Adviser feedback spurs AIA coverage updates

AIA NZ's recent overhaul of its critical illness insurance buyback options gives customers a 60-day window to reinstate their life cover immediately after making a claim. It has also expanded its out-of-hospital cardiac arrest definition to include more types of evidence.

The changes, which took effect in May, apply retroactively to existing policies dating back over two decades. With a high cost of living and insurers straining under rising medical costs, AIA says its updates aim to “make sure that insurance is affordable.”

"We know that many of you [advisers] have been asking for these types of enhancements. We have listened, and we are on the move with you," says Aaron Gilmore, AIA national sales manager for retail.

The enhancement works by offering customers three reinstatement options after a critical conditions claim: immediately (within 60 days), at six months, or at 12 months. For those choosing immediate reinstatement, they receive accidental death coverage only during the initial 6-12 month period, with full coverage resuming afterward.

For cancer claims, customers who reinstate immediately face a 12-month exclusion on all cancers from the original claim date.

“AIA’s stand-down for cancer is a market-leading 12 months, and new and unrelated cancers are covered after that period,” Gilmore told advisers at an Adviser Connect webinar.

“That’s a special thing that we can offer, and we’re happy to support you with those conversations. With your financial advice, your clients will know that they’re choosing the best solution for what they need.”

Sums insured on the rise
The product changes have come as insurers face mounting pressure from rising healthcare costs and claim volumes. Travis Higgins, AIA's head of claims, said the challenge is sector-wide and substantial.

He also noted that due to inflation, AIA’s sums insured have naturally gone up.

“We're not the only health insurer in the market that’s been challenged by increasing costs and increasing volume,” Higgins said.

“A lot of our products are tied to CPI, which does obviously increase the sums insured on an annual basis. Then you have special events increases, whichis tied to things like having a baby. This means that we are starting to see sums insured increasing over time.”

AIA is also targeting what it sees as the root causes of claims. It cited its 2021 5590 research, which showed that five modifiable behavioural factors - smoking, unhealthy diet, lack of physical activity, excessive alcohol consumption, and environmental interactions - contribute to 90% of deaths in New Zealand for under-70s.

Gilmore said that AIA’s wellbeing program - Vitality - has been designed to tackle some of these issues, and the insurer has long seen it as a win-win.

"You can almost draw the line from those modifiable behaviours through to the non-communicable diseases," Gilmore said.

"I know that for some of my dear friends, some of these choices have gone on to become real issues for them. But I've also had friends who changed those modifiable behaviours and have started to see some changes."