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.
Capgemini’s World Life Insurance Report 2023
Capgemini have published their World Life Insurance Report 2023, ‘The aging well opportunity: how trust and engagement can unlock growth for insurers’.
Capgemini have published their World Life Insurance Report 2023, ‘The aging well opportunity: how trust and engagement can unlock growth for insurers’.
This report looks at how people are living longer and healthier lives and the implications for individuals and organisations who will be impacted including life insurers, retirement advisers, pension providers, brokers and agents.
By 2050 3.2 billion people, 33% of the world’s total population, will be 50 years or older. The dependency ratio – the ratio of the dependent population (aged 65 and above) to the working-age population (aged 15 – 64) – of 15% today is predicted to increase to 26% by 2050. Currently 40% of the top 40 global life insurers’ assets under management are held by those 65 years or older – by 2040 most of these assets will be transferred to their beneficiaries aged 50+.
At a time of declining governmental support and increasing healthcare costs, individuals will need to shoulder more of the financial responsibility for aging well. The World Economic Forum predict the retirement protection gap (the difference between desired retirement income and actual income from pensions, savings and social security) will quadruple by 2050, to a staggering 400 trillion USD in markets with the largest and most established pension systems. In some cases, this will lead to those aged 65 and older having to work longer.
Worryingly, Capgemini’s 2023 Voice of the Customer survey of policyholders across 20 markets found that 60% of those 65 or older have not sought professional financial advice to prepare for retirement or to transfer their wealth. With demand for life insurance, long-term care services and financial advice predicted to skyrocket between now and 2030, there are plenty of opportunities for advisers to make their mark.
Consumers have called out product complexity (39%), limited awareness (39%) and lack of trust (28%) as their biggest obstacles to life insurance product adoption.
Capgemini have identified current gaps between what policyholders want and insurers can deliver, and steps insurers can take to foster deeper partnerships and enhance customer lifetime value. The steps include creating personalised and bundled aging-well propositions; streamlining the purchase experience; accelerating risk assessment; engaging more widely and frequently; and elevating the claims experience.
Capgemini call out the need for more advanced technology and more robust data analytics to help engage more effectively and productively with clients, delivering better recommendations and more personalised plans. They highlight the importance of delivering comprehensive and innovative aging-well value propositions that meet a broader range of customer needs. After all, strengthening relationships with aging policyholders and their beneficiaries is critical to safeguard assets under management.
Swiss Re write about Health and Wellness engagement impacts
Swiss Re have published a report on how to engage customers with a health and wellness programme.
Swiss Re have published a report on how to engage customers with a health and wellness programme. They write how the proliferation of health apps and wearables has led to consumers having more data about their health and lifestyle than ever before. Two thirds of consumers are open to sharing personal data or health results in return for a benefit, whether that’s personalised health advice, discounts or something else.
For insurers there are many benefits, from increasing the frequency of touchpoints, building customer loyalty and maximising lifetime customer value. For consumers the benefits include more relevant products, better price points, meaningful financial incentives and rewards and, best of all, improved health and longevity.
Swiss Re calculated that a successful program with a 25% engagement rate can be ROI positive, after accounting for the costs of launching and running the health and wellness engagement programme including policyholder rewards, premium reductions, initial setup costs and ongoing costs. If engagement rises to 40%, profitability can be up to 9% higher compared to not having a programme in place.
John Hancock in the USA is hiring behavioural scientists and drawing on gamification elements to help encourage policyholders to lead healthier lives. For example, when customers hit an activity threshold they can spin a wheel to win rewards.
Insurance Thought Leadership discuss the success of the Vitality programme. Vitality aims to increase people’s healthspan, the time in a person’s life where they experience optimal health, through a behaviour change incentive programme. Policyholders are nudged towards healthier lifestyle choices that they’re rewarded for in various ways including discounted premiums, discounts at places like gyms and free health checks. They list benefits of the programme to the insurer including reduced frequency and severity of claims, high engagement of policyholders and high levels of retention. Over the last three decades,
“Discovery's three-decade journey provides robust evidence that a significant increase in the level of physical activity reduces by 49% the mortality for individuals aged 45 to 65, and a remarkable 61% reduction for those older. Positive impacts have further manifested within annual medical expenditures, where the most engaged participants have 15% lower claim costs than the less engaged, risk-adjusted by age and medical conditions. A longitudinal study on the people who showed a low level of physical activity during the initial six-month period showed a subsequent 14% reduction in hospital medical costs for the subgroup that notably elevated their engagement levels over the ensuing four and a half years.”
