Insurers hoping for loyalty out of Covid-19 offers

Insurers say helping advisers through the Covid-19 economic disruption was part of their motivation for offering client relief packages.

Tuesday, May 12th 2020, 2:18PM 7 Comments

Gail Costa

The Financial Markets Authority wrote to insurers telling them they should “remain cognisant of the challenges faced by New Zealanders, continue to offer support and flexibility to assist policyholders and do what is possible to maintain or reduce costs for consumers at this time”.

But it noted that how insurers offered that assistance had varied.

Insurers have offered everything from no particular provision for hardship, through to the offer of policy suspension – including premiums and cover, and premium holidays where the cover remains in place while premiums are put on hold.

Some required an income drop of 15% to qualify, some 30%.

Gail Costa, chief executive at Cigna, said her company had had to come up with an approach it could offer every customer, because it has both Cigna and OnePath policies on its books.

It settled on a premium holiday period of one month during which people would be covered, and policy suspension of up to three months beyond that.

Costa said the one-month period was intended to cover the initial level four lockdown, “when hardly anyone was working. That was most important.”

It had had to take a practical approach to determining whether a client's income had been affected, she said. Cigna required a net drop of 20%.

She said the experience had made it clear how important the adviser channel is, and Cigna had been able to share its previous experience as a direct insurer with advisers adapting to new, digital tools during the period.

Partners Life offered a six-month premium holiday, during which cover remained in place, to people who had an income drop of 20% or more. About 4,000 people had applied, managing director Naomi Ballantyne said.

It was an extension of an existing holiday available in Partners Life's policy wording, which offered relief when someone was made redundant, bankrupt or suffered the death of a spouse.

The offer will stop on Monday. Ballantyne said the return to level two seemed a natural time to make the change. It will revert to its normal premium holiday offer.

“When Covid came we thought is there more we need to do? This is unprecedented – how do we support brokers to support clients?”

Partners continued to pay renewal commission to advisers during the holiday period, recognising that they faced the prospect of new business being hard to find, and an increased workload of worried clients.

The offer had been designed to create client and adviser loyalty, she said. “We've seen huge gratitude from clients and brokers through that process and that should stand us well when we return to normal.”

Tags: Cigna coronavirus Covid-19 FMA insurance OnePath Partners Life

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Comments from our readers

On 22 May 2020 at 1:48 pm Donald said:

The Goodwill created to both clients and advisers by Partners Life's premium holiday offer is to be commended and for those of my clients that were required to take advantage of it their gratitude was immense.

All other providers offered either a somewhat dumbed-down version or none at all. AIA's offer of premium suspension would be a last resort only as while on suspension, no cover.

For a company that puffs their chest out as NZ's #1 it was a pretty poor effort in comparison to the #2 NZ provider, Partners Life.

On 24 May 2020 at 7:17 pm sunil@sunilprakash.co.nz said:

Partners Life came out with the best offer during COVID-19

On 26 May 2020 at 5:23 am Tigua_Sigadur said:

I had to laugh when read the comment above. Partners Life was one of the most difficult insurers to secure a premium holiday with. They were requesting a statement from accountants confirming a drop in turnover at the cost of time and money. I found other insurers much more accomodating for my clients. The constant bias towards Partners Life with your articles is starting to wear a bit thin.

On 26 May 2020 at 9:40 am Tash said:

Tigua_Sigadur, perhaps that is becuase they were offerring a premium holiday (full cover remains), not merely a suspension (no cover) or deferral, and this on top of existing holiday and suspension benefits!

On 28 May 2020 at 1:27 pm Tigua_Sigadur said:

@tash, not sure what insurers you’re referring to but all our clients that applied for a premium holiday remained on risk while premiums were suspended.

On 28 May 2020 at 3:30 pm Tash said:

Tigua_Sigadur. If your clients are not with Partners Life, you might want to get confirmation of continued cover if they are not paying premiums, it depends on the insurer, the type of cover, even which product. This is why Donald and Sunil posted as they did!

On 29 May 2020 at 9:08 am Assured said:

Good point Tash! Tigua_Sigadur several of my clients were able to get the holiday from Partners based on their Xero reports, might I suggest that if you had reached out to your ADM to discuss this you would have been aware of this option.

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