It seemed like just last week that I was welcoming everyone back to the New Year and already we are a third of the way through 2019!
On the upside, the tsunami of legislative change is washing through and the landscape advisers will be working within is now fairly clear. The Reserve Bank/FMA reports on major banks and insurance companies have been having an impact and some of that is flowing through for independent advisers to manage as well.
Our next meeting with MBIE and the FMA to lobby/advocate on your behalf, is scheduled for the 27th of May. Now that we are through the bulk of consultation processes, we are trying to get those meetings back onto a regular quarterly rotation. If you have any issues or salient points on any topical matters, then please feel free to feed them through to me (email is best) and I’ll raise them on your behalf.
As I outlined in my last newsletter a few of the key media messages we are pushing are:
1. Financial advisers provide a valuable service to New Zealanders helping them increase their financial health, wealth and wellbeing.
2. It is important there are unaligned advisers in the system to ensure that consumer choice is not restricted to product providers only advising on/selling their own product.
3. Independent advisers will need to be remunerated for that work and commissions (suitably disclosed) are a valid way to do this. We are working to shift the language when speaking with legislators and regulators from ‘incentives’ to ‘fair remuneration’, and highlighting the fact that financial advisers do not set the remuneration structures.
The TripleA scholarships continue to see steady levels of enquiry and applications as many RFAs look to complete the training requirements they need to operate under the new regime. Read more here.
It’s been a great little initiative by the TripleA and has helped underpin a membership that continues to steadily grow. The TripleA has seen a 16% growth in membership over the last two years, which when considered alongside a steady stream of older members retiring from the industry, is a solid effort. Our intention is to remain a boutique adviser association with the Board targeting a further 10% steady and targeted growth in the 2019/20 Business Plan. We list and welcome all our new members to the TripleA in each newsletter.
For members in our PI scheme you will be in the middle of the annual renewal process as I draft this newsletter.
Unfortunately, as signalled in the last newsletter, we saw quite a large base premium increase this year (most add-on elements remained unchanged). This was driven at the global level with international reinsurers exiting PI from higher risk markets. Locally the earthquakes in Christchurch and Kaikoura generated PI claims against engineers, architects and advisers, to name just a few occupations.
The Board had AON and NZI present at its meeting on the 13th of March to explain this background. While the premium increase was disappointing it was pleasing to hear that the TripleA PI scheme is still one of the most competitive in the marketplace for benefits, policy wording and premiums.
The base premium of around 50% we shouldered is significantly less than the 80%-90% premium increase for most other PI schemes. We are also aware of some schemes that have been closed and, in some cases, renewal not being offered.
It was also pleasing to hear that the loss ratio of most other schemes over the last 4-5 years hovers around 100%. The TripleA scheme is less than a third of that with low levels of claims over the last five years so is very well regarded. Part of that is the importance of notifications. In the last newsletter, you had the 1st of two articles AON has drafted for us on “Notifications and Claims”. The second is here.
Wayne Smith, CEO