AIA NZ have recently released statistics on how AIA Vitality has contributed to notable shifts in health metrics. By September 2023 there was a 20% increase in members moving from an unhealthy body mass index (BMI) range to a healthier one. Similarly, there was a 51% improvement in blood pressure levels, 26% in cholesterol levels, and 81% in glucose levels.
AI and Machine Learning are driving benefits and reducing headcount in the insurance sector
A survey of insurers by Rackspace has found that the implementation of Artificial Intelligence (AI) and machine learning (ML) technologies are driving benefits and enabling the reduction of headcounts.
A survey of insurers by Rackspace has found that the implementation of Artificial Intelligence (AI) and machine learning (ML) technologies are driving benefits and enabling the reduction of headcounts.
The survey found over the past 12 months 62% of insurers had cut staff numbers due to the implementation of AI and ML. They found that the new technology enabled low-level analyst work to be completed by AI and ML. 52% of respondents said they had already realised substantial benefits from AI/ML, with a further 23% seeing modest benefits. 25% of respondents said it was too early to tell.
The benefits insurers listed from implementing AI/ML were
81% risk reduction, increased understanding of business/customers
79% increased sales
77% personalised marketing
75% increased productivity
73% increased revenue streams, operation cost reduction
69% improved customer satisfaction
67% faster time to profitability, reduced cost of new product development, ability to hire/recruit new talent
65% increased innovation
There are still some issues with AI, with 42% only ‘slightly trusting’ AI/ML results compared to 28% ‘strongly trusting’ results.
Talent and skill shortages were seen by 67% as the greatest challenge to further adoption of the technology; however 90% of insurers had grown their AI and ML workforce in the past 12 months.
Although this survey lumps AI and ML together there are some fundamental differences. Machine learning can be disconnected from the large volumes of training data that are used in generative AI such as Chat GPT. Although that may sound like a disadvantage, narrower pools of training data can make results from machine learning applications much more accurate for highly specific tasks. It also means that data does not have to be shared with generative AI engines – its can remain in confidential silos within the business.
ChatGPT recently put forward it’s arguments for how it can positively impact the insurance industry. While there are still plenty of cons to using ChatGPT right now, ranging from inbuilt biases and prejudices to its failure to comprehend nuance such as sarcasm, some insurance executives believe the underlying technology could be used as a starting point to build on and to jumpstart innovations in the sector.
At Quality Product Research Limited we agree that there are some great opportunities for implementation of AI and ML initiatives. With more than 15 million quotes and over 1.25million data points of data in our research databases we are well positioned to employ these tools to greater effect over the coming years.
We’re back!
The Chatswood and QPR team are back in the office and looking forward to everything we have planned this year. Although we are keeping some great new developments under wraps, we can drop some hints of what’s coming your way this year.
We hope you had a lovely break and got to enjoy some sunshine and had a chance to relax. The Chatswood and QPR team are back in the office and looking forward to everything we have planned this year. Although we are keeping some great new developments under wraps, we can drop some hints:
· People with an interest in data and statements of advice for KiwiSaver and Home Loans should drop us a line
· How do you check if a plan you have put together is reasonable? Ask us to put you in the beta test group for Checkmonster
Things already live that you may want to check out again now you’re back:
1. Research: you should check out the stand-alone head to head comparison with access to more than 50 legacy products now rated and more joining them every week
2. If you aren’t using Advicemonster to make your production of SOAs better, quicker, and more robust, then we’ve added more reasons to help you make up your mind
3. Want to make sure your compliance is in good shape? Maybe add a copy of our outsource provider statement and information security bulletins to your compliance file
Hit us up with any questions you have. And if you have any thoughts on training you would find useful, please let us know here or here.
Legal and regulatory update for the life and health insurance sector
27 Nov 2023 - APRA embarked on a multi-year pilot study with a selection of banks to gain insights into the status of data risk management. They have outlined their findings and highlight multiple areas where all APRA-regulated entities can improve their data management practices. https://www.apra.gov.au/news-and-publications/quality-data-as-an-asset-for-boards-management-and-business
28 Nov 2023 - The Financial Markets Authority (FMA) has cancelled Foundation Advice Limited (FAL)’s Financial Advice Provider (FAP) licence. FAL was an Auckland-based FAP offering advice on life and health insurance as well as KiwiSaver. The High Court put FAL into liquidation on 26 October 2023 following an application filed by the Inland Revenue Department. https://www.fma.govt.nz/news/all-releases/media-releases/fma-cancels-foundation-advice-limiteds-licence/
28 Nov 2023 - ASIC has issued guidance to financial advisers and Australian financial services (AFS) licensees about the new requirement for financial advisers to be registered. From 1 February 2024, financial advisers who provide personal advice to retail clients on relevant financial products must be registered with ASIC. https://asic.gov.au/about-asic/news-centre/news-items/asic-releases-guidance-on-the-registration-of-financial-advisers/
28 Nov 2023 - The FMA has agreed in principle to grant a class exemption for five years for each Climate Reporting Entity (CRE) which is in liquidation, receivership or voluntary administration from the duties in Part 7A of the FMC Act, comprising:
full relief for a CRE which is in liquidation (solvent or insolvent) and for managers that are CREs in respect of a registered scheme (or fund within a scheme) that is in wind-up.
