AIA appoints new Chief Distribution Officer and new Chief Customer Officer

AIA has announced two executive appointments, with Angela Busby being appointed Chief Distribution Officer and Maddie Sherlock being appointed Chief Customer Officer.

Busby was previously AIA NZ’s Chief Customer Officer and Chief Strategy Officer and has held a variety of other senior roles across Sovereign, ASB Securities and Aegis. Her new role will see her responsible for business development including IFA and Group Distribution, Aligned Advice and AIA NZ’s ASB Partnership, as well as Distribution Performance and Supervision.

Angela Busby, Chief Distribution Officer

Sherlock has been with AIA since 2015 and was most recently AIA NZ’s Head of Customer Strategic Delivery. In her new role, Sherlock will oversee all the functions of Customer operations including the management of customers, underwriting, claims, rehabilitation, and customer experience.

Maddie Sherlock, Chief Customer Officer

Sharron Botica, former AIA NZ Chief Partnership Distribution Officer, has recently resigned her role at AIA to pursue new career opportunities.

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Government announces reforms to strengthen NZ’s capital markets

The Government has announced a package of reforms to help ensure New Zealand’s capital markets are working to support a productive economy. The Government is making it easier for businesses to raise money from the public by making it voluntary to provide forward-looking financial information as part of an Initial Public Offering of shares. These changes are expected to be in place by May 2025.

The Government has also opened consultation on two proposals: enabling KiwiSaver investment in private assets; and potential adjustments to the climate-related disclosures regime. Consultation closes 14 February 2025.

The Financial Services Council (FSC) has expressed strong support for enabling KiwiSaver funds to invest in unlisted assets. FSC CEO Kirk Hope said,

“By enabling KiwiSaver investments in unlisted assets, such as infrastructure projects and innovative New Zealand businesses, we can unlock substantial capital for domestic growth.”

“This reform will not only provide Kiwi businesses with much-needed capital to innovate and expand but the opportunity of greater diversification for KiwiSaver.”

Some financial advisers warn that regulators need to get on board with the proposals, however. At a recent event we held in conjunction with the Financial Services Council, advisers asked questions about whether the Financial Markets Authority would be supportive of fund managers choosing to invest more in private assets and infrastructure projects which tend to be illiquid in nature. We think that these are good questions, and the answers will be highly sensitive to the context in each fund: for example, the scale of the investments relative to the total fund size and the liquidity of other assets, and the ages, balances, and probable withdrawal patterns of investing members.

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Fidelity Life announces growth plans

Campbell Mitchell, Fidelity Life Chief Executive, announced the company’s intentions to grow to a $1 billion company in eight years time. Mitchell was speaking to delegates at Fidelity Life’s Engage Conference in Auckland.

Fidelity Life was the fastest growing life insurer in New Zealand in the period ending September 30, with 150% growth in new business year-on-year across the last two quarters.

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Deepfake scams on the rise

Research commissioned by MasterCard has found that 29% of New Zealanders and 18% of NZ businesses have been targeted by deepfake scams in the past year. Deepfake scams use generative artificial intelligence (AI) to impersonate individuals, with the aim of stealing their targets’ money or personal information.

Deepfakes scams can utilise video, images and audio and can look increasingly convincing. Confidence levels in the ability to correctly identify deepfakes are low, with only 12% of respondents confident they would be able to detect a deepfake scam. Deepfakes are eroding trust in public figures and digital platforms, with 41% of individuals being more sceptical towards celebrities and influencers; 61% of kiwis being less trusting of social media platforms; 40% of New Zealanders being less trusting of emails and 37% of respondents being less trusting of phone calls compared to the previous year.

Some steps businesses are taking to address these risks include employing identification verification for accessing sensitive information, offering cybersecurity training and conducting training on financial transactions.

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Southern Cross Health Society Group annual results released

Southern Medical Care Society Group has shared their annual results for the year ended 30 June 2024. By the numbers:

• Group deficit of $88.2 million after tax. $43.1 million of the deficit is attributable to a change in international financial reporting standards introduced this financial year. The balance of the deficit is driven by higher claims costs from a high inflationary environment combined with high member demand for private health services, particularly in the second half of the financial year.

• Group reserves of $470.7 million.

• Claims paid at a rate of $6 million per business day (up from $5.2 million in FY23).

• 15,196 net new members, with total membership now at 955,301.

• This represents 60% of the New Zealand health insurance market by customer numbers but 71% per cent of the value of all health insurance claims paid.

• 99% of claims were submitted electronically.

Southern Cross Health Insurance

• Reported a deficit of $99.1 million.

• Paid $1.498 billion in claims from $1.605 billion received in premiums.

• Claims costs increased 15% on FY23 (up 13.9% when adjusted for member growth).

• Premiums increased 9% on FY23 (up 6.6% when adjusted for member growth).

• 93.4 cents paid in claims from every dollar received in premiums (compared to an industry average excluding Southern Cross) of 73 cents.

• Operating costs grew by 4%, less than inflation.

• 3.2 million claims in FY24

• 50% of members claimed over the financial year.

• 39,326 virtual GP consultations with Care HQ.

• 4,635 annual health check-ups with MedPro.

• 4,016 online mental health sessions with Raise.

• Net promoter score of 53.7%.

 Nick Astwick, Chief Executive for Southern Cross Health Society said

“We have never been in more demand by our members as they prioritise their health needs, largely in the private system. In 2019 33% of our membership claimed, last year it was 50%.”

