Partners backs direct insurance offering

Volo Lifestyle Cover is billed as insurance policy that is designed especially for 18- to 35-year-olds, and is available from 50c a day.

There are no health questions for those taking out the cover but pre-existing conditions are excluded, as well as some occupations and pastimes.

It would cost $56.25 a month to get up to $90,000 of cover. The cost of premiums is tied to the level of cover required, not the insured customer's age.

Volo offers one policy to cover surgery, major health events, cancer, permanent disability, fractures and temporary disability. The amount that pays out for each event varies. In the case of someone earning $60,000, payouts range from $7500 for temporary disability through to $90,000 for cancer or permanent disability.

Partners Life managing director Naomi Ballantyne said her company was underwriting the product for Volo’s parent company, Mosaic, to distribute.

“It’s very exciting to be involved with this bespoke Gen Y offering,” she said.

But she said it was not competition with the adviser distribution of Partners Life.

“As many GenYers do not buy traditional life insurance products from any of the existing channels, Mosaic have created a specific distribution and service platform for them and we have created a bespoke product to be sold through this platform. As a result we see very little overlap with our advisers and therefore very little channel conflict. Advisers are still able to sell our comprehensive product range to any Gen Y customers they are advising.”

Mosaic says: “Traditional insurance is hard to buy, unsuitable for many target sectors as well as being complicated and expensive. We will disrupt that paradigm by creating new, easy to buy, easy to claim and above all affordable products, designed to suit the customer's lifestyle.”

Comments from our readers

On 8 September 2015 at 11:09 pm Headmaster said:

Despite everything that Naomi Ballantyne has said, Partners Life has caved in to direct sales online:

"Partners Life managing director Naomi Ballantyne also supported increased use of the internet for tasks such as filling in application forms and providing medical notes, but again backed the role of the adviser. "You run the risk of the blind leading the blind, the client doesn't know what they don't know." (Naomi Ballantyne, Good Returns, Wednesday, September 28th 2011)."

"It was a fallacy that people wanted to do things directly", she said. “It doesn’t take them long to realise that it’s more complex than they think. There’s hundreds of thousands of dollars, or even $1 million at stake. Trying to go that quickly without much thought, it doesn’t mix. It doesn’t take most people very long into the process to realise that they don’t know what they’re talking about.” (Naomi Ballantyne, Good Returns, Thursday, July 31st 2014).

So, "they don’t know what they’re talking about"? Well, it seems all along that they did.

Good thing that successful online sales channels such as Life Direct, KiwiCover and Cigna didn't listen to Naomi Ballantyne. Pity that Partners Life agents did.

Expect more of this in the months and years ahead as Partners Life tries to play catch-up.

On 10 September 2015 at 9:02 am Honestly said:

So when a 35 year old's insurance policy ceases good luck to our gen Y. Trying to get full insurance at age 35; with a potential list of exclusions and increased premium. And Loadings. I sell Partners Life - not a happy broker, all of the promises of never selling direct mmm right oh.

On 10 September 2015 at 10:01 am Dirty Harry said:

I don't have a partners agency. I have never sold a Partners policy. If I did, had I believed Naomi before today I would be among those who feel betrayed by this move. And perhaps a little chagrined if I hadn't seen it coming.

I still have lots of Sovereign and OnePath policies though, with my persistency at 92% and 98% respectively. How many big Partners writers have strong persistency in their other agencies?

My thoughts on insurance for "millennials".
They are coming into buying age, as the baby boomers are retiring. The average age of buyers is falling as the average age of advisers is rising. Surveys and research coming from both Australia and the US shows they want advice, they want personal service and they want to look after their personal finances. Gen Y is the most educated and financially savvy generation the world has ever had. They don’t go for the tricks, gimmicks and ideas their parents did, and they don’t go for inferior product or providers they don’t trust.

But Insurance is not hard for them to buy.
They don't have the costly premiums and health complications older buyers have.

Insurance is not complicated.
It's not. They need some lump sum stuff, and maybe health (or FIO) and income cover. The complication comes from the insurers themselves pumping unnecessary "features" into their products, and/or having multiple versions of them. Partners are one of the worst for this.

