Insurance
Partners’ fall in medical business ‘lower than anticipated’
Friday 23rd of November 2012
Managing director Naomi Ballantyne said there had been approximately 10% fewer applications since the September 1 commission changes came into effect, when upfront commission was replaced with commission paid on an ‘as earned’ basis, where advisers get paid as each premium is paid to the insurer.
Ballantyne said Partners Life was forced into changing the commission structure as they ended up writing far more medical insurance than estimated, and the relative lack of reinsurance financing for medical cover meant commission payments were coming out of capital.
“When we launched we thought we’d do about $2-$3 million of medical premium in the first year and instead we did more like $12 million, which meant we just had to keep raising capital in order to pay medical commissions, which just seemed crazy.”
She said there was some concern that the change would also see a knock-on effect on other benefits written alongside medical cover, as brokers moved to providers paying upfront medical commission, though this failed to materialise.
“Unsurprisingly the bulk of the slowdown was in applications with medical and only a small amount of other cover, such as life cover.”
Ballantyne also said volumes had increased in November, matching their expected seasonal trend.
“I think we can now confirm that the overall impact on our business is about 10% - which is lower than we had anticipated.”
Ballantyne said Partners Life remained on target for their business plan this year and had “caught up” on service delivery.
“We were running hard to catch up with the volumes of work that we were doing so we’ve got the resourcing right now, so business is good.”
Comments (15)
Craig Knox
Why are you so fixated on OnePath Mr D ? They are owned by a bank, capitalised correctly and from our experience have kept their service standards throughout the onslaught from Partners. They are a great underwriter and will remain so for a long time yet.
In Naomi's own words "When we launched we thought we’d do about $2-$3 million of medical premium in the first year and instead we did more like $12 million, which meant we just had to keep raising capital in order to pay medical commissions, which just seemed crazy.” It seems a little worrying that they cannot accommodate circa $10 million of additional premium/commission on their balance sheet– what does this say about their financial strength and for that matter what is their financial strength rating right now?
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12 years ago
Simon Rule
Zak - Part of the reason Partners Life have proven so popular amongst advisers is that they actually address the issue of resourcing seriously. OnePath (and I really mean ANZ Bank) don't seem to have a focus on making sure service standards are maintained. Like everything else the ANZ touches they try and run their operations on the smell of an oily rag (look at how they resource their broker unit in Auckland for a prime example!) No wonder so many experienced OnePath staff have since journeyed across to Partners. Your staff are your biggest asset in business, without them you are nothing but ANZ always seems to think otherwise. OnePath are now paying the penalty for this ignorant stance with many advisers electing to place their clients at Partners Life and elsewhere for cover. It’s almost comical to watch a big bank like ANZ squander all the talent and opportunity that was Club Life/ING Life when they acquired it.
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12 years ago
Craig Knox
Amused your tirade against OnePath may be your experience but it has not been ours - each to their own. But back to the question at hand what is Partners Financial Strength rating - does anyone know? Amused it seems to me that you should have this at hand given all that business you are putting their way. Having the financial ability to pay claims today, tomorrow and out into the future is what clients demand not that you have a great relationship with them.
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12 years ago
Regan Thomas
From Partners website. " We would re-assess whether that cover would have been offered and on what terms, had that material information been available at application time. Any decision whether a claim can be paid or not will then depend on this re-assessment "
So differentiating by pointing out they do something everybody else does. All an adviser should expect is that a claim will be paid if it's a claim. Period.
If a company is struggling to pull the funding together to pay commissions, can only scrape a B++ rating (1 in 30 chance of default within 5 years, A+ is 1 in 300) and might be owned by KiwiBank one day anyway, why would I recommend them?
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12 years ago
Simon Rule
Zak - having handled a big health claim for a Partners Life client recently I can speak first hand of Partners ability to pay claims (and promptly I might add). I hope you are not seriously suggesting that an insurer's financial strength rating is the ONLY thing an adviser should focus on when making a recommendation to his/her client? You seem to have bought the OnePath email of 20th Sept this year hook, line and sinker. Partners having a B++ rating currently isn't bad considering they are only the new kid on the block so to speak. Care to guess what Club Life’s initial rating was when they were first started?
I still give business to OnePath now and then Zak but when you compare Partners Life on features and benefits, premiums, underwriting outcomes and general turnaround times its pretty bloody hard to go past Partners Life as an insurer for my clients. As I said in my earlier post above ANZ had such a golden opportunity with Club Life/ING Life and they stuffed things up royally. Yes I am sure they (OnePath) are scrambling now to repair the damage but it’s too little too late for many advisers. It only takes someone like a Naomi Ballantyne to come along and do things better and smarter which doesn’t say much of the calibre of the senior management teams for the various life companies and who is running their day to day operations nowadays.