“The cost of claims in 2024 was steep and rapid, driven by a combination of price, volume, and the mix of claims. The growth in the volume of claims results from an increase in the number of members claiming, the frequency, and claims being made for more expensive procedures.”

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Commerce Commission release banking competitiveness study

The Commerce Commission have released the Final Report on personal banking competitiveness. The 14-month market study found

“a stable, highly profitable, two-tier oligopoly with no disruptive maverick and a lack of obvious or aggressive price competition.”

The study found little strategic differentiation between the major banks and found their growth targets focus on maintaining market share and protecting margins and profitability, limiting competitiveness and innovation.

The Commission’s recommendations to Government can be grouped into four key areas and broadly speaking involve making Kiwibank a more disruptive competitor, accelerating progress on open banking, ensuring the regulatory environment better supports competition and empowering consumers.

While both the Finance and Mortgage Advisers Association of New Zealand (FAMNZ) and Financial Advice New Zealand (FANZ) have welcomed the report, after criticising the draft report which was released in March.  Since then, the Commerce Commission has engaged with both associations as well as other representatives from the mortgage industry to better understand the role advisers work.

Leigh Hodgetts, country manager of FAMNZ, has called out the Commerce Commission’s statement that advisers should put more emphasis on price, saying that there are many factors around individual circumstances that must be considered when a consumer takes a loan.

Financial Advice New Zealand said it would be seeking clarity on the recommendations, in an effort to determine any unintended consequences.

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Should more employers be looking at offering more flexible working options?

Increasingly, organisations are seeing the benefits of offering more flexible working options, in terms of productivity output, being able to attract a more diverse range of employees and employee satisfaction.

Stats NZ data shows that in 2023, 81% of organisations offered flexible working hours, up from 57% of organisations in 2018. In 2023, 77% of organisations offered part-time work roles, up from 53% in 2018.

Kiwibank economist, Sabrina Delgado, highlighted flexible work’s impact on the wider economy,

“Whether it’s working around school hours or the location of work, greater work flexibility perhaps has the biggest economic impact on improving the labour market outcomes and productivity.”

Infometrics chief executive and principal economist Brad Olsen said,

“Increasing participation even further can be supported by removing barriers to work for different groups, like parents, while still allowing them to do their parental duties without as much compromise as before.”

Dr Ellen Ford, the creator of #workschoolhours movement, said,

“There are a huge amount of parents who would absolutely love to work in an organisation that provides a school hours framework and they would add immense value to the organisation.”

“One of the economic benefits is that it actually allows organisations to tap into a massively underutilised section of the workforce.”

“If businesses are struggling to attract and retain great talent, one of the ways they can do that is actually offer roles that work within school hours.”

“People on part time contracts are typically the most productive in the workforce. They just get their stuff done in a shorter amount of time.”

It seems like flexible work options are here to stay. An international survey of more than 500 CEO’s around hybrid working, found 91% had adopted hybrid working and 74% said a full-time office return is not a business priority. 73% of CEO’s agreed that hybrid work allows them to attract the best workers and 76% saw improved staff retention since offering flexibility to employees.

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Steve Wright has examined the FMA’s FAP monitoring report and gone through the findings to highlight areas advisers and FAPs need to keep their eyes on.

While the FMA was for the most part happy with the results of their monitoring visits to around 60 FAPs, they did highlight a number of gaps where improvement is needed. In particular, the FMA identified ‘tick-box’ approaches to compliance as a root cause of some of these gaps.

Some areas that were identified as needing improvement were proper oversight of advice; identifying and working to close knowledge gaps; a considered approach to continuing professional development (CPD) with the identified learning achieved and recorded; some situations where the advice given was ‘unsatisfactory’; consideration of clients’ future needs.

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AIA appoints Chief Product and Strategy Officer

AIA NZ has appointed Alex Kühnast as Chief Product & Strategy Officer. Kühnast  joins AIA from KPMG New Zealand, where we was Principal – Head of Insurance Consulting & Actuarial Services. In his newly created role, Kühnast will look after Product, Pricing, Investments and Strategy.

AIA NZ CEO Nick Stanhope said

"Alex’s appointment is exciting for us. He is a natural fit at AIA NZ with his passion for health and wellbeing, and he has a wealth of international experience, having lived and worked in his home country of South Africa, the Netherlands, United Kingdom and of course now New Zealand.”

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Southern Cross cautioned by FMA for neglecting to apply advertised discounts

The Financial Markets Authority (FMA) has issued warnings to Southern Cross Medical Care Society and Southern Cross pet Insurance for failing to apply advertised discounts to their insurance products.

Both entities have accepted they had breached the fair dealing provisions of the Financial Markets Conduct Act by making false or misleading representations. The FMA determined the cause of each issue was due to poor controls and/or technical errors. The FMA found no evidence of deliberate misconduct.

Southern Cross Pet Insurance initially reported to the FMA in November 2022 some of the contraventions. Further enquiries from the FMA and an internal review in the wider Southern Cross Group established the extant of the contraventions.

SCPI failed to correctly apply the following discounts:

·         Additional pet discount

·         Direct debit discount

·         Southern Cross membership discount.

SCMCS failed to correctly apply the following discounts:

·         Free child discount

·         Healthy lifestyle rewards discount

·         Low claims discount.

The total amount of Southern Cross Pet Insurance premiums overcharged was $424,508, affecting 7,542 customers. Southern Cross Medical Care Society overcharged $161,547 across 1,957 customers.

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