Click here to read the full press release: Download 15 July - AMP Life sale and interim dividend update

The release is comprehensive and well worth a read. Probably AMP and Resolution made what was a reasonable assumption at the time that the exemptions AMP enjoyed would be extended to Resolution. The tougher line being held by RB is also logical, given the increased scrutiny being placed on the sector and recent events. I expect that some sort of accommodation, perhaps to share the costs of the requirements of the RB, can be struck with Resolution Life. The whole situation speaks loudly of regulators and being more prepared to exercise their supervisory powers. 

Susan Edmunds story on this, at goodreturns.co.nz 

Tamsyn Parker has a story on this too, at NZHerald.co.nz 

Call for financial adviser opinions on retirement policy interactions with insurance

This is an appeal for advisers to help out with opinions on how retirement policy interacts with insurance. 

Submissions are now open until 31 October for the CFFC's Review of Retirement Income Policies - https://www.cffc.org.nz/reviews-and-reports/2019-review-of-retirement-income-policies

I do not normally work on investment issues, and won't make a substantial submission on this one either. However, I am interested to see if there are significant issues of interaction between this policy and insurance provision.

I do expect that some will call for KiwiSaver to include insurance, given the Australian experience with that, I am against the idea.

There has already been a consultation on defining the terms of the unlock in the event of serious illness, but comments on that may be helpful. 

What else should we be considering? Glad to have your calls or emails. 

New Zealand: a world leader in...

...house prices: link. 

AIA-Sovereign health insurance - a couple of big changes

AIA-Sovereign has upgraded medical insurance and although there are many changes, the two big improvements are in the minor surgery definition and the addition of an obstetric care allowance. These result in substantial uplifts in the product score. They weren't live earlier this week - but they are now. Do take a look. 

Product and pricing changes for OnePath, nib, Asteron Life, Southern Cross, AIA and Sovereign

An absolutely huge couple of weeks of changes: 

Pricing:

• Updated OnePath Mortgage Protection Prices effective 1 July
• Updated nib health prices effective 1 July
• Updated Southern Cross health prices effective 1 July
• Updated Asteron Life and Trauma rates effective 1 July

New Features:

• Needs Analysis – added Standalone and Accelerated options for existing Trauma and TPD insurance
• Research report – added a new page at the end explaining the QPR Research methodology

Research:

Completed a big set of changes, with some quite substantial shifts (see more posts later today and next week)

Eligibility rules:

• OnePath - Income Protection, Mortgage Protection and Trauma - changes in entry ages
• OnePath - Income Protection - age limit changed

General insurance: Tower set to reduce disclosure obligations

Tower is set to minimise disclosure obligations placed on customers according this piece by Susan Edmunds in Stuff.co.nz. Richard Harding, Chief Executive, has said that Tower has decided to remove the wider duty of disclosure from its sales and claims processes before the end of 2019. Crossley Gates, insurance law specialist, has stated that Tower's move was likely to be required within the insurance industry. Click here to read more.

 

Fidelity Life: 2 months free extended

Fidelity Life have extended their '2 months free' campaign again, it will now close on the 6th of August. 

The deal applies to:

• New Platinum Plus, Platinum Plus Level or Mortgage Protector policy applications received up until 6 August, Fidelity Life will pay the first two months’ premiums for eligible customers
• At least one life insured must have life cover on the policy issued for a total sum insured of $500,000 or more
• Premiums must be paid on a monthly basis

The application must be underwritten and the policy issued within six months of Fidelity Life receiving the application.

Massey University looking to offer financial planning major

Massey University’s plans to offer financial planning and advice major as part of its Bachelor of Business is set to be reviewed by the Committee on University Academic Programmes. If approved, the major will be made up of eight courses that will be focused financial planning process, financial institutions and markets, investments, personal finance management, risk management, financial advice implementation and estate and tax planning.

Click here to read more

The steps required to stay in practice as an RFA

Join Tony Vidler, Barry Read, and me for a practical webinar for NZ Registered Financial Advisers. The steps to take to stay in business as an adviser in the new regime. This is an agnostic and educational approach - no promotion of particular business models, groups, products or providers. For RFAs unsure of precisely what is needed to either maintain status as an adviser or develop a plan for maintaining your independent choice. We will provide a comprehensive checklist of the steps which we expect will be required for full licencing, and the timeline for achieving them.

Here is the link: Remaining In Practice for RFA's

Asteron Life: Update on regulatory response

Asteron Life have sent their formal response to the FMA/RBNZ joint report on Life Insurer Conduct and Culture. Their response included information on all the recommendations made by the regulators in addition to an action plan of how Asteron Life will incorporate their recommendations into their business. 

Here is a snippet from a recent email Graham Hill, Executive Manager - Life Distribution, Asteron Life distributed:

 

Obstacles to buying financial protection

Damien Green once co-sponsored a study that found that 19 in 20 working age people did no see protecting their financial future as a priority. This is a form of ‘cognitive dissonance’, people know that they should do something but not. Green advances three reasons for this form of behaviour:

• Applying a high discount rate to distant future events
• Lack of trust
• Belief that the state will provide

To counter these, Green suggests focusing on customer experience, intermediary educators and instigators, engaging in public affairs, and developing trust. Click here to read more. All those look like intensive and engaging ways to work with the market at large, and individual customers in particular. It is a continual process, relentlessly working against a number of easy choices to defer, deny, or delegate responsibility. Lots of work. 

Latest premium comparison database update

We have just distributed a new version of the premium comparison database (v104) to subscribers. Changes include:

• Update OnePath Mortgage Protection rates effective 22/6/19.
• Update Asteron YRT Life and Trauma rates effective 1/7/19.
• Update Pinnacle Life rates effective 4/6/19.

Weekly highlights email

If you are only an occasional reader of the Chatswood site, then an alternative to remembering to drop by the page every now and then is to subscribe to our weekly digest of headlines. This goes out on Tuesday morning. If you would like your name added to the weekly email list, please email Jerusalem.Hibru@chatswood.co.nz. 

What does commission buy you?

The argument over commission, and the effect of conflict of interest created by commission, is the insurance industry's equivalent of the great debate over whether advisers add value.

Supporters of the validity of the commission model received a boost on Friday from an unlikely corner. APRA's research, backing up a survey by ASIC not long ago, shows a greater percentage of admitted claims if the client received advice compared to a non-adviser individual cover see this link and table below:

There is some nuance to consider. 

Advisers tend to sell a broader cover mix. When clients buy income protection cover direct, the contracts tend to be issued based on short-form underwriting and have tougher terms. There are some stand-out numbers. The first is TPD where advised clients enjoy higher accepted claims rates over non-advised by a large margin. The second is 'accident' which is very rarely sold by advisers, but there appears to be a startling gap there, showing that non-advised clients do better in that case. 

 

New medical insurance premium database

The latest medical insurance premium comparison database is version 7_3. If you are a corporate subscriber you should have received your copy by now. It includes changes:

• Update nib rates effective 1/7/19
• Update Southern Cross rates effective 1/7/19
• Change Accuro rates for ages under 21 to dependent rate to make it consistent with other providers

Perspective on ageing

A lovely piece by Judith Viorst on ageing - as she nears 90 - link. 

Cigna: Update to advisers

Here is a recent update from Gail Costa, CEO, Cigna to advisers: