[GRTV] Time to change debate on replacement business

Insurance People adviser Kat Church says it is time the discussion around replacement business changed.

Tuesday, February 25th 2020, 5:41PM

GRTV: I thought it was about time we had an adviser on the show because we haven't had many financial advisers on Good Returns TV so I'd like to welcome Kat Church from the Insurance People. She has this great title of head of client engagement so not just an adviser anymore.

Church: No. All about trying to improve the client experience. Thanks for having me.

GRTV: It's great to have you here and we're going to talk about MDRT later on as well because you're the chair in New Zealand here. First up, the hot topic – replacement business. So why do you think we need to change the conversation around replacement business and make it more positive than it's been?

Church: All we hear at the moment is the churn debate but there isn't actually any conversation going on around the good reasons why business replacement should occur.

There are very old policies that are sitting out there that aren't serving our clients. The policy wordings we have today are so much more flexible, but we're not actually discussing that. Setting a standard, helping our clients de-risk and just making sure that they have a better outcome.

GRTV: A lot of the negative stuff is coming from people like the regulators and the FMA and people like that. Do you think they actually understand the issues?

Church: No. Look full respect to them, they're in a position that they need to be in, but I'd really love them to come and walk in my shoes. Walk in my shoes when I have a phone call from a client who has breast cancer and I have to sit there and think which wording is she on? Is it stage two? Is she going to get a full payout on her trauma cover or is she not going to get a full payout on her trauma cover because the reinsurer's changed and the wordings aren't improving. And so I'd love them to walk in our shoes a little bit to sort of understand why there is good business replacement.

GRTV: Do you think it is as big a problem as they make it out to be?

Church: No. Look, there are some claims in the industry that do not get paid because someone has moved someone from one insurer to another. It's going to happen. We've got to learn how to mitigate that, how to de-risk that. And that's the message I think we should be talking about.

GRTV: So what is good practice around replacement business?

Church: Oh my brokers love me for this one. So we've got a really, really robust process and it's hard for some to actually follow, I'll be honest. There's a big engagement around what covers they do have. Really good analysis around whether or not it's fit for purpose. All of our statements of advice will actually offer staying where they are as well as improving their situation to potentially other insurers if it warrants. But when we get into the actual underwriting stage that's where all the information comes out.

So I encourage my clients to get hold of their own medical notes so that they themselves can understand what their doctors have been writing about them. Because invariably they just don't know that their doctor noted about [perhaps] their stress in 2019 – which is a hot topic for underwriters. So we'll get them engaging in that.

We'll get them understanding. I prefer to do bloods and medicals at underwriting time because it gets rid of issues. And then we'll also get ... every application has to have an ACC claims history and that's gold.

So it takes 24 hours for us to obtain an ACC claims history on a client. So it's not an onerous thing. And I know insurers that are actually doing it at claim time now, so if you've got a musculo-skeletal claim, they are actually getting that document at the wrong time of the process when we should be doing it at the front end.

GRTV: So how hard is it to get ACC claims history on a client?

Church: It's a signature on a form with some information on there giving me permission to go and obtain that. And I'm sitting in front of a tradie who invariably just wants to get on with whatever he's doing. He's busy. He's a small businessman. He wants to get on and he's not put anything in the forms around his back, his shoulders, his knees, and then I'll get a 10 page ACC claims history. And wow ... what an amazing document to be able to show people what disclosure is all about.

GRTV: So do you think many advisers are doing that?

Church: I like to share it with as many people as I can ... and it's growing ... but nowhere near enough. I don't even think people know about it and that's the conversation I'm trying to sort of put out there.

GRTV: So are the insurers giving best practice guides to advisers around how to do replacement business?

Church: I don't think I know of one document yet. And if there is one please get them to send it to me. I've not seen one.

GRTV: Is that something they could do?

Church: They really could.

But why aren't their underwriters asking for it [ACC claims history]? If it takes me a day to get that, then why don't they? Because it actually is free. It's available. It doesn't cost them to receive it.

GRTV: So what can you do to de-risk a person's situation so that you can make sure that they do get their claim paid at claim time?

Church: Well the key is to actually follow that process all the way through. When I place somebody with an insurer I've only got an intent of a claim being paid if it needs to be. So I've got to make sure that they understand those disclosure regimes and we do help them through that.

