New Zealand’s insurance industry is too focused on the potential problems with replacement insurance business, and not thinking about the good reasons why it might occur, Katrina Church, head of client engagement at Insurance People, says.
Church said there were many old policies in the market that were not serving clients well.
“The policy wordings we have today are so much more flexible, but we're not actually discussing that. Setting a standard, helping our clients de-risk and just making sure that they have a better outcome.”
She said the regulators did not understand the issues when they tried to crack down on the perceived problem.
“They’re in a position that they need to be in, but I'd really love them to come and walk in my shoes. Walk in my shoes when I have a phone call from a client who has breast cancer and I have to sit there and think which wording is she on? Is it stage two? Is she going to get a full payout on her trauma cover or is she not going to get a full payout on her trauma cover because the reinsurer's changed and the wordings aren't improving.
“Look, there are some claims in the industry that do not get paid because someone has moved someone from one insurer to another. It's going to happen. We've got to learn how to mitigate that, how to de-risk that. And that's the message I think we should be talking about.”
She said Insurance People had a robust process for replacement business that was hard for some advisers to follow.
“There's a big engagement around what covers they do have. Really good analysis around whether or not it's fit for purpose. All of our statements of advice will actually offer staying where they are as well as improving their situation to potentially other insurers if it warrants. But when we get into the actual underwriting stage that's where all the information comes out.
“I encourage my clients to get hold of their own medical notes so that they themselves can understand what their doctors have been writing about them. Because invariably they just don't know that their doctor noted about [perhaps] their stress in 2019 – which is a hot topic for underwriters. So we'll get them engaging in that.
“We'll get them understanding. I prefer to do bloods and medicals at underwriting time because it gets rid of issues. And then we'll also get ... every application has to have an ACC claims history and that's gold.”
She said insurers could give a best practice guide to advisers on how they should approach replacement business.
“I want to point out that I don't believe New Zealand advisers as a rule do their business, go about their business every day trying to rip off New Zealanders by any stretch.
“In fact, it's very much the opposite. But we're not good at telling people what we do really well. They tell a story but they don't document a story. And that's the difference ... now that we're going into this new regime.”
Church is also chair of MDRT in New Zealand. She said advisers could qualify if they had earnt $140,000 of commission income.
More could be involved than currently were, she said, and it could have significant benefits to them.
“I love the fact that I'm sitting down with practitioners from around the world that are also going through elements of what we're going through with regulation. Some are a lot further down the track than what we are. So you're garnering a lot of information there. But to be fair, and I've said it to you before, it's chicken soup for the soul. In New Zealand you're busy, you're going about your business, you're doing all the things you do. You never take enough time to fill your tank up.”
Read the full interview here.