deferral relief for up to two years for CREs in receivership or voluntary administration.
The effect of full relief is that the climate reporting duties are cancelled. The effect of deferral relief is that climate reporting duties are deferred but must still be complied with at a later date.
Swiss Re write about redefining sustainability in life and health insurance
Daisy Ning, Head Life & Health Re APAC ex. China, writes about how sustainability can be applied more broadly in the insurance and reinsurance context. Swiss Re believe sustainability aligns with what they refer to as the ‘3A’s’ of life and health insurance:
accessibility (the ease of acquiring coverage), availability (whether suitable plans and products exist to cover the full range of L&H needs), and affordability (whether products and plans are priced fairly and within consumers’ means).
Ning advocates for formulating strategies that manage risk, improve adaptability and explore opportunities – regardless of market conditions; assessing trends and value delivered to clients and adjusting as necessary; and enhancing value delivered to clients by making insurance solutions more relevant.
The global protection gap in 2022 was sitting at US 406 billion in premium equivalent terms, up 1.5% since 2021. A recent Deloitte estimate has the Australian public at 60 – 80% underinsured. A Swiss Re estimate of NZ’s mortality protection gap was USD 435 billion (NZD 670 billion) or more than USD 540 000 for each household, as of 2020.
Ning suggests we need to leverage connectivity and digitalisation to make products more affordable; leverage big data and advanced analytics to uncover insights into market trends, customer behaviour and risk factors and create products that address emerging needs discovered through this process; look at digital health underwriting; and increase reach through building alliances with online platforms, aggregators, fintechs and other digital players.
More daily news:
Katrina Shanks works through pros and cons of Trusts
Industry leaders suggest how incoming government can support the industry
mySolutions launches New Adviser Academy
FintechNZ Annual Meeting 2023 3pm on 23 November
ANZ awarded New Zealand's top bank for small business by Canstar NZ
Link financial group awarded one of the Best Mortgage Companies to Work for in New Zealand
Wotton + Kearney release 2023 NZ Insurance Market Trends Update
Wotton + Kearney have released their 2023 NZ Insurance Market Trends Update. Of note, it includes updates on:
· increase in director accountability for ESG issues and climate-related financial disclosures;
· how organisations will need to consider how applicable tikanga values should inform their conduct when dealing with employment relationship issues;
· how organisations need rigorous processes in place for restructures and redundancies;
· extensions to Schedule 2 Occupational Diseases;
· changes to the regulation of medicines, medical devices and natural health products;
· the passing of the Therapeutic Products Bill 2023;
· cyber, privacy and data security.
More daily news:
Cost of living crisis is changing conversations advisers are having with clients
Katrina Shanks writes of the importance of quality financial advice
mySolutions webinar 'Are you maximising your marketing potential' 9am 27 September
27% of 4,120 claims received by IFSO were related to health, life and disability insurance
Lifetime webinar 'Your Homeownership Adventure Begins Here' 7pm 27 September
Man trying to claim pregnancy care on his health insurance policy has complaint turned down by IFSO
Alzheimer’s Society recommends regular exercise to cut dementia risk
Data is plural - international cancer data
The excellent blog, data is plural, publish links to open-source data which may be of interest. One that caught our eye is a link to International cancer statistics.
The World Health Organization’s Global Cancer Observatory provides interfaces to a range of studies and statistics. Its Cancer Today portal features tables, charts, and maps of “incidence, mortality and prevalence for year 2020 in 185 countries or territories for 36 cancer types by sex and age group.” Those figures come from the latest GLOBOCAN estimates, calculated by the WHO’s International Agency for Research on Cancer based on data from national and regional registries. Note: “Caution must be exercised when interpreting these estimates, given the limited quality and coverage of cancer data worldwide at present, particularly in low- and middle-income countries,” the researchers warn. Previously: Statistics from the American Cancer Society (DIP 2016.01.27).
