Australia: insurers responding to the post-Hayne world

Reporting in the AFR highlights the impact of Hayne on different insurance sales models. iSelect has cut staff and outsourced most administrative functions to TAL's Lifebroker. Most banks have exited, or are in the process of exiting, the insurance sector. The fact that these changes are concentrated in the no / low advice portion of the market should be of most interest to us. Similar themes have played out here, whether it was large banks selling life insurance operations (such as CBA and ANZ) or TradeMe selling Lifedirect back to Mark Solomon. Insurance assets are returning to specialist hands - those more likely to see long-term value emerging from them. 


UPDATED: Melanie Purdey shares top FAP related questions, and more stories

Melanie Purdey shared what she thought advisers should be asking to ensure that they make the right decision in regard to joining a FAP.  Melanie covered culture, controls, communication, capability, and conflict.

Advisers need to consider the culture of the FAP. To ensure that there is synergy between them and the FAP. Melanie suggests advisers look into the FAP’s leadership, integrity and commitment to customers.

“Does this FAP have the leadership and legacy of looking out for clients’ best interests and putting them in priority?

Have they modelled a culture committed to attracting advisers with integrity or have numbers been the main driver for recruitment? Have they demonstrated leadership in dealing with renegade advisers who have committed breaches in the past?”

Click here to read more

In other news:

Asteron Life: Underwriting and New Business teams moved into a regional-based structure

Fidelity Life: Premium increases for some Income Protection and Key Person Cover customers effective 1 August 2020

Fidelity Life: Premium increases for some new level trauma covers, including Trauma Multi effective 1 August 2020. The underlying rates for some personal IP covers will increase for benefit periods to age 65 to age 70.  For new business for level Trauma and IP the to age 65 term will become to age 70. This was first reported incorrectly by Chatswood as a change to ages of eligibility, our apologies for the confusion. 

Fidelity Life: Planned changes or removal for some sales discounts including Key Person Cover


Daily news update: Southern Cross report on member feedback and more stories

Southern Cross have reported that the feedback they received from members on the $50 million return has be positive. Additionally, it was reported that the credit return has been helpful.

Although helpful, Southern Cross have said that it is unlikely to happen again if we remain in Alert Level 1.

“Despite the significant chunk of savings made through April, Astwick says that as long as New Zealand stays at Alert Level 1, another giveback of a similar scale is unlikely – especially since the private health system was able to resume as early as Alert Level 3.” Click here to read more

In other news:

RBNZ: RBNZ released a statement supporting a worldwide multi-stakeholder appeal to keep and improve migrants’ access to remittance or money transfer services during the current economic crisis brought about by the COVID-19 pandemic.

FMA: FMA statement on director liability and continuous disclosure

FMA: Auditor Regulation and Oversight Plan 2020-2023

Alert Level 1: what have advisers learnt from lock-down?


Lack of market maturity insulates insurers in the COVID-19 crisis

The the market for insurance has grown significantly in recent years. Chatswood defines the market as people with both the money, need, and health sufficient to buy insurance coverage. A rough proxy for this is the number of people in work between the ages of 16 and 65. Analysing the 2018 to 2019 year we found that when allowing for people entering and leaving the market the number of eligible people had grown by over 50,000 (up 1.4%) and GDP per capita had grown by 1.3%. This reflects the situation applicable for most of the last five years – a net increase in eligible people of around 50,000 per year. Giving us a number of about 2.6m people employed in June last year. That will take a big hit this year, but we also estimate that there are about a million people who have no cover, and probably about another million (based on Massey University research and other industry sources) who have less cover than they need. That presents us with a big cushion: as the size of the unmet opportunity is large compared to the size of the expected unemployment and income hit to come in the year. In effect, underinsurance, an industry weakness, dilutes the effect of the economic impact on the sector, provided we are prepared to see it as an opportunity, not as a fixed and immovable problem. 


Daily news update: FMA consultation paper, and more stories

The FMA have revealed their proposal of what full licence standard conditions would look like when they released their consultation paper. The consultation ends Friday, 7 August 2020 at 5 pm. The proposal will be discussed in our quarterly report. If you would like to discus your options feel free to contact Russell on 021 764 606 or by emailing your queries to russell.hutchinson@chatswood.co.nz.