Sometimes they may actually be moving to a policy where there is going to be more exclusions, but if they're engaged in that process, if they understand the reasons why the new products are actually better for them, fit for purpose they're okay with it. It's when they get to claim time and they suddenly get asked about the asthma or asked about a problem with sinusitis that actually doesn't relate to their current claim that they get tetchy. So all of that is really important at the outset.

GRTV: So you said before that you put both the new policy and the old one in front of the client and they have to decide. So that's how the process goes?

Church: They don't decide. I give them the information and then we discuss it.

GRTV: Because it wouldn't be right for them to decide would it, otherwise you wouldn't be an adviser.

Church: Well I think they have to make the final decision because they've got to wear it. But that's my job as an adviser is to put them into the best situation possible. So we'll get through an underwriting stage. Let's say we do. We've got an insurer over here who doesn't do non-Pharmac chemo, not guaranteed wordings, prices going up, no ability to put excesses on. Maybe I can move them to an insurer that could be more cost-effective. It could be all of those things that I've said that are important. But I get through that process and find that they've actually got some things that's really good to keep that one there. I can still take this one too, but with a really high excess. That's the best way of doing business.

GRTV: And so what do your advisers not like about your process?

Church: I think they just get frustrated with it. So I want to point out that I don't believe New Zealand advisers as a rule do their business, go about their business every day trying to rip off New Zealanders by any stretch.

In fact, it's very much the opposite. But we're not good at telling people what we do really well. They tell a story but they don't document a story. And that's the difference ... now that we're going into this new regime. So we've actually got to help people understand how to document the story, how to send the offer of terms. It's all very well we can accept offer of terms now without actually any written trail. The insurers are quite happy to get things issued, but we've actually got to do a lot more on the documentation of it because that's what the regulators are actually going to require of us.

So they get frustrated. They get knocked back. In our world, we won't pay an adviser until that file's compliant. So there's always a bit of niggle.

GRTV: So do you lose advisers over there?

Church: I have. I have lost advisers and I want to say they're not bad people and they invariably weren't people that were doing the wrong thing. They just are struggling with the documentation of it. And in this new regime I can't carry that.

GRTV: That's a good point. Now coming onto your other hat you wear, so you're the MDRT (Million Dollar Round Table) New Zealand president is it?

Church: No New Zealand chair.

GRTV: So tell me MDRT, you go off to the conferences. What do you really like about MDRT and what does it do to help you and your business?

Church: I love the fact that I'm sitting down with practitioners from around the world that are also going through elements of what we're going through with regulation. Some are a lot further down the track than what we are. So you're garnering a lot of information there. But to be fair, and I've said it to you before, it's chicken soup for the soul. In New Zealand you're busy, you're going about your business, you're doing all the things you do. You never take enough time to fill your tank up.

When I'm training advisers, I always need to come up with new ideas, new ways of doing things. It also allows you to understand how unique we are in New Zealand and how blessed we are to have ACC, how blessed we are to have the public hospital system that we do have and how blessed we are to have the products that we have because not all countries have the product ranges that we do. It allows us to just let off some steam but go and meet some really cool people.

GRTV: And to qualify for MDRT, how hard is that in New Zealand?

Church: A lot easier than what people realise. So it's $140,000 worth of commission income. So it's around $80,000 worth of new business, depending on what you're earning. That's not that hard. And there's a lot more people in New Zealand that would qualify and could qualify now than who belongs [to MDRT].

GRTV: And so this year it's in Dubai?

Church: So we've got the annual meeting in June, June 6 and that's in LA. That's the main meeting. That's the one that tends to attract about 14 to 15,000 people. Last year it was 12,000 then we have Dubai, which is the global. It's the second year of global. Sydney last year was the first and that's August 31 through to September 3 and then we have Top of the Table. So can I just say those that haven't gone to the Top of the Table that qualify for that in New Zealand ... wow ... what an amazing meeting. It's smaller. It's more intimate and you're really rubbing shoulders with some of the best in the world at that level. I'm looking forward to that one this year.

GRTV: It should be exciting. Thanks Kat for taking the time to come in today.

Church: Thank you.