Chatswood serves the life and health insurance sector in New Zealand with market intelligence, data, and bespoke consulting services. Some of these are provided in conjunction with Quality Product Research Limited - a subsidiary that brings you Quotemonster.
We believe that good decisions are more likely to occur when we have good information about the market environment in which we operate. Intuitive leaps and creative decisions are always required, of course, but the more they are based on a firm foundation of observation, the better they tend to be.
Demystifying Advicemonster [online session]
Over 2,000 Statement Of Advice (SOA) reports have been generated on Quotemonster in the last six months and we invite you to see why!
We welcome you to join our upcoming online Advicemonster training session scheduled on Tuesday, 26 September 2023 12:00 pm-1:00 pm.
In this session, we have an in-depth walk-through of our Statement of Advice service and how you can create a professional and comprehensive SOA. Be the first to learn about our recent enhancements and ongoing developments from our new AdviceTech Lead, Aneel Ravji. Our Needs analysis and SOA tools are exclusive to the Advicemonster subscription and due to the advanced nature of the product, training can take between 60-90 minutes. This session is great to attend for those considering upgrading their subscription, or if you have already upgraded but would like to learn how to get the most out of it.
If you would like to register, please send us an email on aneel.ravji@qpresearch.co.nz
We look forward to seeing you there!
Legal and regulatory update for the life and health insurance sector
18 Sep 2023 - ASIC Chair Joe Longo gave an address at the Australian Financial Review Cyber Summit on cyber preparedness https://asic.gov.au/about-asic/news-centre/speeches/marconi-s-illusion-what-a-120-year-old-magician-s-trick-can-teach-us-about-cyber-preparedness/
20 Sep 2023 - he Australian Prudential Regulation Authority (APRA) has announced its decision to grant a 4-week extension to insurers for the submission of most of the Australian Accounting Standards Board 17 Insurance Contracts (AASB17) reporting forms for the September 2023 and December 2023 Quarterly reporting periods. https://www.apra.gov.au/news-and-publications/apra-extends-due-dates-for-submission-of-quarterly-data-reporting-for
20 Sep 2023 - ASIC is extending the date by which relevant providers – financial advisers who provide personal advice to retail clients on relevant financial products (including time share advisers) – must be registered. Relevant providers will now need to be registered by 1 February 2024. The reason for the further extension is that the Treasury Laws Amendment (2023 Measures No. 1) Bill (the Bill) remains before parliament. https://asic.gov.au/about-asic/news-centre/news-items/asic-extends-date-for-financial-adviser-registration-requirement/
21 Sep 2023 - Privacy Commissioner outlines how New Zealanders using AI tools can ensure they’re meeting their obligations under the Privacy Act 2020. The detailed guidance outlines how AI relates to the 13 Information Privacy Principles (IPPs) in the Act, looking at how AI tools work, offering practical examples, and setting out a range of questions to consider as you think about your privacy obligations. https://privacy.org.nz/publications/guidance-resources/ai/
Quality Product Research Limited: Legacy Research Overview
Why score legacy products?
Legacy products may be of interest to financial advisers wishing to provide advice on retention, addition, or disposal of a currently held contract which is in a closed product group no longer receiving upgrades, or receiving limited upgrades.
Insurer product teams an in-house client advice teams may similarly wish to understand the differences between the closed product and on-sale products.
The value of legacy product research
We estimate that more than 95% of these legacy policies require some form of individual research to enable an adviser to confidently advise on business replacement. A Financial Advice Provider needs to be able to confidently address the differences between an existing policy and a possible new policy to provide advice on retention, disposal, or replacement of the business.
Definition of a legacy product
A legacy product is one that is no longer on-sale and is not covered by the enhancement pass-back or policy upgrade provisions. We have a library of more than 1,000 policy documents and although some will have very few policyholders, the top 200 contracts may have more than 500,000 policies that remain in force. If you are contemplating the use of legacy research, we first suggest:
1.Familiarise yourself with the pass-backs offered by insurers. You can find a guide to passbacks directly on Quotemonster or download one here.
2.Make yourself aware of the risks of advice on legacy contracts, whether that is retention, addition to the contract, or replacement – a good statement of risks is included in the Advicemonster statement of advice template wording.
How do we know what is legacy and what is equivalent to modern product due to a pass back?
Where an insurer provides us with sufficient information to assess what is passed back, we will provide a table so that the user can check and ascertain when current research is applicable. Where it is clear there is no pass back, we shall refer to new legacy research. Where it is uncertain, we shall warn that the pass back is not clearly added to the current contract. We think it is advantageous that if you have substantial pass back commitments that can be clearly identified then you should supply us with that information as they will compete most effectively based on modern wording. Most packages of cover on modern wordings from adviser-focused companies perform to a high standard and very closely to their peers. A modern product within a single digit number of percent of a near equivalent does not, in our view, present a strong case for replacement. In fact, replacement may well be hazardous. But replacement business decisions are not ours: they will be for the financial advice provider to consider and recommend and for the client to take. Pass back rules are to be surveyed and supplied as part of the process. It will be the responsibility of the Financial Advice Provider to assess whether a product will qualify under these pass back rules or should be considered a legacy product. That is because an individual product may have been changed by endorsement.
