We have been closely monitoring the Covid-19 pandemic progression worldwide and the response, including that of our government. We are supportive of the measures taken to protect New Zealanders. In response our office at Ferry Road is now closed until further notice.
However, please be assured that we are alert to the consequences of the pandemic and the consequences of the closedown on our clients. We are now working remotely and your adviser and the support team can be contacted as follows:
Kevin Seque, mobile 021 240 4540, or email email@example.com
Brian Seque, mobile 021 227 6035, or email firstname.lastname@example.org
Grace Downs, mobile 027 652 4334, or email email@example.com
Jack Radford, mobile 021 627 049, or email firstname.lastname@example.org
Sharon Empson, mobile 021 109 3165, or email email@example.com
The outbreak of the Coronavirus has captured all our attention and as yet we still do not have a clear view of what is going to happen in the future. The uncertainties of the ability for the virus to be largely contained with China remain, and the prospect of it spreading aggressively in other countries still exists. Thankfully the New Zealand government followed the quarantine measures introduced by many countries, including Australia and the US, which stopped all flights to and from mainland China.
So what should you do now from a risk management perspective?
The potential impact of the Coronavirus started me thinking about the reason people have for owning personal insurance policies. Basically it is to provide financial certainty if something catastrophic occurs that their assets and their families are safe and protected from life’s curveballs.
I see the Coronavirus as one of those potential curveballs that is totally outside our control and could be devastating. So, I set out a series of questions for you to answer to check if you are prepared for this now ‘known’ event that may come our way.
Will you leave your family with a secure financial position if you die next week?
What happens if you cannot work for between 3 and 6 months due to illness. Will your employer continue to pay you or can your business afford to pay for your replacement?
Are you financially prepared if you suffered a major trauma or critical illness?
What would happen if you were diagnosed as being permanently disabled and no longer able to ever work again?
Are you prepared financially for a non-urgent elective surgery costing $30,000 or more?
Coronavirus and its effects should motivate you to revisit your insurance portfolio to ensure that you have the correct levels of insurance, funded appropriately, correct ownership and that you are confident that the insurer has the financial capacity to pay.
It is extremely important that the insurance company managing and underwriting you and your family’s financial future, has the international strength and financial capacity to meet catastrophic claims conditions. KSL’s recommended panel of insurers do.
Your Preparedness Action Plan
Having been a survivor of both a heart attack and cancer I can certify that “I am financially prepared”. Are you?
My intention in this letter is not to create alarm; rather it is to urge you to make sure you are prepared for whatever may happen.
Contact me on telephone 021 240 4540 or email me at firstname.lastname@example.org to arrange a suitable time to catch up and review your insurance program.
I look forward to working with you.
KSL Insurance Limited
Kevin Seque AFA FSP 108805 Insurance and Audit Specialist
Effectively developing and managing our personal insurance portfolio is a critical part of assuring that our family’s financial security and lifestyle is not put at risk. Just as we are encouraged to develop long term savings strategies for our retirement by establishing a portfolio of assets, we also need risk management strategies to protect our income that is used to generate our savings, and to ensure adverse health and accident events do not prevent us from being able to retain our asset portfolio.
For many people understanding the issues, analysis and jargon of personal insurance is daunting and often results in ‘whatever you think is best for me’ solutions. Consequently, deciding who you are going to work with in developing your personal insurance portfolio is one of the more important decisions you make in planning your life’s journey; it is much like deciding on who your solicitor, accountant or doctor will be.
A recent survey(1) undertaken by the Financial Services Council identified that ‘peace of mind’ is paramount to people when taking out a personal insurance policy. This peace of mind stems from the relationship between the person selling and the person buying; in very simple terms, it is ‘trust’. And as one respondent from the above survey commented: “Also, with peace of mind you feel more in control. You are able to carry on.”
Choosing your adviser
So let’s take you on a journey where you can explore what you need to know in choosing an adviser to help you develop and manage your personal insurance portfolio.The first thing you need to accept is ‘this is going to be an important relationship that, if successful, will last your lifetime and beyond.’ Hence the initial focus has to be on trusting your adviser. This comes from many perspectives but there are five things about advisers that are particularly important; being able to listen, being able to understand your point of view, having the background and experience, being with you for the long haul, and doing what they say they are going to do.
In the insurance industry there are many differing labels used to describe marketing and sales people including insurance agents, advisers, and brokers. Some are employees and some are independent contractors. Some have an almost tied relationship with one insurance company, while others use a wider range. Some are on a salary, some are on retainers, some are on commission on new sales, and some are on a combination of commission on new sales and servicing fees from existing clients.
For the typical family the insurance adviser must commit to a long term relationship. In doing so there needs to be a process in place whereby regular (annual) reviews are undertaken to ensure your insurance portfolio is appropriate for your family’s evolving circumstances.
At KSL Insurance Limited we recognise that we are in the people industry. We help families weather the storms they face and underpin their future success. While we are small in terms of the number of people in Christchurch, we are large in terms of our experience (Kevin 49 years, Brian 23 years) and resources we can call on to help.
Now having the Maurice Trapp Group as one of our major shareholders means that we have access to a broad range of additional skills and resources, as well as providing continuity in terms of succession.
What is your most valuable asset?
I am frequently asked what the most valuable asset a person can have; my answer is always the same. Your ability to earn…. and the only thing stopping you from earning is your health. While we all understand this, it is surprising that insurance to protect personal income is still one of the least popular mainstream insurance policies purchased.
The Reasons for not having Income Protection Insurance?
Cost…the perception that the cost of premiums cannot be justified.
‘It will never happen to me’ attitude to accidents and illness.
The Government will protect me through ACC and sickness benefits.
The Consequences of not having Income Protection Insurance?
Most New Zealand families live payday to payday; 80% of New Zealanders families cannot scrape together $10,000 in cash for an emergency without mortgaging something. I have watched the bitter experiences of a number of my clients when their ‘secure’ world collapses after losing their income through accident or illness resulting in financial ruin that follows from not owning income protection insurance. The consequence that follow include:
Recently I was undertaking some research in support of my belief that every family in New Zealand needs to consider medical Insurance as a cornerstone of their risk management plan.
The data I obtained from AIA Insurance validated my belief.
• People over 65 comprise 12% of the population but consume 40% of health spending.
• By 2051 the proportion of the population over 65 is estimated to double with the share of the total health spending increasing to 63%.
In my opinion, Government health spending will increasingly need to be “rationed” in the future. The focus will be increasingly on acute services and those most in need. Threshold levels for elective surgery will inevitably increase.
Elective surgery and diagnostic services not identified as an emergency and not life threatening will be prioritised within the Public Health System; notwithstanding the fact that it can improve a person’s health and quality of life.
In many situations diagnostic procedures are essential before a decision can be made to proceed with surgery, and there can often be delays in obtaining these diagnostic services through the public hospital services.
Elective services include hip and knee replacement, heart surgery, hysterectomy, cataract removal, cancerous tumor removal and diagnostic services such as endoscopy, laparoscopy, colonoscopy and MRI scans. While these services will continue to be provided by the public health system, they are increasingly becoming the domain of the private medical health industry.
The topic of conversation in many of the media outlets this week has been the on lack of trust that the New Zealand consumer has in the insurance industry. As much as I hate to admit it, it is a well-founded observation.
The commentators in TV, radio, newspapers and social media have avoided the single most important word that describes the purpose and objective for owning insurance; that is to create ‘CERTAINTY’.
Consumers purchase insurance to have the “peace of mind” provided by the financial CERTAINTY that, in the event of suffering a mishap covered by the insurance policy, that the claim will be paid, without question, to the full extent of the contract promise.
CERTAINTY is the missing ingredient. Plain language policies, when they were introduced in the late 1990’s, were intended to create CERTAINTY for the layperson. That is until we had a major disaster in Christchurch. The plain language policy words like “replacement value”, “as when new” or “as new” unbelievably had to have their meaning determined by the courts.
Common sense and integrity were replaced by “legal speak”.
The behaviour and delays in settling the Christchurch earthquake claims warrants urgent regulation of the claims process for general insurers.
With the latest life insurance and financial advice sector reviews, the consumer is again being ignored by the regulators’ approach to managing/regulating the integrity of the insurance industry by not addressing the claims management process.
I am embarrassed as a 40 year sales veteran to observe the industry review focusing further on regulating the sales of insurance; however, there appears to be no focus, rules or regulations offering any CERTAINTY to the insuring consumer with respect to claims management behavior of the insurance companies themselves.
Unwittingly I suspect, these same regulators are allowing the insurers to dictate their positions by being allowed to continue to market and issue policies to consumers that can be underwritten at claim time. Many policy owners are unaware that within the small print of many policies, before a claim is acknowledged and/or paid, the insurer then has the right to “check up” on your medical records, inspect your house or motor vehicle, and may require evidence of the property ownership documents.
The practice of underwriting at claims time is undertaken on almost all classes of policies including medical, life, trauma, disability, income replacement, travel, motor vehicles, and house and contents.
If, at application time, an inspection was made of the commercial building, house, contents or car, there would be no issue about modification, gradual deterioration, or pre-existing conditions; therefore this “fine print” could then be banned from the policy and the insurer would be required to improve their behavior immediately.
In the life, travel and medical areas, if medical records are requested before the policy is issued there is no opportunity for the insurer not to be fully informed of the risk and this information would eliminate almost all non disclosure issues.
Within the current environment there is no CERTAINTY for consumers while this behavior is allowed to run rampant.
During a TV3 Interview on Monday 23 June 2019 Tim Grafton, the spokesperson for the insurance industry, said that 90% of all claims are paid without question. That means that 10% of claims are investigated or at risk of not being paid. 10% is unacceptable and could be completely eliminated if regulations were put in place to ensure that all applications were underwritten correctly before the policy is issued.
Our firm recently made submissions to Government arguing for the need to explore how the insurance industry needs to modify the management of underwriting and claims. We hope our submissions do not fall on deaf ears. It is the claims management process that is in question, but all the emphasis is on the sale rather than the purpose for which the policy was purchased; financial CERTAINTY.
As part of the last phase in our earthquake claims auditing work we prepared and submitted to the Ministry of Business, Innovation and Employment (MBIE) our report on our reflections of our experiences and concerns relating to the insurance industry’s performance in the management of earthquake claims. We also made recommendations for changes to the claims management process.
Our objectives in preparing the report were:
To develop effective regulations modifying the behaviour of EQC and the insurance industry to ensure consumer interests are secured.
To restore the confidence of the insuring public in the industry.
To make the industry accountable to a government agency with the necessary authority to discipline individual companies for delinquent behaviour as a result of not applying good faith to their activities.
MBIE requested our permission for our report to be provided to the Public Inquiry into the Earthquake Commission. Subsequently the directors of KSL Audit met with Dame Silvia Cartwright and her legal counsel to discuss our report and our recommendations for upgrading and improving the claims management process for future events.
Dame Sylvia gave us a very fair and extensive hearing and we felt it appropriate that all our clients now received a copy of the report.
We also attach an extract from the MBIE Options Paper – Conduct of Financial Institutions, Section 101 which summarises information from our document.
We trust that we have represented your concerns accurately within this document.
Living insurance, known as “critical illness”, “trauma” or “major medical”, is the policy that pays a lump sum if you are diagnosed and survive 14 days from an extensive list of over 48 medical conditions. It also pays a lesser sum, generally 20% or up to $100,000, on a secondary list of early stage conditions/ events. This money will enable you to fund care, rent/mortgage and all outgoings and will also allow you to retire any immediate pressing debt, fund unforeseen medical costs and it will allow you to focus on recovery without financial stress.
Once you are paid a full claim the policy ceases. Some policies offer a reinstatement of the contract after 13 months but do not ever cover again the condition that caused the original claim.
Introducing Asteron’s new ‘Continuous Trauma‘ benefit
Asteron has just released what I view as one of the most valuable upgrades to living insurance policies in the form of ‘Continuous Trauma’ benefit.
‘Continuous trauma’ benefit means the policy is not cancelled and continues to protect you for all other conditions. After three years the condition that caused the claim is also reinstated and this process can continue for two further claims during the course of the contract.
Let me give you a real life example of the value of ‘Continuous Trauma’
I am living proof of the value of this new upgrade benefit.
As many of my clients know, I had a heart attack in 2015 and three months later was diagnosed with unrelated cancer of the bladder. Had this contract extension been around then, I would have been paid out twice! (I am pleased to advise I am totally clear on both counts now.)
I am recommending to all my clients to add a ‘Continuous Trauma‘ benefit to their existing trauma policy.
In this newsletter I want to share with you a story that has forever affected the life of a valued KSL staff member. I have this person’s permission to share her journey with you; the bad, and also the good of her ordeal.
This tragic event could happen to anyone and is a reminder to all millennials and their parents who may be skeptical of the value and need for including insurance as part of their risk management programme.
For many years I have been strongly advocating that my business owner clients should consider the financial impacts of illness and/or disablement to key employees. My advice has always been that clients protect themselves and their staff with appropriate insurance on their key people.
My Journey to and from the Earthquake Claims Business
In September 2017 I decided to “wind down” my involvement in auditing and negotiating earthquake claims. If I am honest with myself, I just got sick and tired of what I regard as the unethical behavour of the insurance companies in managing earthquake claims.
In 2011 when I initially set up the claims audit business it was to help my own KSL clients. I expected that we would be all “done and dusted” within 12 to 18 months. The reality was, it ended up consuming me! The business diversified into a specialist claims audit business which I operated for almost six years.
With the successful integration of the new shareholders from the Maurice Trapp Group into KSL Insurance I am delighted to now be embarking on the continuation of my first love – Life Insurance Auditing. Helping clients (before they have their claims) through my Pre-Claims Audit.
What the earthquake sequence has taught me as an insurance veteran of 48 years, is that the principles of good faith and Insurance integrity vanish when a disaster strikes at the heart of the profitability of an insurance company.