This may be especially useful if you want to make comparisons between markets, especially those that you may consider peers, or markets to which we might aspire to be peers with, in terms of cancer treatment and survival rates.
Legal and regulatory update for the life and health insurance sector
28 Aug 2023 - The Reserve Bank has introduced a new data series called New Residential Mortgage Lending by Purpose https://www.interest.co.nz/personal-finance/123983/number-people-choosing-top-their-home-mortgage-running-fewer-half-number
28 Aug 2023 - ASIC’s latest Corporate Plan reveals ASIC will take further enforcement action to protect Australian consumers and small businesses in an environment where scams, digitally-enabled misconduct and predatory lending practices are increasingly prevalent https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-230mr-asic-focuses-on-protecting-vulnerable-consumers-and-small-businesses-in-23-24/
29 Aug 2023 - APRA has unveiled its 2023-24 Corporate Plan, which outlines an evolution in APRA’s priorities for the coming four years in response to new and developing risks impacting the global financial system https://www.apra.gov.au/news-and-publications/apra-responds-to-emerging-risks-2023-24-corporate-plan
Legal and regulatory update for the life and health insurance sector
18 Aug 2023 - The Australian Securities and Investments Commission (ASIC) today confirms several executive changes within its senior leadership team. https://asic.gov.au/about-asic/news-centre/news-items/asic-announces-executive-appointments/
23 Aug 2023 - The Reserve Bank of New Zealand has published a Bulletin article highlighting high level results from a survey of prudentially regulated entities on climate change. Almost all entities’ governance bodies are discussing climate-related risks on a regular or ad hoc basis (28 out of 29). Concerns about climate-related risks are influencing day-to-day business decisions more than they were in 2019. However, only 3 out of 29 entities stated they have ‘fully embedded’ different aspects of climate-related risk management in the manner they already do for other business risks. https://www.rbnz.govt.nz/hub/news/2023/08/rbnz-releases-results-of-industry-climate-survey
23 Aug 2023 - APRA releases quarterly private health insurance statistics for June 2023 https://www.apra.gov.au/news-and-publications/apra-releases-quarterly-private-health-insurance-statistics-for-june-2023
23 Aug 2023 - The FSC have published 'KiwiSaver serious illness and life-shortening congenital conditions processing guidelines' https://blog.fsc.org.nz/guidelines-kiwisaver-serious-illness
24 Aug 2023 - The Reserve Bank of New Zealand has published new statistics from the monthly Loan-to-Valuation New Commitments Survey. The Loan-to-Valuation New Commitments Survey collects data from registered banks on new mortgage lending commitments during the month. On 31 August, RBNZ will also publish new statistics from the Bank Balance Sheet Survey (BBS), making more data available to all users on their website. The Bank Balance Sheet Survey collects data from registered banks on non-performing loans (impaired or more than 90 days past due) and provisions (for potential bad debts) across the banking system. https://www.rbnz.govt.nz/statistics/series/lending-and-monetary/new-residential-mortgage-lending-by-loan-to-valuation-ratio
24 Aug 2023 - The Reserve Bank of New Zealand has completed a review of its Connected Exposures policy; the finalised policy has now been published and is expected to come into effect on 1 October 2023. https://www.rbnz.govt.nz/hub/news/2023/08/connected-exposures-policy-finalised
24 Aug 2023 - The Australian Prudential Regulation Authority (APRA) has advised it will suspend the release of the September 2023 editions of the quarterly insurance statistical publications ordinarily released in late November 2023. https://www.apra.gov.au/news-and-publications/apra-suspends-publication-of-next-quarterly-insurance-statistics
24 Aug 2023 - Today, the privacy protection authorities of New Zealand, Canada, Australia, the United Kingdom, Hong Kong, Switzerland, Norway, Columbia, Morocco, Argentina, Mexico and Jersey are issuing statements on data scraping, and how the public can protect their privacy. https://privacy.org.nz/publications/statements-media-releases/new-zealand-part-of-global-effort-on-data-scraping/
25 Aug 2023 - ASIC has welcomed three new Commissioners to ASIC - Ms Katherine O’Rourke, Mr Alan Kirkland and Ms Simone Constant https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-229mr-asic-welcomes-appointment-of-three-commissioners/
25 Aug 2023 - Chapter Zero has published an article on 'Data-driven decisions: Governance outtakes' https://www.chapterzero.nz/news/data-driven-decisions-governance-outtakes/