What does the research look like?
Although this may change by agreement, currently, we plan to offer a simplified form of legacy product research and to make it available perhaps exclusively to the larger adviser groups and insurers that would use it the most while we work on building up the ‘catalogue’ of researched legacy products. The research would cover three areas:
A check for any major faults or limitations which make detailed research unnecessary. For example, American Income Life offers a cancer-only insurance product which has tough qualification criteria – that statement alone would be sufficient demonstration of the gap between its coverage and most modern contracts.
A review of the most important features: e.g., the main benefit for life cover; cancer, heart attack and stroke for critical illness, and so on – all done with the same level of detail as the current research, with scores based on our four-factor methodology to ensure that they are properly weighted.
A review of the presence or absence of minor features The latter two components would be used to calculate a score range that is comparable to a modern score in our system. So, for example, if your current product scores 120 points, a limited legacy product may score 60 to 89 points based on accurate scoring of the most important items and worst to best scoring of the minor features. It would be a summary of this assessment.
Handling previously researched products
Previously researched products will be identified and listed and checked against current pass-back rules
Those with pass-backs will be tagged as passed back
Those without a pass back will be compared using the following process
A previously researched product will be compared to the ‘best current’ score in the latest database version.
Current products will be compared to the unadjusted ‘best possible’ score in the current database version.
The resulting scores will be added to the legacy research database and a summary report commentary will be added
Research process for an identified case:
Is this the current product?
Is it subject to pass back rules?
What is the policy document?
Fatal issues review – an issue that makes the product non-comparable in some fundamental way
Identify top items (that account for approximately 80% of score) for review and conduct a review of these leading items
Check each benefit in the legacy product to see if it is present in rating – mark the balance of items as gaps
Assess best possible scores for non-assessed items
Assessed QPR-legacy score
Comparison with a perfect score
Write Commentary
Rating areas excluded:
We will provide no evaluation of:
Price
Exclusions or endorsements specific to the individual
Product not offered by a New Zealand insurer
Products where the document is incomplete
Products where the insurer states that they are covered by pass backs
An example of items we re-rate
Your feedback
We value getting your feedback on the subject and if you have any you would like to share with us, please email us on info@quotemonster.co.nz
FMA focus on fair dealing and the key takeaways for insurers
MinterEllisonRuddWatts have highlighted some key points for insurers in light of the FMA’s focus on fair dealing. Since June 2020, the FMA has brought five proceedings in relation to breaches of the fair dealings provisions in Part 2 of the Financial Markets Conduct Act 2013 (FMCA) against insurers making representations to customers admitted to be false or misleading. Examples involved systems failures in relation to not applying discounts or benefits correctly, cover cessation/duplication or charging premiums after termination of policies or incorrect inflation adjustments. Often, statements made through marketing materials, invoices or policy anniversary letters were not delivered on, so the FMA considered this a false or misleading representation to customers. Several of these cases were self-reported to the FMA with steps already undertaken to remedy systems issues and compensate customers.
Both the FMA and the Courts have been focused on deterrence, using penalties to encourage entities to maintain adequate processes and systems. Customer remediation to date since the FMA’s Conduct and Culture reviews in 2018 and 2019 has now reached $161.3 million, impacting more than 1.51 million consumers. To date, the largest penalty imposed was $3.575 million on Cigna Life Insurance New Zealand. Three alleged breaches are ongoing investigations, but in all cases the FMA is seeking declarations and pecuniary penalties.
MinterEllisonRuddWatts highlight three key learnings for insurers:
1) Invest sufficiently and regularly into your systems to ensure they are reliable and fit for purpose;
2) Systems need to be regularly checked for issues, and any issues need to be appropriately escalated;
3) Substantiate all marketing claims and ensure underlying systems and processes are cable of delivering what is promised.
More daily news:
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Katrina Shanks writes of how to deal with relationship strain around financial concerns
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MDRT Roadshow coming to Auckland and Christchurch
What is MDRT?
Million Dollar Round Table (MDRT) is a global, independent association of life insurance and financial services professionals. They have more than 66,000 members from more than 700 companies across 80 nations and territories. MDRT offers a variety of virtual and in-person networking events, peer mentoring options, volunteering opportunities and educational materials to help industry professionals aim higher and achieve more. Members must demonstrate “…exceptional professional knowledge, strict ethical conduct and outstanding client service”.
When are the roadshows?
The MDRT Roadshow is on in October featuring keynote presentations from Nick Longo, a financial adviser and Rico Gomes, a high-performance mental health coach; a member spotlight; and professional development insights.
Auckland: 9:30am October 17 at Ellerslie Racecourse. Register here.
Christchurch: 9:30am October 18 at Addington Racecourse. Register here.
More daily news:
Fred Ohlsson talks about the challenges of selling an advice business
nib survey finds 49% of parents said financial uncertainty is main source of household stress
Katrina Shanks responds to National's pledge to rollback CCCFA
Benefits and concerns of using AI in the financial services industry
KiwiSaver report shows total scheme funds under management $93.6 billion as at March 31
Challenges: do safe replacement business cases exist?
