Customers not shaken, or stirred, by churn debate

The churn debate has been stirred up again in the wake of Investment Savings & Insurance Association (ISI) figures which revealed a drop in new business for OnePath.

Friday, March 9th 2012, 1:40PM 10 Comments

by Benn Bathgate

Widespread industry speculation suggests Partners Life - whose data is not included in the ISI figures - has been the main beneficiary.

Yet according to the main disputes resolution schemes and the Financial Markets Authority (FMA), while a hot button topic among advisers and insurers, the issue barely registers with consumers.

The FMA's head of primary regulatory operations, Sue Brown, said "we have had feedback from industry, and a few complaints" but that the topic is only an issue within the industry.

She said churn wasn't an issue picked up in the monitoring visits conducted so far by the watchdog but that insurance advice, including product replacement advice, "may be a theme or targeted area in the future."

Financial Services Complaints (FSCL) general manager Trevor Slater said it had only received one enquiry on the issue, which was resolved before reaching complaint status.

He said an adviser moved a client from one insurer to another with an increased level of cover. However, when the client wanted to cancel due to increased premiums they discovered they would have to pay a "substantial" fee to the adviser.

He said that while the fee had been disclosed, FSCL deemed it inappropriate to the level of service and believed the new policy provided more cover than required.

No further action was taken after the adviser agreed to a settlement on a lower fee.

Financial Disputes Resolution (FDR) said they had received no complaints and Insurance Savings Ombudsman (ISO) Karen Stevens said that while problematic in the past, "it hasn't really been an issue recently."

She doesn't believe the lapse in churn complaints is linked to new adviser regulations.

"There hasn't been any noticeable change at all because of the new adviser regime," she said.

Stevens conceded the debate can get complicated when the term churning - which she describes as "conveying the worst aspect of changing a customer from one policy to another for the wrong reasons" - is used to describe legitimate policy replacement.

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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Comments from our readers

On 9 March 2012 at 9:43 pm billy the broker said:

If you find some business with the bank with a punter..you will have to be brain dead if you can't move it. As they have rubbish service and rubbish product..And depending where it is you can move it internally with no underwriting...Shame the insurance companies don't pass these free gifts to us...the people who suffer are joe smith out there:( What a shame.

On 13 March 2012 at 11:19 am No show said:

Bob the broker, I find your comments above some what misleading. Most banks now use main stream insurance companies products etc when providing a service to their customers. Also your suggestion that the banks provide "rubbish" service would suggest you need to move banks. I deal with two banks and I have to say that the service they provide is great. I think that you are stuck a little in the dark ages. Good luck with replacing business.

On 13 March 2012 at 8:01 pm 6ftndr said:

Banks should stick to banking, end of story.

On 14 March 2012 at 2:09 pm Giles Thorman said:

I think when the Banks own several of the Insurance Companies in this country that "Banks should stick to banking" is highly unlikely. I would also ask why should they? We do not have a Monopoly of the Industry and neither should we. My criticism of the Banking Industry entering the Insurance field is that they invariably employ a Banker to do the Insurance job.
This means the job quite often (I am talking Insurance here not Investment and even then, NOT ALWAYS!!!!!)is below par and only partially completed. Mind you from my perspective that is marvelous as it means what could be some very serious competition seems to fail; long may it continue.

On 14 March 2012 at 10:35 pm Graeme Lindsay said:

Billy the Builder: if you want to be taken seriously, I suggest that you cut the generalizations and start to consider your client's best interest rather than a sale at any price. Many bank Life covers are competitive with non-bank life insurers, and if you churn, then I wouldn't want to be your professional liability insurer!!! And as for suggesting that insurers should "pass these gifts on to us" I find that offensive. Professional life brokers don't need or want 'free gifts' from insurers - they are perfectly capable of attracting introductions from clients to new prospective clients without free gifts from anyone. They earn them by providing professional advice to clients!!!

On 14 March 2012 at 10:46 pm Graeme Lindsay said:

@6ftntr: we live in a global village which means that ownership of assets is and wil be international. Similarly, ownership will be spread -insurers will be owned by banks and others, BUT insurers will own banks and other businesses.

Get used to it -it's not going to change any time soon.

On 14 March 2012 at 10:52 pm Graeme Lindsay said:

@Giles: I agree with your post - the inescapable conclusion that the banks that buy insurers haven't realised that the cultures are quite different and persist to appoint banker people to run insurers beggars belief. You'd think that they might have learned that the fool learns from his own mistakes, the wise man learns from the mistakes of others...

On 15 March 2012 at 1:12 pm billy the broker said:

@Graeme....and no doubt your software will show me this.....no thanks....good luck in your ivory tower!Curious actually..what is offensive of getting a few dated old bank policies that can be dealt with the same insurer and turned in to a better contract...or can your brain not comprehend that...its called giving value added service Einstein:)

On 15 March 2012 at 10:52 pm Ron Flood said:

Billy the Broker. Isn't it easy to run off at the mouth when you don't use your real name? "Can your brain not comprehend that" is hardly appropriate in this forum.

On 16 March 2012 at 2:24 pm billy the broker said:

@ Ron....yes it is actually...You are a good guy ex Provident life...but get sick and tired of some other people who preach!! been in the game a long time as well...I will reveal myself eventually:)
sick of the big heads who think they know everything!! Its a people industry?? or have i got it wrong, and just flog some computer software at them?? Am I wrong??

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Customers not shaken, or stirred, by churn debate

The churn debate has been stirred up again in the wake of Investment Savings & Insurance Association (ISI) figures which revealed a drop in new business for OnePath.

Friday, March 9th 2012, 1:40PM 10 Comments

Comments from our readers

Commenting is closed