New online venture offers cheaper Sovereign and OnePath cover

Awful awful awful! Why would any insurer support this venture?

I agree Bill. Any insurer supporting the belief that the client themselves is knowledgeable enough to determine what cover they actually need is just going to see more business placed with other providers as a consequence. OnePath this is a sure fire recipe for alienating advisers against recommending your products to clients. Dumb!

I would love to know how he knows what premiums will be in 20 years. Am sure the actuarial departments of said insurers would like to know too.

Am also curious about what the terms and conditions of this rebate are for the client? If they are paying out of their commission, are they locking the clients in to a term to avoid writebacks? No mention of anything on the website.

To quote Des Morgan: "plus by building up a database of members he said he is able to negotiate better rates with the insurers."
This is very interesting as his lead Insurer Sovereign states categorically that it DOES NOT discount premiums; one rate for the market. Someone is telling Fibs........is it Des or Sov???

You make the assumption Bill, that rebating doesn't happen off-line. That said, I don't believe I've seen a more unprofessional, clunky and ugly looking website than Des'.

I agree with Johnny - terrible webpage. Further to that - don't drag OnePath's name down with Sov's if you only provide information around Sovereign on the website.

Also agree with Common Sense - no one can give accurate 20 year premium projections, they will be an incredibly rough estimate at best.

Shame that good quality providers like OnePath and Sov get dragged down by external adviser's like this.

Interesting feedback given that the banks are selling bucket loads of life insurance with little advice. Insurance companies are now dealing direct with outfits like the Warehouse(no advice)and many brokers are already offering cash rebates for purchasing online. To think that consumers are not intelligent enough to complete their own needs analysis is absurd. Getting real life insurance can and will be purchased online in ever increasing numbers, but there will always be a place for a good quality adviser that has a value proposition, and the value proposition is being able to give somebody completely unbiased advice not necessarily moving the client from one company to another.

Just to clarify the following statement was taken out of context "plus by building up a database of members he said he is able to negotiate better rates with the insurers." We are not looking to negotiate better insurance rates but discounts on a range of other products and services for our members outside the insurance industry.

Questions:
1. Didn't OnePath change their product offering via the IFA market to stop offering stand-alone medical cover?
2. What then drove the change to remove stand-alone cover - was it claims, pricing, cost of underwriting, or making room for the direct channel?
3. OnePath’s Trauma rates well, so why would you split cover between two companies?
4. Has Des not realised that OnePath used to offer a bundled discount on the medical premium that reduced the medical premium by @ 15% if taken with another risk benefit?
5. Presumably, the stand-alone medical premium with OnePath would have to be more than you can quote in their software, which forces you to bundle?
6. To access guaranteed wordings and non-pharmac drugs, you need to have the ‘Major Medical Deluxe’. Do we all assume that the deluxe model will be quoted by default will be quoted on-line, and not the standard Major Medical?
7. Wonder how loyal a client will be when they realise that they are paying two policies fee’s if they take medical with OnePath and other risk with Sovereign when they could in fact combine medical and trauma with the likes of Partners Life, pay one policy fee, get a discounted medical premium for having it bundled with risk, or even worse, pay one policy fee by combining the cover with OnePath?
Skeptic, the underlying rates will not be different, just that the client will do all the work, get no advice, and the adviser gets full commission. The adviser then uses a % of the commission to pay the ‘cash-back’ to the consumer.
Common Sense. The following is a cut and paste from the website:
“If you pay your premium yearly in advance a cash rebate equivalent to the first years premium will be credited to your bank account once the 30 day free look period has expired.
If you elect to pay your premiums fortnightly or monthly a cash rebate equivalent to 30% of your contracted premium will be credited to your bank account as premiums are paid for the first 12 months once the 30 day free look period has expired.”
I would also be wary of the statements on the website. According to the ratings from Strategy (those issued in December 2011), OnePath only rate ‘A’, not ‘A+’. Only Partners Life and Accuro rate as ‘A+’.
Last observation, relates to the statement from Des about knowing what the rates will be in 20 years. Unless you are being offered guaranteed rates from the insurers, it seems somewhat misleading to suggest that you are able to predict what the rates will be in 20 years.

I really don't understand why Des gets this type of attention on the Good Returns website (or why he would want it - which he clearly does). His online ventures are very poorly put together, and it is clear that he has no idea what he is doing in the online space. If one of his ventures becomes even moderately successful then that would be the time to write articles about him.

Correct Annon, which makes it even more laughable that bricks and mortar brokers are scared of losing business to him.

Yes it is an industry of replacement business. It is something that used to be treated as blatantly dishonest, but now it is "in the clients interest" All it does is load the premium and keep shonky brokers in business. Over 80% of business and therefore commissions is from recycled policies - if the insurance companies don't do something about it - and they don't seem to want to - then a Government agency will. Then it will be a sorry industry. As it is the Banks now control the main share - SAD

I am extremely dissapointed to hear that Sovereign would agree to do business like this. They have always said that they like their clients to get the best of advice. This does not fit with their attitude to the new regulations. I have been putting business with Soverign almost since day one & am not impressed with this move.