Click here to read more

Click her to see full consultation

In other news:

FMA KiwiSaver tracker updated, showing part of COVID-19 impact

Adviser platform offers specialist support for challenging claims

Australia: Financial advisers get last minute lifeline on exams


FMA release draft licence conditions for consultation

Katrina Shanks of Financial Advice New Zealand hosted John Botica from the FMA to talk about the newly released licence conditions. You can find the consultation paper on licence conditions at this link: https://www.fma.govt.nz/assets/Consultations/FAP-full-licensing-standard-conditions-consultation-document.pdf . John Botica started by taking us through a reprise of the options for licence structures, which was valuable given the new classes of licence introduced by the paper for consultation. The consultation outlines three possible licence classes and eight possible standard licensing conditions, as follows:

Classes (Summarised)

  • Class A: Sole practitioner businesses
  • Class B: FAP providing advice on its own account and/or through Financial Advisers
  • Class C: FAP providing advice on its own account and/or through Financial Advisers and/or through Nominated Representatives and/or through engaged entities

Standard Conditions

  1. Record keeping
  2. Internal complaints process
  3. Regulatory returns
  4. Outsourcing
  5. Professional indemnity insurance
  6. Business continuity and technology systems
  7. Ongoing eligibility
  8. Notification of material changes

Further consultation on the regulatory return framework and methodology is planned, date unstated, but noting that such reporting by the FAP to the FMA will not be required during the two-year transitional licensing period.

Subscribers to the quarterly life report will see a review of the conditions and their possible impacts on business structure, digital advice, governance, connected systems, and capital requirements. 


Daily news update: Partners Life discontinues funeral cover, and more stories

Partners Life announced that they will no longer be offering funeral cover to new applicants as they have found that demand for the product is minimal. Although this decision was made earlier in the year, Partners decided to prolong the announcement date to ensure COVID-19 updates did not overshadow this announcement. Customers with existing cover will continue to receive product enhancements.

“As such, we have made the decision to discontinue Partners Life Funeral Cover for new policies effective today (15th June 2020). While this change may seem sudden, we had originally intended to discontinue Funeral Cover earlier in the year, however wanted to ensure it did not get swept up in, or lost amongst COVID-19 related changes and communications.

Of course, clients with existing policies will continue to remain covered and receive product enhancements and full support from Partners Life for as long as they stay in-force, as is the case for all existing Partners Life policy holders.”

In other news:

Insurer says May, June claims levels are almost back to normal

COVID-19 has increased demand for financial advice

Alert Level 1: what have advisers learnt from lockdown?


FSC: Generations conference

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Conference Countdown: 88 Days To Go
Following the announcement of New Zealand moving to Alert Level 1, the FSC Conference and Events Committee are excited to re-launch the Financial Services Council's 2020 Conference - Generations.

The conference will go ahead on 9 and 10 September 2020 at the Pullman Hotel in Auckland, and we hope that you and your team can join us and re-connect with the industry.

Join us on Monday 15 June at 4pm for an Introduction to Generations webinar. More details, and registration below.

Keep reading for details on how to register for one of just 150 Earlybird tickets, the launch of the FSC industry award nominations and an introduction to our 2020 Charity partner - Voices of Hope.

 

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Daily news update: Newpark at a cross road, and more stories

Bernie McCrea has said that Newpark is looking into introducing shareholders as well as private capital investors to help Newpark achieve long-term goals. Bernie has said that gaining funding from investors is a better alternative than accumulating debt.

“Chairman Bernie McCrea said it was interested in institutional shareholders who might invest in the business to help it achieve its goals. It was also open to investments from private capital investors who might have money in the bank earning little interest.

“People who have an interest in financial services but are earning zero at the moment and want to diversify … we are an option for them.

In other news:

Newpark has given members a choice of four options for their ongoing relationship with the group.

Australia: Former celebrity financial adviser charged with dishonest conduct

Here are five ways to avoid looming 'retirement time-bomb'

Advisers urged to “get their cyber-security sorted”

IFSO: IFSO Scheme names two new commissioners

BNZ to put all staff through courses