Insurance
Fidelity admits it’s dropped the ball
Thursday 28th of September 2023
Acting chief executive Ian Clancy was upfront at the company’s recent Engage conference and acknowledged the company has not been servicing advisers well.
“We can’t move forwards without looking in the mirror and owning up to a few home truths.”
Amongst those home truths he acknowledged what advisers had been saying about Fidelity’s products being uncompetitive, its service levels have been lagging and its lack of digital tools.
“We’ve heard your feedback loud and clear. We need to do better,” he said.
“We are renewing our commitment to advisers and the adviser channel.
“We’re getting back in the game.”
Clancy also acknowledged that the company had been transforming on inside, and that had come with consequences. The internal changes included a new CRM, its Tahi platform, a rebrand and some HR changes.
Fidelity works with 1800 advisers and they are “most important means of protecting New Zealanders,” he said.
The internal changes are the foundations needed to allow for a growth phase to start.
He told advisers Fidelity wants to “focus on growth and take our business and yours to the next level.”
“It will take a sustained effort but we want to make it easier for you to do business with us.”
He also said the current environment has hard, but Fidelity’s lapse rates were holding up.
The ongoing regulatory changes are going to cost the company “tens of millions of dollars.
“We are entering a new era; a new landscape.”
Comments (7)
Evan Cavanagh
This is encouraging to hear from Fidelity Life.
The company had seriously lost direction and - especially - care for adviser led business after Milton Jennings tenure.
It also definitely lost the "family" culture within the business and the care for advisers (there was actually a deliberate decision to move away from being the "Fidelity Family" to a "Tribe")
I am glad that they are returning to the values and ideals that Gordon Watson formed the company on.
The last 2 leadership units seriously eroded that and a lot of advisers voted with their feet.
Well done to the new leadership for the decision to confront the past mistakes and to return to a focus on Advisers.
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1 year ago
jules glass
Dropped the ball is an understatement.
Not that long ago the head of sales at Fid was interviewed by GR and she said new business was a vanity measure.
So they seem to have done a u turn from not caring about new business to wanting to be back in the market.
This is a long term business and customers and advisers need a long term commitment to provide quality products and services. To think one can drop in and out like Fid are saying is arrogant.
Funny how the imminent arrival of a new CEO has woken up some Fid sales staff from their highly paid slumber.
Good they are back in the market but how about they stay there or just close down.
At least Resolution Life raised the white flag when they closed the old AMP-AXA books. resolution are clearly a vulture life business but what you see is what you get.
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1 year ago
Jon-Paul Hale
While we can wax lyrical about the challenge of being new business focused or not, the reality is the Res Life business is incredibly profitable.
Yes, service issues galore, and plenty of change management with loss of staff and knowledge, but still one of the more profitable insurers we have.
How long for an aging book is debatable, this has to be part of the business plan as they wouldn't have walked into this blindly thinking everything will remain the same.
I give it 10 maybe 15 years, those that can move will have moved because of new cover needs, and the rest will either be canceled cover as they retire or hanging on for a claim because they can't move.
Then we’ll see what managing a closed book looks like, and that may result in a fire sale to one of the other insurers for what's left.
Something I suspect Fidelity has worked through, keeping in mind Fidelity has been physically moving the business operation as well as implementing a new operating system, both hugely disruptive to focusing externally on growth.
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1 year ago
jake lester
Good call out JP. In a financial transition between highly successful Sir Clive and AMP management it was clear who would get the better deal for the sale to Res Life.
Suspect Res Life have factored in the impact of deteriorating claims experience as the healthy lives move.
Your comments do highlight the impact of keeping the pool of lives healthy in a yearly renewable book and not have poor underwriting, volatile prices or poor service impact the book. As you allude to the healthily lives can move so the pool will suffer from what I think is called anti-selection with. This can be a spiral as claims get worse but using the price lever just encourages the good lives to move.
Res Life seem smart enough to allow for this (the purchase price will have reflected this) and their book will contain lots of with profits and level premium business where there are different issues.
Businesses with robust but quality and well communicated underwriting, marketing initiatives to attract healthy lives and stable prices are likely to do better at having a quality pool of lives. Compare to a business that may have had lax underwriting when new to the market and volatile pricing.
Again thanks JP for your insights.
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1 year ago
Regan Thomas
how many advisers had something to say about the ex-Tower stuff that we still can't look up on their Adviser Centre?
This is probably a good example of upper management making stupid decisions against good advice from people who had knowledge but no rank.
As for Res? Not sure why they are mentioned here; but AFIK the AMP purchase was their first with a term book. They have always purchased conventional stuff, which has vastly different factors, especially persistency. In terms of scale this is a smaller deal, more of a toe dipping excercise. I reckon its more likely than not that the water is far colder than expected, and they won't get their togs wet unless they fall in and start to drown.
If AMP was free, it might have nearly been cheap enough.
But their MO doesn't require ongoing trust and support from us. Fidelity's does.
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1 year ago
Jon-Paul Hale
@Jake good points and highlights the many impacts on insurers that drive a raft of different things. I think every inuser we have has come out a said much like Fidelity Life has at soem point int he last 20 years.
The challenge with Res Life is they have bought what they have bought, and a signifcant part of the book doesn't have any where to go. At the same time there's an awful lot that will drop cover for retirement or end of contract term reasons as the boomers ride off into retirement.
The difference between a permanent coevr book and a renewable term book is yet to be seen,
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1 year ago
Harry Walters
Resulution life have recently recalibrated surrender values upwards, sometime by a considerable amount leaving the assumption they want to encourage surrender. They have also backdated to the date of purchase so many clients got a letter telling they were getting a second payment. Resolution life is extremely profitable off the back of the book. It's a shame AMP didn't recognise that when they shafted clients and advisers.
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1 year ago
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