Partners Life loses staff
Changes to the way medical insurance commission is paid have led to the loss of eight jobs at Partners Life.
Friday, April 26th 2013, 6:00AM 
27 Comments
by Susan Edmunds
In September last year, the insurer axed upfront medical commissions in favour of as-earned commissions, because it was getting higher volumes of medical insurance than expected.
A lack of reinsurance financing for medical insurance meant that commission payments had to come out of capital.
The company had been on track for $50 million in issue premium last year. “That’s too hot when you are paying upfront medical commissions.”
Instead it had $37 million, managing director Naomi Ballantyne said.
The change led to a slow-down in business, which had prompted the restructure.
Ballantyne said seven months had passed and it was an appropriate time to consider how the firm’s budgets were being spent. “Expenses were higher than they should have been for the volume of business… efficiency is a serious part of our strategy.”
Partners Life’s headcount was reduced by eight, although the number out of a job was higher than that as senior underwriter positions were replaced by more trainee underwriters. Other people made redundant included sales administrators and operational roles. “We picked places where on balance we felt we could do without one of the jobs.”
Ballantyne said the company was sad to have lost people. “The restructure is difficult for everyone but particular for those who haven’t got a job and hadn’t done anything wrong.”
But she said Partners Life had to be sure that every dollar was spent properly.
| « Let's reframe under-insurance debate | Partners Life rejects restructure scepticism » |
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Comments from our readers
On 26 April 2013 at 8:16 am Paul Charles said:
I have to say I am somewhat surprised that the unfortunate loss of eight jobs is being totally blamed on the changes made to their health commission - which was after all, nearly 8 months ago now.
Perhaps the pot of gold at the end of the rainbow is getting a little empty?
On 26 April 2013 at 11:09 am Vinnie said:
Correction from myself - I mean paying claims for decades (not claiming claims for decades). On 26 April 2013 at 11:36 am charlie said:
Good price, good policy words, high medical limits, and a company ready to accept a policy from anyone. No wonder they have been successful.
Other than the small fact that the book is based upon churn so I guess after 2 years the easy in businesses is now and easy out business....I guess the oldsaying of living by the sword is true here.
On 26 April 2013 at 11:40 am wondering said:
I agree with Vinnie. Wondered what would happen when the twisting stopped and growth returned to normal?
Hope they don't come unstuck as there will be some advisers and a dealer group in deep trouble as they try and explain this to their cleints.
On 26 April 2013 at 11:54 am Confused PL Supporter said:
I have been a supporter of Partners Life over the 18 months. However I have to agree with a few of the negative comments on this blog.
Dropping eight staff after changes to health insurance commission?? WTF?!
Partners keep telling us how well things are going and how they are still growing. This kind of action makes you wonder if you are hearing the truth?
On 26 April 2013 at 1:57 pm Broker said:
You can't blame them for not wanting too much medical insurance on the books - and you also can't blame them for managing their expenses...smart if you ask me... On 26 April 2013 at 2:02 pm Zak said:
To grow as fast as PL has in a market growing at CPI can only mean one thing 'business was being replaced from other providers'. With the low hanging fruit picked the game has become harder and doesn’t look any easier with judgement from the Reserve Bank on Financial Strength using the reinsurer not far away. On 26 April 2013 at 2:06 pm Aibee said:
So some of the brokers who recommended the Partners Life Private Medical policy as the best option when they were receiving up-front commissions no longer do so, mmmmmm.......interesting. On 26 April 2013 at 2:51 pm Janie said:
Vinnie
I was saying this very thing 2 months ago and got shot down in flames. If it looks too good to be true it usually is..... and all those other tried n true cliches.......
AS I said then and will always maintain - it's the claims experience that matters for my clients.
On 26 April 2013 at 3:57 pm MichaelL said:
Best policy wording in the market, very competitive pricing and decisive management that will take action to keep the company's balance sheet strong, sounds like a winner to me. On 26 April 2013 at 3:57 pm James said:
Aibee - you sound like a "Newbee". Of course that's the way it rolls. Sad, but true. On 26 April 2013 at 4:08 pm Giles Thorman said:
Sorry if I am being a tad cynical but this just smacks of spin to me.
Why make any mention of changes to commission when answering a query about making staff redundant? Since when have senior underwriters been required to underwrite medical insurance?
As Aibee above states, either the Medical product was good enough to be recommended or it was not; regardless of how the commission was paid. Otherwise there are a LARGE number of Partners Life Brokers who were recommending a product for the wrong reasons and they have now reverted to using companies that pay up front commission on Medical Insurance. Not a good look for Brokers meant to be working in the clients best interest surely?
According to my Maths that means that Partners Life are claiming they have not written 13 million in premium purely because they stopped paying up front commissions on Medical Insurance 8 months ago. I would also suggest that those 8 staff were being worked to death if they were expected to underwrite and process 13 million dollars worth of New business all on their own; they likely need the rest!
That is a lot of Medical Insurance. That is a very big claim.
On 26 April 2013 at 4:37 pm Amused said:
To hear that some advisers might have stopped recommending Partners Life to their clients based solely on them no longer paying up-front commission on health cover really worries me. No scrub that. It actually makes me very mad. Are these “clowns” really working in this industry for themselves or their clients?
If these idiots had half a brain they would realise that "as earned" as opposed to "up-front" commission on medical can be extremely lucrative for an adviser over time. Clients who decide to actually pay for private medical cover through a health insurer are likely to have their policy in place for a considerable amount of time. Anyone who has been in this game for a while knows that. That makes “as earned” on health very very attractive to advisers.
I think it’s only a matter of time before other health insurers adopt the same stance as Partners on health commission to keep things affordable for all concerned. It was a smart move back then and it remains so.