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12 years ago
Craig Knox
Johhny D no I am not Jeremy N sorry - sounds like a smart bloke though - hahaha.
So if Dirty Harry is right Partners rating is B++ compared to AA- for OnePath. I am sure all those customers moved from OnePath to Partners will sleep well knowing this fact especially as the global economy rock and rolls over next few years. By the way Amused how was Vegas as it sounds like this was a higher priority than shoring the balance sheet for more medical premium or alternatively a higher financial strength rating.
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12 years ago
Craig Knox
Amused there are two parts to paying a claim. Firstly the desire to do so and secondly the financial ability to complete that desire. My original question asked does Partners have the ability to pay over time. To determine this their financial rating is paramount. The world is filled with businesses that desire all kinds of things but lack the means to deliver. Back to the question what is Partners financial strength rating?
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12 years ago
Simon Rule
Zak - I never went to Vegas. My focus is on my clients and their best interests not whatever exotic location the insurers happen to have picked out each year. Africa for OnePath this year wasn't it?
You seem to be hung up on Partners current financial strength rating as the reason you won't recommend them to your clients. That is a real concern Zak and I feel sorry for the clients that come to see you for cover. On behalf of the majority of advisers in the industry that do use Partners Life please open your eyes! You owe it to your clients.
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12 years ago
Broker Broker
How was South Africa Zak? Bit quiet?
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12 years ago
Daryl McAlinden
It is fairly obvious that a start up life company will have a lower rating. I remember similar negative comments by my fellow advisers (and AMP et al) when Sovereign was in its formative years. Do the naysayers understand the concept of reinsurance treaties?
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12 years ago
Bryan Tucker
I was told recently that PartnersLife have just had the rating agency in to look at their rating and that something in the A range is probable. I'm sure that will satisfy everyone who places the financial strength rating first and foremost.
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12 years ago
Regan Thomas
Many have read Reality is Crazy. And the nay-sayers were calling Sovvy out on many fronts. Sov3 is here, but the market is different.
What is the same is the buying business with trips and commissions, product built to the ratings, and perhaps some loose underwriting. All things advisers go for. All things that caused a lengthy hangover for Sov1 and Sov2.
Mac: Reinsurance treaties are complex beasts. Two points on this: 1, if it's grey we will pay (so long as the reinsurers agree not that it's grey but is an actual claim because we haven't got much money and can't afford to go it alone so they actually pull the strings we just have a nice slogan)
and 2, the reinsurer agreement is with the insurance company, not the client. Where does that leave the client if the insurer goes broke?
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12 years ago
Mike King
Cannot believe the level of pure vitriol becoming evident in this conversation - these are insurance providers, not AFL teams!
This is Year 21 for me and I recall the ways Sovereign both used to attract brokers. It may not always have been 'ideal'(especially if judged in today's climate & morality), but how else would a start-up, much derided, 'mission impossible' outfit like Sovereign have survived and indeed THRIVED if it had not so effectively converted so many newly-unleashed ex-tied agents?
And it wasn't just the incentives - the products were just so..DIFFERENT! and priced very attractively compared to what had been the dominant insurance culture.
A decade later, Club Life/ING (aka Sov 2) performed a similar service to the industry, and was also slagged and derided as a 'mission impossible'. Some people never learn.
Now, Partners (Sov 3)is once again kicking industry butt and changing the paradigm for us as we interact with our clients (who, let's face it, are not so interested in the actual product and its features, but in your/my ability to identify - with professional competence and confidence - and implement a plan that will perform when needed.
Maybe this time is different - in many ways, it is, given the financial & economic uncertainty. Maybe Partners WILL crash & burn and Zak will be able to start an'I told you so' thread. Then again, maybe not. After all, Naomi & the Coons have all done this before and we can be pretty sure they would have learned a truckload along the way.
More power to them.
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12 years ago
Regan Thomas
Mike you're so right. Some never learn. Coon and Coon and Ballantyne started Sov1, tied up the newly untied (SovNet), brought products and commissions and trips and all that stuff into the market and people lapped it up. Then they sold to CBA, who spent years getting over the loose underwriting and other practices.
Then Sov2. They bought in product and price and underwriting and half the staff at Sov1. And advisers lapped it up. They sold to ING who sold to ANZ. Now that medical product in particular is causing problems, along with the advisers who follow Naomi and flick clients from Sov1 to Sov2 to now Sov3.
Then Sov3. More product, ratings, commissions and trips and the pack lap it up. And one of the Partners directors is also on the board of KiwiBank....
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12 years ago
Simon Rule
Well said Linus. I am sure most astute advisers agree with you also.
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12 years ago
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