This episode is also available as an audio podcast. Listen now or download using the controls below:
The “distressing imbalances” were identified in a recent adviser survey run by Chatswood Consulting to analyse how different insurers offering income protection underwriting have responded to the covid crisis.
The issue is of particular concern for New Zealand insurers after the Australian Prudential Regulation Authority (APRA) launched an intervention into the life insurance market in response to heavy losses in individual disability income insurance, in December 2019.
Hutchinson believes that the New Zealand insurance market may need to respond in kind and that what we have seen happen in Australia is a “big change of circumstances” for the sector.
But this does not mean getting rid of income protection as we know it. Hutchinson in fact has a vision of income protection underwriting as a key product for future advisers helping their clients navigate such uncertain times.
“It can be a sustainable product, but fundamentally we have some things to address. That’s what APRA is saying in Australia. People are not different across different markets. I would be surprised if we did not have at least a portion of the problem here that APRA is dealing with in Australia.”
This issue needs to be addressed sooner rather than later. Hutchinson points out that “by some measurements only 15-20 percent of the working market buy income protection cover. That’s too low. More people should have this cover.”
But the issues stopping more people from acquiring IP cover are the same imbalances that are rocking the market for our Tasman neighbours. “Some people are getting Rolls Royce cover, and other people are getting nothing.”
Hutchinson suggests that a medium needs to be found if the cover is to survive, requiring big changes to be made in client access and the very nature of the income protection cover.
For the full story, watch this video
To read more, click here
« [GRTV] Boyle on KiwiSaver changes | [GRTV] The winners and losers from Covid-19 » |
Special Offers
Sign In to add your comment
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved
Maybe some of the things to debate are: should we have ratios of 40-45% as mortgage repayment where ACC is not offset. Should we have product paying out for broken bones when a client is actually not off work.
If you are an adviser with a client on claim receiving these then absolutely we want this for them however as people do age , costs balloon could we remove these features.
I agree the Rolls Royce product is not always sustainable all but desirable.
Also can we do more around mental well-being when clients are on claim. Advisers involved in the claim experience can make such a difference here. Absolutely wholeheartedly agree a number of claimants experience longer periods on claim when mental health comes in as a secondary condition.
We need to do all what we can to ensure our reinsurers know we are still a different market to that of Australia. Where a lot of their income product is now included in their supers and or with little or no underwriting we don’t experience this in NZ our product generally is fully underwritten. It’s a great conversation Russell and Phil thank you.