On 27 April 2013 at 6:36 am Paul Charles said:
Amused - I can only assume the words "clowns and idiots" are technical words in your world?
My post makes no mention of the fact that I disagree with a level commission arrangement - in fact I actually agree with you and have for many years used the commission options available from the carriers I use and have now built a very good passive income stream.
What I was saying however, is that I find it very incongruous that PL can blame the demise of 8 positions solely on their decision 7 months ago to change the commission structure on their health product.
If you have taken the time to read all the comments posted here I am sure you will see a common (and repeating) theme, and clearly see there are other issues PL are dealing which make the their health insurance commissions irrelevant.
On 27 April 2013 at 12:41 pm MGGray said:
Have to agree that blaming Brokers no longer supporting an up front commission structure for medical covers .Then this has caused job losses etc.
Insurance Co Management love to pin something on the distribution & sales sector.
Why then I ask has Southern Cross, Accuro and others far bigger than PL in the field of Health covers not been throwing out statements, yet pay no up front commissions.
On 28 April 2013 at 9:57 am Dirty Harry said:
I think many of the above comments about sum it up. Drop or change commission and the flow of business changes - anyone remember "rockit rewards?"
All kinds of records were smashed. Dorchester tried as-earned too - where'd they go? Tower are doing some kind of 20% thing right now - who would've thought they are short on new bus right now...
But Giles really nails it. Something else is going on.
On 28 April 2013 at 2:42 pm Voice of gore said:
Trust RBNZ are awake monitoring the whole industry to help avoid any train crash. On 28 April 2013 at 3:33 pm liam said:
Spin from PL going awry.
Will be interesting what spin follows over this year and next.
On 28 April 2013 at 8:13 pm Lindsay Strathdee CLU said:
Not concerned to use my real name ;
My partners and myself have decided some time ago to provide the best for our clients. With the well provided omissions provided with other products taking as earned on medical is quite affordable when it is with a company that guarantees no changes to its policy wordings.
I support Partners Life as a product that has an option to increase client excess to $10 k thus allowing my older clients to maintain cover when they will have the most expensive operations.
On 29 April 2013 at 8:11 am Janie said:
Exactly my thoughts "Voice of Gore" - there's more to this than meets the eye.... On 29 April 2013 at 10:09 am Ray Lewis said:
Nice to see you back Janie. You weren't shot down like you claim. You were merely asked a question, which to this point you haven't been able to answer. So, let's try again shall we?
Prior to having your first claim how did you determine which company to place business with? Logic says you couldn't base it on claims experience as you didn't have any.
On 29 April 2013 at 11:38 am Giles Thorman said:
Unfortunately Ray I did not see the article from 2 months ago where Janie states she was "shot down in flames", so my comments might be a little skewed because of that, apologies if they are.
From what I can surmise you asked the question of Janie when Partners Life were being discussed a couple of months ago as to how could anyone use "claims experience" as a basis for placing business with Partners when they had in fact not at that time paid any (or very few) claims. Is that correct?
I would suggest that every Broker uses a different method to determine with whom they place business (otherwise we would all use the same company/ies).
For myself I look at and compare the following A/ Premium B/ Policy wordings C/ Claims paying ability (credit rating) D/ Attitude towards paying claims and E/Company ownership; are the shareholders long term investors and what might they be willing to sacrifice in the future;are they stable?
Possibly Janie uses a similar method to this and not being happy about D felt she could not support Partners Life, that is her prerogative. If on the other hand Ray you are possibly happy to look past both C and D, that is also your prerogative. I suggest however when premiums can change on 30 days notice and policies can be closed to new business and a small company can be sold fairly quickly that deciding to place business (particularly Medical business) solely on A and B could perhaps be just a little risky.
On 30 April 2013 at 9:46 am billy the broker said:
Well you have a lot agreeing with you Janie...NOT!! I'm sure your clients are happy to have the best policy wording out there,that won't be changed. But Mr Punter is going to be real happy when his $50,000 operation is declined cos they have no money in the pot and the re-insurer is not going to bail them out. Like the people are saying "the historical claims history". Hope your PI cover is in place with a good disputes resolution behind it....I mean its like taking a joyride on the Titanic!!! On 3 May 2013 at 8:55 am Kane said:
Perhaps the theme song for the PL Hawaii Convention could be, "twisting by the pool" by Dire Straits? On 3 May 2013 at 2:54 pm Top Gun said:
Na I'd prefer 'we are the champions' by Queen... On 7 May 2013 at 11:23 am Bob said:
The issue here is an industry wide issue with regard to churning and unless the industry bands together to form a committed stance this behavior will continue. Or the regulators will do it for them.
There are many ways to control excessive churning notwithstanding that there can be at times genuine reasons for replacement of a policy and/or insurers. Documented evidence with product comparisons and recommendations would possibly satisfy any scrutiny.
In some countries any existing business replaced with another insurer will earn only either a reduced commission or be placed on a renewal basis for commission (renewal or service commissions being another subject entirely).
Under the Financial Adviser Act (2008) we are required to act with care, diligence and skill and when called to prove same by a FMA Inspector will need to be able to show the clients best interests were taken into account. Being unable to do so will have severe ramifications.
And finally this is not necessarily a Partners Life issue but an adviser issue where we need to be sure that our clients best interests are paramount to our own greed.
Bob
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I have always (and will always) maintained that irrespective of all the hyperbole about how great it is having PL as another option in the market and all the blah blah blah, I would rather have my clients with organisations that have been operating with robust and sound balance sheets, and have been claiming claims for decades and decades.
No doubt my comments will attract some response, however I would suggest all look at the facts here and draw pragmatic conclusions.