Partners puts hold on redundancy cover
Partners Life has put a stop to sales of the redundancy benefit on its Mortgage Repayment Cover, in the face of a probable global recession.
Monday, March 16th 2020, 12:11PM 
3 Comments
Managing director Naomi Ballantyne said, while it would honour claims on those policies that already had redundancy benefits in place, it did not want to encourage people to start buying the cover in large numbers because they were fearful.
Coronavirus has affected economies around the world and New Zealand is expected to go into a recession this year.
Ballantyne said the impact of coronavirus was a non-quantifiable risk that could not be priced in so sales had been stopped for now.
Because it was quite an expensive option, there were not large numbers of customers with the cover, she said.
Ballantyne has also encouraged advisers to be careful about moving clients to new personal risk cover because each insurer is approaching the underwriting for coronavirus differently and clients could be left exposed.
She said brokers could talk to people about increasing their cover, or their options with their existing provider – “but be cautious about replacing existing benefits”.
Insurance commentator Russell Hutchinson said the impact on the insurance industry in New Zealand from coronavirus should be manageable.
Income protection policies would not be called upon significantly, he said, because most people would recover from coronavirus within the stand-down period for their claim to be paid.
While half of New Zealanders had life insurance, the death rate from coronavirus internationally had been highest among people aged 75 and over who usually had less insurance cover, he said.
Most people insured were aged between 35 and 55, he said, and the death rates among those age groups was very low – at about 0.4% in China.
If insurers calculated a likely pay-out based on 0.4% of the insured population’s sum insured that would be a “painful and deeply unpleasant” figure, he said, but it would not be insurer-killing.
“It’s a human tragedy but financially manageable. We are not talking about billions of dollars like we were with Christchurch.”
AIA said in a statement: "AIA New Zealand has not received any claims related to Covid-19, though we are beginning to receive questions from our policyholders about what CovidD-19 may mean for their insurance coverage.
"Customers can be assured that our insurance products do not contain any exclusions for pandemics, so as with any claim, policyholders would simply need to meet the eligibility criteria for the particular insurance benefits held through their policy."
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Comments from our readers
it is really important we don't give our customers false hopes. Income protection is there to protect customers with severe health issues which prevent them from working, including in some cases, mental health conditions.
Income protection is NOT desigend to protect against business failures, even if that causes stress and depression.
The insurers started putting 6 month stand-dwons on redundancy, but didnt quit it completely. (I also recall signs outside bank branches peddling redundancy cover - sales directives and targets to exploit consumer fears!).
But the optics here arent flash. It looks to the untrained eye of the average consumer, or worse, journo, that the company that makes the umbrellas is stopping production when it looks like rain.
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