Share data, insurer tells rivals
Life insurer Partners Life will begin publishing information about the $2.7 billion-a-year industry which is usually kept from the eyes of the public, and is challenging other insurers to do the same.
In about four weeks, Partners Life’s chairman Jim Minto said the company would begin publishing information including the number and types of complaints the company received from customers, and the proportion of claims not paid.
It will reveal 9 per cent of its claims made were not paid.
Other uncomfortable information it would reveal include the 12 per cent increase in premiums on its trauma and income protection policies, which had seen spikes in claims, and the 314 complaints it had from among its 201,000 policyholders.
It has withdrawn its funeral cover, a type of insurance the FMA and Reserve Bank criticised as poor value, and will reveal details of changes in its underwriting on policies to limit the risk presented by the Covid19 pandemic when accepting new policyholders.
Since the 2019 publication of a critical review by the Financial Markets Authority and Reserve Bank, which found poor value products and legitimate claims not paid, all major life insurers have had to provide reports every three months to the regulators on their progress, to ensure they were treating all customers fairly.
Insurers have sent in their reports away from the public eye, but Minto said publishing them for the public to see would help prevent an Australian-style loss of confidence in the insurance sector.
‘‘We exist in a public-private partnership with government to serve consumers, and therefore we must have the confidence of public, of government,’’ Minto said.
The move was praised by Jessica Wilson, head of research at Consumer NZ, but she said insurers should be required by law to provide information the public needed to make informed choices, including the ratio of claims paid for every $1 earned in premiums on each of their insurance products.
‘‘It’s long overdue. The problems in the life insurance market have been welldocumented,’’ Wilson said. ‘‘The industry has got away for a long time without much scrutiny.’’
Naomi Ballantyne, Partners Life managing director, said in 2019 the FMA and Reserve Bank told insurers to provide evidence that they were not ripping off customers.
Insurers had to comply, leading to the September 2019 report in which no insurers were named and shamed.
Ballantyne said: ‘‘Having done that huge piece of work, and having the regulator know all of the things we do, we said, ‘Well, that’s great to tell the regulator, but no-one else knows’.
‘‘All that information we provide to them, we felt we should provide to our customers,’’ she said.
If all life insurers published the information it would encourage competition around good behaviour towards policyholders, but also create a public record of promises from insurers to policyholders, making it hard for companies to backtrack on them.
‘‘It’s important the delivery of those promises is not dependent on who runs the company,’’ Ballantyne said.
‘‘This business requires trust over a long period of time.’’
It also meant the industry had to confront uncomfortable truths publicly, Ballantyne said.
Richard Harding, chief executive of house, car, contents and boat insurer Tower, told an insurance conference last year that around a fifth of all claims made were ‘‘withdrawn’’.
That was usually because the customers were told there was a good chance they would not be paid. This could happen for a variety of reasons, Harding said, including that people were buying policies they did not understand.
‘‘If you don’t talk about those other claims, you are burying them and pretending they did not happen,’’ Ballantyne said.
‘‘That’s part of confidence, not pretending that all is well.’’
Independent life insurance analyst Russell Hutchinson said: ‘‘I’m really excited Partners is sharing the information’’.
While life insurers provided a lot of information to insurance advisers, much of it did not reach the public, he said.
Greater transparency would be good for the image of the insurance industry, including by highlighting the proportion of claims paid, he said.
Minto said Partners Life supported Commerce Minister Kris Faafoi’s Financial Markets (Conduct of Institutions) Amendment Bill, which would require insurers and banks to treat customers fairly.
‘‘What the Government is aspiring to do is a big idea, and I think it’s just right for the time,’’ Minto said.
The insurance industry was, however torn over how much the public should get to see of the fair conduct programmes that insurers would be required to have under the law.
Ballantyne hoped Partners Life’s rivals would follow its example. ‘‘This standard of being transparent forces the rest of the industry to play the same game, or explain why they won’t,’’ she said.
‘‘We exist in a public-private partnership with government to serve consumers, and therefore we must have the confidence of public, of government.’’ Jim Minto Partners Life’s chairman