And as for "traditional insurance" being unsuitable. Meh. Tell that to the 19 and 20 year old couple, the 21 year old farmer, the 20 year old first-time flatter and the 24 year old first-house buyers, the 25 year old realtor and 24 year old photographer I worked with over the last few months.

The real issue is ageing traditional advisers. Millennials don’t want to buy insurance from someone who is as old as, or older than, their Dad, who looks and thinks like their Dad and has the same lack of understanding of them, as their Dad.

They also dont want dumbed-down over-simplified insurance that comes without personal advice and will let them down when the proverbial hits the fan.

On 10 September 2015 at 10:12 am Tash said:

How on earth does Partners Life's support of the likes of this new lot affect independent advisers? As long as their product and remuneration stacks up this is irrelevant. Really
Headmaster! what are you actualy whinging about?

On 10 September 2015 at 11:39 am Observer said:

The whole industry needs to get with the times. The next generation wants to do business differently. Product suppliers meet that expectation or fall by the wayside.

Creating a channel to service the new generation does not mean that Advisers are no longer supported. Nor does it negate the suitability of "traditional" insurance - it just offers something different.

Some readers may remember the good old whole of life and endowment products. I don't think that their passing was mourned ...

On 10 September 2015 at 12:32 pm Pragmatic said:

To all those disgruntled insurance sorts: why do direct sales by insurance companies threaten your business? Is it because you have a sketchy value proposition, and find it challenging to justify the 200%+ commissions?

I’d suggest that disintermediation / direct sales / technology is here to stay, putting downwards pressure on price and upwards pressure on value.

It seems to me that groups like Partners Life are simply responding to the inevitable. The next step will be for top performing insurance agents to start paying for their own overseas trips... but then, that's another discussion

On 10 September 2015 at 4:41 pm Dirty Harry said:

Some of us readers remember ERGO. Some of us know what market share Pinnacle has achieved, let alone Simple Life, countdown life, the warehouse life et al. The only one claiming to be gaining traction is LifeDirect since trademe bought it. What we cant see is their actual numbers of policies sourced, how much is replacement business and what their persistency rates are like.

Bit I don't care. Millennials want to find stuff online, but the jury's out on them buying it there. And even of they do, how long will they keep it?

On 11 September 2015 at 12:16 pm billy the broker said:

Headmaster and Dirty Harry I totally concur with your comments. @ Observer, my friend I mourn the loss of the Whole of Life contract. But hey there is good old level premium to age 80, great policy until you turn 80!!
We know who wins in the pocket with these new contracts and it ain't the punter.

As for you Partners converts how are those shawdow shares looking, what a stroke of genius by Naomi to dangle that carrot to get all that so called new business flooding into her coffers.

On 11 September 2015 at 1:03 pm Donald said:

I would have thought that the best outcome here may be more younger people becoming insured and insurance aware as a result of innovations whether it be product or marketing methods, Partners are just the underwriters not the marketers even though they may have a hand in the design. It is a gap filler not a long term personalized plan, plenty of opportunity always there for the professional adviser.
Billy yes for once you are right, it was a stroke of genius in Naomi creating shadow shares, but an even greater stroke of genius in her hand in creating Partners Life. How's life in Timaru by the way?

On 11 September 2015 at 1:18 pm Pragmatic said:

"shadow shares"??? Isn't that called a conflict of interest? Hmmm - curious to understand what the regulator thinks

On 11 September 2015 at 2:41 pm Future Thinker said:

A huge congratulations to Naomi & Partners Life for thinking outside the box & leading insurance insurance policy into the 21st Century to meet the modern day needs of their clients. We need to meet the market where it is at and not be like ancient educators who were opposed to dropping their talk & chalk in classrooms - they have been ousted out of education now. All industries have to come to terms with modern technology and so do financial advisors. We can either embrace the future of change or go out with the dinosaurs. What was good last year may not work this year - try using your old floppy disk now! I am a financial advisor and am in no way threatened by this, except to say that I embrace the inevitable changes that lie ahead in this industry and look forward to seeing what lies ahead! Well done, I am impressed!