Leave Des alone - he's been to madam fortunes the futurest and can predict how the banks will operate in the future but !!!!
be careful Des, ANZ has just announced that its going to sack a whole lot of people - you might be next!
And our friends at ASB - allowing 50%.Mmmmmmmm - Do they get an agency with the fries & where everyone gets a bargain

Having looked at the site, i agree with Bill and Annon, its awful and badly put together. From what i hear OP were not aware of the venture before Good Returns gave it the publicity they did, but i bet they not too happy with material taken straight from their website. If Des wants to market himself better and be taken seriously in this market, then he really needs to step up the quality somewhat. Would give it 1/10 for presentation.If this is the best he can do then we have nothing to worry about, but i would ask that Good Returns stop giving Des the publicity he and his Online ventures don't deserve.

Johnny - the reason many are scared of losing business to the on-line syndicate is that the public have been educated to accept cheap, discounts, bargains, and low cost - NOT quality. Consider the Warehouse versus Ballentynes, and who is most popular. As much as I hate fee-based advice, especially in the area of Risk, I wonder how the likes of Des Morgan and Pinnacle will survive should commissions ever be wiped...

Just a thought.

Much as the concept of paying people to take a policy makes me cringe; One might think that some here are over-reacting to this new version of an old idea. Online sales have been around for some time, and we (the advice/relationship selling model) have coped just fine. Perhaps the direct model is more likely to take some business off the banks, the Warehouse and such like, not us. And the direct model is not terribly popular right now - so "ever increasing numbers" is the only option, because so few are actually doing it! Pinnacle is bottom of the table on here:
http://www.goodreturns.co.nz/article/976498831/partners-life-figures-revealed.html

Can I say that there is hardly anything in this world that some man can make or provide a service that is a little worse and sell a little cheaper, and the people who consider price and price alone and this man's lawful prey. The way we used to do business is slipping away, the new generation buy on line they want it now. I have seen a lot of changes in my 54 years but unlike Kodak, we need people that recognise that change is upon us for there is the new market to be tapped into. Good on you Des.

Looks like a handy do it yourself wordpress blog, may appeal to some?

Why would a young person entering our profession want to be bothered with having to spend hours of their personal time learning and achieving the current industry standards ,i.e. sitting examinations, paying registration fees to Govt and others including other added costs when people can go online, assess their own insurance needs and now assisted by the big Insurers. They expect support from us and for us to give correct advice to their clients. Maybe,we the adviser should set up our own insurance company.

Rebating premiums in the first year sure looks attractive to a potential buyer - who could argue with that? But, when Month 13 rolls around and that 30% rebate ceases, what will his persistency be within 6 months?

Touting Onepath with this significant liability in the offing seems a little short-sighted.

As the banks already know, price-based purchase decisions are highly vulnerable to changes in costs, as well as to poaching from other supliers.

If Des's persistency falls to that magical 83%, from where will he fund the generous rebate?

"Wondering" stated that Accuro have an A+ rating - DO THEY and if so where do you get this info. I don't think they have a rating at all !!!!

Is there anyone on this blog that isn't an old school insurance broker with a vested interest???

I like the idea, Des, good luck to you. I'm a lawyer, and saw all the same arguments about the setting up of conveyancing shops. Most lawyers arguing that conveyance's could not handle people’s needs - because they 'didn't have the legal knowledge and experience'. What they were worried about, of course, was their bottom lines. Well the rest is history, conveyance's can handle house sales and purchasers, wills, basic trusts, simple leasing, etc, and lawyers have lost their core cashflow streams. Lawyers are now having to specialise in areas like construction, IT, business structure to remain relevant. Is this a bad thing? Depends which perspective you choose.

You have to innovate to succeed in life, and I for one will be using a service like Des's in the future.

Greg a conveyancing shop is a bit different to offering no advice discounted life insurance website. How do you feel about cheap online wills and trusts?

Well said Broker.

Lindsay: "Wondering" referred to the Strategy rating of policy wordings. These are available to advisers, updated monthly, and give the adviser some basis for selecting products. Check out www.strategyfinancial.co.nz

It is incredible to see the amount of concern on non-issues that have been around for so long, rather than dealing with current issues like churn and the ability of some advisers to make huge amounts of money with the aid of an insurer.

The tagline on the website "PAY THE LOWEST PREMIUMS IN NEW ZEALAND" I believe the first thing that should concern most is the misleading tagline quoted.
This is misleading and incorrect, they still pay the real premium(not cheapest in NZ) and only get a rebate and then just for a year. The premiums are the same as anyone else. I would suggest this is in breach of the fair trading act. To give genuine cheaper premiums the premiums paid ongoing must be cheaper.
I see that Endeavour Financial Services Ltd is actually behind this and one of the things Gerry from Endeavour proudly told me at a Sov roadshow was that they would get appointments telling potential clients they could save people 20% on their premiums and give them Pinnacle Life. If they could actually do better from another carrier say Sov,then sell them Sov product and get paid more, only to go back 18 months to 2 years later and sell Pinnacle 20% cheaper and get paid again. I was offended that he would even tell me this thinking that I would believe this behavior to be OK. I am sure it is the same deal here. Probably make the same offer of 50% rebate in 18 months with another carrier and get paid again.

Mark We do not have a Gerry? working for us. We did have an agent named Gerry who represented us as an gent briefly over 3 years ago. The only person who promotes Endeavour Financial Services is me and I find your comments regarding our company bordering on slander. I have taken on board your comment about the slogan and have altered accordingly.