Speaking to the Parliamentary Joint Committee hearings into the life insurance industry last week, NAB executive general manager for wealth advice, Greg Miller, addressed concerns from Senator Deborah O’Neill that consumers want standard medical definitions as a means of certainty within their insurance cover.
“I’m not sure that would be the best approach, because if MLC Life sees the need to update a definition, why should they wait for the rest of the industry to update the definition,” Mr Miller told the inquiry.
Mr Miller noted that the incoming FSC Life Insurance Code of Practice states that medical definitions will be periodically updated.
He said there “should be nothing to stop an insurer jumping ahead of that”.
Senator John Williams also asked Mr Miller whether NAB’s advice division is back in order following the Graeme Cowper scandal.
Mr Miller echoed earlier comments to the inquiry by NAB chief customer officer for consumer banking and wealth management, Andrew Hagger, saying “we are proud but not perfect”.
“We have been working diligently for the last two years to make sure we continue to improve in what we do,” Mr Miller said.
“That’s not to say that some adviser won’t do something that we don’t like in the future, but we are doing everything possible to make sure we improve, and we’ve been improving our monitoring and supervision and compliance over the last two or three years.
“That’s important to us, and we will continue to improve.”
NAB talking about non-competitive? pot, kettle, black. This powerful member of the FSC is doing all in its power to eradicate IFA’s.
Oh dear! I wish people would read and understand before commenting. The FSC proposal is for minimum standardised definitions. Not standardised definitions full stop. Insurers can still compete with each other beyond the minimum wording on the core definitions and on all the other definitions and product features.
The comments by Greg Miller and this poster would appears to reflect the sentiment in the UK before their minimum standardised definitions were introduced and guess what? The world didn’t fall in and insurers are competing and differentiating from each other.
However, everyone over there now agrees, it was a successful move forward for [u]everyone[/u], especially for the consumer.
And as for adviser laziness, advisers have plenty to do with full advice on a risk portfolio: needs analysis, existing product research and replacement analysis, ownership considerations and structuring, etc. etc. After all, the product is just the funding mechanism and comes after all the other work has been conducted.
The first trauma policies arrived in the early 90’s. Todays definitions are much more generous than those early attempts when insurers and re-insurers were, frankly, flying blind. Anyone who can use Google will soon discover that Australian trauma policies are more generous in the core definitions than many overseas offerings-take a look at a USA stroke definition !
Re-insurers will swing the lead if given some rope, and may be inclined to recover what they perceive as past losses on trauma with Australia’s generous ( by comparison )definitions. What we could end up with, if the re-insurers copy the ( say ) USA definitions, are policies with identical “rubbish” core definitions, because it was the easiest thing to do ! That’s a flight straight to the bottom !
Those insurers with TIED distribution would love “standardisation” of policy wordings
As a seasoned risk writer who has taken the time to understand the different wordings by reading learned papers on re-insurer web sites, reading the odd court case and FOS Determination, I believe there is no advantage for consumers in having standardized core trauma definitions: and I find myself in agreement with Mr Miller – to do so would be anti-competitive, and it would stop insurers seeking to improve definitions while waiting for the others to catch up.
Remember there is more profit if you are not paying claims
My other fear is that such a move would in some way encourage laziness amongst some advisers viz – “the policies are all the same, and mine is cheapest ” ignoring the fact that the differences will, I assume, be found in the other 40 odd definitions separate to core benefit definitions and that will require some effort to make “reasonable enquiries ” research .
If you want evidence of adviser “laziness ” consider the availability of CHILD TRAUMA. Most advisers think the products are identical, except for maximum sum insureds. A quick look at the latest PDSs will show that some insurers have tightened up their definitions over the last 10 years, introducing some un-healthy exclusions. Not all insurers under-write at application. And worst of all, the RESEARCH HOUSES do not cover the definitions and exclusions in Child Trauma
And if you think there is a distinct lack of quality risk training on product wordings now, if core trauma definitions are introduced, here will be zero trauma product training.
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