On 12 September 2015 at 10:48 am dcwhyte said:

@Billy - WoL = the most profitable product EVER for life insurance companies. Poor value for money protection levels; worse investment returns
@ Pragmatic - shadow shares = de facto deferred commission, subject to AFA disclosure requirements. The regulator is no doubt well aware of their existence, and has been since inception.
http://dcw1950.blogspot.co.nz/2015/09/much-ado-about-nothing.html

On 15 September 2015 at 9:46 am billy the broker said:

@dcwhyte if you look at a whole of life as an investment product then you are totally missing the point of what the contract is all about.
@ the Donald, this is an open forum so please dont take offense if my opinion differs from yours which by the sound of it it does. So good luck and happy trails.

On 15 September 2015 at 1:16 pm Majella said:

I've just spent 15 minutes on the VOLO site and it's an innovative way of delivering a product to a low-risk age cohort.

Once again, Partners shows the rest f the market how to think outside the box. Congratulations, Steve Wright & team.

The product is a combination of Specific Conditions with some Severe Trauma and highly limited Disability, with Life cover - all based around a stated income.

I checked out a 35 y/o male n/s on SCC at $40,000 (maximum) = $254 pm.

It's a struggle to spend $250 pm at VOLO, but if one has an income of $200,000 (!), one can.

The range of benefits is broad, and their levels are acceptable (2 x income maximum in this case, $400,000).

All in all, it looks like a pretty good offering for what it is - non-underwritten, no smoker/non-smoker or gender differentiation, not age specific but with an expiry date.

If a client were to try to send a Millennial to me and she didn't seem entirely interested, I'd probably direct them to VOLO, and offer to explain anything they want to understand better.(Catch them when they turn 35!)

I wish Mosaic & Partners all the best!

On 15 September 2015 at 5:00 pm dcwhyte said:

Billy - WoL was abandoned because the product represented poor value for money to the consumer.

Irrespective of all the old arguments trotted out, It's gone and won't come back. Even though the product created huge surpluses for the old mutuals, they eventually bowed to progress.

On 15 September 2015 at 8:24 pm Tony Walker said:

@david - Given the longevity of clients lives and the problem created by the industry providers encouraging term insurance as the solution far too many clients have to cancel when they need the cover most. WOL at the correct level did exactly what it was intended to do, provide cover for the Whole of Life in a very cost efficient manner. I challenge the sweeping statement that it represented poor value to the consumer. Insurers looks after corporate profits, advisers tend to look after clients interests first.

It has gone and won't come back, that much is true. As for bowing to progress, if closing a product that seeks to protect clients in their older years constitutes progress then the industry is really in trouble

On 16 September 2015 at 10:23 am dcwhyte said:

Tony - pointless argument as the product is dead and gone, and we're way off topic.

But from my perspective, the changing attitude toward debt and borrowing in society consigned the product to the scrapheap.

People need cover most when they have financial liabilities to cover. One of the most significant financial liabilities these days is a residential mortgage.

Ask an actuary to price a WoL cover, with reserving on a 'with-profits' basis, to cover the average mortgage in Auckland. The premium would be completely unaffordable and very poor "value for money" even if the cost could be borne.

Even if the contract contained rate-for-age mortality to reduce the premium, as the mortality expense increased with age, the residual value would erode over the years to nil - the what do you have left? Yes a - level term cover!

The need to maintain high levels of life cover in retirement is questionable. With the mortgage paid off by age 65, and kids up and away on their chosen path, financial liability and the need for high life cover, dissipates. Share of wallet is then more critically allocated to cover major medical expenses, or other more pressing priorities.
Anyway, if you want to advocate the return of WoL policies in the market, an RBNZ license is only $5m. You'll probably need another $10m - $15m to gather the human and system resources to bring the product to market. Oh, and you'll need a huge and immediate supply of capital for reserves to support the liability your accepting as I doubt if any reinsurer would support you. Good luck. Time to move on?

Partners backs direct insurance offering

Partners Life is backing a new, direct model of insurance.

Wednesday, September 9th 2015, 6:00AM 17 Comments

Comments from our readers

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