It is possible that they do. Having said that, an adequate assessment of the risks is required. We are writing about this in detail for our subscribers in our quarterly life report, but the issues that are coming up for advisers tackling the questions and challenges of replacement business are these:
Underwriting - obviously, but issues of time to complete it and client fatigue through the process should be considered before a recommendation is made.
Projecting price variations - as every insurer revises life prices annually, typically, and health prices more often.
Age of policy - the longer it has been in force, the more likely it is to be a poor quality wording compared to a modern contract, but also, the more likely the client has pre-existing health conditions that will not pass underwriting without some rating impact
Costs of change - these are not limited to the premium payable. They must include the time required to get underwritten and the risks associated with the underwriting of a new contract, even if, say, benefit stand-down periods are waived by the insurer.
Pass backs - as most adviser insurers offer extensive pass-backs a policy that is close in score to another may quickly enjoy a pass back which could make that score even or nudge it ahead.
Value of change - to be considered alongside cost of change, value of change is broader than, say, money saved. Harder to evaluate is benefit gain - and how long that gain may be sustained.
Purpose change - possibly the most reliable reason for a change, it is not considered frequently enough: if the purpose for the cover is significantly different, wholesale changes that transcend underwriting issues may beat other considerations.
Circumstances change - advice on reduction of cover due to pressure of budget is still advice to remove some cover. It may not be covered adequately and advice risk may be acquired if the question of alternatives to reduction are not adequately considered. If the client then returns to re-purchase cover that was cancelled, say, six months prior - this may amount to replacement in the eyes of the regulator.
Inspired by one of our excellent research advisory board members who called me to talk about replacement business they have seen in the market. Many thanks, we thrive on your feedback and calls.
Legal and regulatory update for the life and health insurance sector
12 Sep 2023 - The Office of the Privacy Commissioner (OPC) is launching its project on children and young people’s privacy. As a first step, professionals who work with children in sectors such as in health, education and social services, non-governmental organisations, and organisations who advocate for children’s rights, are encouraged to take part. OPC will be seeking the views of children, their whānau and wider community early in 2024. https://privacy.org.nz/publications/statements-media-releases/privacy-commissioner-opens-consultation-on-the-children-and-young-peoples-privacy-project/
13 Sep 2023 - RBNZ Assistant Governor Karen Silk gave a speech on the different forms of liquity and the RBNZ's interest in them. https://www.rbnz.govt.nz/hub/news/2023/09/liquidity-one-word-three-meanings
18 Sep 2023 - The Commerce Commission and the Financial Markets Authority have collaborated on a joint message that outlines ways that financial service providers (including consumer lenders) can support customers who are experiencing financial difficulty. It outlines ways providers can be proactive about dealing with customers in financial difficulty, including complying with their regulatory obligations, assigning sufficient resources, and always providing customers with fair treatment. https://www.fma.govt.nz/library/reports-and-papers/supporting-customers-in-financial-difficulty/
NZ Banking Association announces co-ordinated, multi-sector approach in fight against scams
The NZ banking sector has announced new measures intended to fight fraud and hamper scammers’ efforts. While no timeframes have been announced, initiatives include:
Supporting the establishment of a centralised, co-ordinated, multi-sector national Anti-Scam Centre.
Instigating an industry-wide “confirmation of payee” account name-checking service.
Committing to removing all weblinks from texts to customers.
Working together to combat “mule” accounts.
Investigating the sharing of real-time information between organisations impacted by scams.
More consistent and timely outcomes for customers who suffer financial losses.
Driving further public awareness of scams and how to avoid them.
NZ Banking Association chief executive Roger Beaumont said the measures fall into three categories
“Making it harder for criminals to operate in New Zealand, making it harder for them to target New Zealanders, and supporting ongoing public awareness of scams and how to identify them.”
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Premium Comparison Database Upgrade v122
For institutional subscribers to our premium comparison database, we have upgraded to v122 which includes the following:
Updated AIA IP and MP rates effective 01/09/23
Added more bank and direct prices. Please note we only have life and trauma quotes at this stage and not for all ages.
Bank and direct products added:
AA Life
ANZ
Pinnacle Life Trauma (Life previously included)\
Southern Cross
Westpac
You will find the file in your usual shared drives or upload process.
Important Notice: scheduled system maintenance for an exciting upgrade
A friendly reminder that Quotemonster will be offline tonight (Friday, 15 September 2023) between 10 PM to 11 PM for a major revamp. This means that when you login on Monday, you’ll see some powerful new features which include:
- Standalone Head-to-Head available to Researchmonster and Advicemonster users.
- Fact Find Option available to Advicemonster users.
- The use of AI for SOA Customisation available to Advicemonster users.
- Updates to Quote and Research reports and minor issues based on adviser feedback.
We would like to emphasize that the data is still being pulled through from the same Research and quoting engine, and all your settings will remain the same.
Please note these features are still in the Beta (testing) stage, so if you have any comments or feedback that we can use for our next round of enhancements, please feel free to send them through to info@quotemonster.co.nz.
Happy Crunching! 🙂