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Medical With Life Cover - Opportunity for Advisers and Clients

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An overview of the recent history in medical insurance product development. Including a discussion of medical insurance comparison issues.

Published in: Economy & Finance
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Medical With Life Cover - Opportunity for Advisers and Clients

  1. 1. 1 Medical with Life Cover Opportunity for Advisers and Clients February 2015 Russell Hutchinson and Alan Rafe www.chatswood.co.nz
  2. 2. 2 Long-term Trend: Medical and Life More than 25 years ago the health and life markets were largely separate, then this happened • Sovereign bought Met Life • TOWER Life bought AXA Health • Club Life – now OnePath life • Partners Life • Fidelity Life and nib Other insurers without health cover are interested. Even insurers with poorly operating health books see the value of health insurance as a gateway product to sales of more life, disability, and trauma insurance. In parallel we have seen: • More mortgage cover • More income protection • More trauma cover www.chatswood.co.nz February 2015
  3. 3. 3 www.chatswood.co.nz February 2015 Better Together: Joint Quoting Number of Health only Quotes in June 2014 1,871 Number of quotes with health in (last crunch, 2-3 re-crunches is typical) 3,295 Proportion of quotes including health of any kind which are health only: 57% Proportion of all advisers that have quoted health at least once: 66% 400 500 600 700 800 900 1000 1100 1200 Jul-14 Aug-14 Sep-14 Accuro AIA Fidelity / nib OnePath Partners Life Southern Cross Sovereign
  4. 4. 4 Benefit Combinations With Health Benefit Combinations with Health in last crunch How many in June Health 1,871 Health Life 330 Health Life Trauma 283 Health IP Life Trauma WOP 111 Health IP Life TPD Trauma WOP 100 Health Life Repayment Trauma WOP 73 Health Trauma 65 Health Life TPD Trauma 53 Health IP Life Repayment TPD Trauma WOP 47 Health IP Life Repayment Trauma WOP 32 Subtotal 2,965 Others 330 Total 3,295 www.chatswood.co.nz February 2015
  5. 5. 5 Excess Options 0 200 400 600 800 1000 1200 1400 $- $250 $500 $1,000 $2,000 More NumberofCrunches Excess Option Health Quote Excess Options www.chatswood.co.nz February 2015
  6. 6. 6 Add-On Options Basic 32% With Specialists 68% Health Quote Add-On Options Note: Other combinations with GP and Dental too small to graph. www.chatswood.co.nz February 2015
  7. 7. 7 Children in Health Quotes 0 500 1000 1500 2000 2500 0 1 2 3 4+ NumberofCrunches Number of Children Number of Children Included in Health Quotes www.chatswood.co.nz February 2015
  8. 8. 8 How Clients Use Medical Cover Full health Medical Trauma Disablement Death Care free or careless? Specialists and tests Trauma add- ons Mortgage cover Terminal Illness Basic medical Limited Trauma Income protection Life Cover Fully featured medical insurance Fully featured trauma Total and Permanent Disablement Non-Pharmac cover International Direct / “Everyday” products Doctors’ Visits etc. Clients can see this need first! Choices are created by the financial assistance provided www.chatswood.co.nz February 2015
  9. 9. 9 Competition: Making Products Better • Stand alone specialists and tests sales • ‘Best Doctors’ diagnosis tool • Simple direct products – low cost, low benefit, high co- payments • Non-Pharmac drugs cover • Loyalty rewards offering procedures outside scope of medical cover e.g. Sterilisation, Breast Reduction & Bariatric Surgery. • Extensive range of products and benefit variations on offer prompted by new market entrants, where previously a couple of providers held market monopoly. www.chatswood.co.nz February 2015
  10. 10. 10 Advisers: Please Consider • Medical insurance has a role in the risk package • Role of medical, IP, Trauma alongside state benefits • Overseas treatment - International options • Sales process innovations • Bundling • Health savings accounts • Long-term care cover • Screening programmes www.chatswood.co.nz February 2015
  11. 11. 11 How Do You Compare Products? Risks • “The One thing” to rule them all • The “non-compliant” feature Factors • The whole product • Price • Service • Claims • Company Factors Preference • A Package View www.chatswood.co.nz February 2015
  12. 12. 12 Overview • Medical is the next protection benefit clients can see the need for • It is a great way to open up a constructive discussion about all the other benefits • Good advice acknowledges that it is part of a personal risk plan • That risk plan isn’t alone: it exists in a context of personal wealth, family, and state health and welfare provision • An overview considering a range of factors rather than just one factor is the right starting point for product selection www.chatswood.co.nz February 2015
  13. 13. 13 Current Issues in Comparing Medical • Guaranteed wordings • Provides customer value in knowing wordings that cannot be altered • Provides an option for unsustainable books • Non-Pharmac • We are seeing claims paid for Cancer related treatment • Increased our weighting due to claims experience being higher • Still working to understand the impact of non cancer related treatments • Need to understand the impact of Chronic Condition exclusions • Impact of out of hospital benefits • Breast Reconstruction • Cosmetic versus medically required • Covered under main surgical benefit • Including realignment, tattooing • Exclusions • Different excesses www.chatswood.co.nz February 2015
  14. 14. 14 What We Compare on Quotemonster Company Basic Excess Options Specialist & Tests Excess Options Saying Specialist Excess Used Accuro $0, $250, $500, $1,000, $2,000, $4,000 $0 $250 Nil excess on specialist & tests no matter which base excess is selected. $0 AIA $0, $250, $500, $1,000, $2,000 $100 $100 excess on specialist & tests no matter which base excess is selected. $100 nib $0,$250, $500, $1,000, $2,000, $4,000, $6,000 $0 Nil excess on specialist & tests no matter which base excess is selected. $0 OnePath $0, $250, $500, $1,000, $2,000, $5,000 $250 $250 excess on specialist & tests no matter which base excess is selected. $250 Partners Life $0, $250, $500, $1,000, $2,000, $5,000, $10,000 $250 $250 excess on specialist & tests no matter which base excess is selected. $250 Southern Cross $0, $250, $500, $1,000 $0 Excess for specialist & tests is matched to whichever base excess is selected. $0 Sovereign $0, $250, $500, $750, $1,000, $2,000, $4,000 $0 $250 Nil excess on specialist & tests no matter which base excess is selected. $250 www.chatswood.co.nz February 2015
  15. 15. 15 Getting it Right: Settings www.chatswood.co.nz February 2015
  16. 16. 16 Rating Process Definition Incidence Frequency Amount Readability Impact Better research to support recommendations, based on: the meaningful differences between products, on your client’s actual situation, and on real-world risks. Based on actual risks and payment Specific to each client and options Low cost, easy to update and use Male / Female Employed / self- employed Age Options selected Realistic claims scenario Each report varied for each quotation www.chatswood.co.nz February 2015
  17. 17. 17 www.chatswood.co.nz17 Thank You! Visit us at www.chatswood.co.nz Please remember that this material is © Copyright – please use in your business but do not distribute or re-sell Information was current to 2 February 2015.
  18. 18. 18 Rating Process Definition Incidence Frequency Amount Readability Impact Better research to support recommendations, based on: the meaningful differences between products, on your client’s actual situation, and on real-world risks. Based on actual risks and payment Specific to each client and options Low cost, easy to update and use Male / Female Employed / self-employed Age Options selected Realistic claims scenario Each report varied for each quotation www.chatswood.co.nz

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