AFRM Referral Partner Newsletter - 7 February 2020
Well, what a start to 2020 it has been – fires, flood and hail across the country. A sobering way to start the year for sure but also heartening to see the best in humanity come to the fore with the outpouring of donations to support communities and agencies impacted by this summer’s bush fire crisis. It was amazing to see how quickly donations grew to $500 million with people and companies from all over the world reaching into their pockets to help those who have lost their homes and loved ones.
AFRM has also made its own modest contribution to the NSW Business Chamber’s Business Backs The Bush campaign by pledging to hold its annual planning meeting in one of the bushfire affected communities. How could we not? Our business is based upon a vision of helping more people. Please take a moment to check out the Business Backing the Bush website. Holding a meeting or event in an affected community is a simple way to help these local economies recover. As you may be aware, insurers are offering a range of relief options for clients affected by the bushfires. We urge any eligible clients you may have to take advantage of these support measures. At the time of writing, general insurers had received 13,750 bushfire catastrophe-related claims since November 8, with losses estimated at $1.34 billion but these figures were expected to climb dramatically as household property assessments are undertaken and large commercial claims are lodged. As the Acting CEO of the Australian Red Cross, Noel Clement said in January, recovery can take years and funding support is required for the long term. Against this backdrop we, like everyone else, are doing our best to get on with our jobs. On that note we’d like to take this opportunity to thank those of you who responded to our December communique in the wake of the Australian Prudential Regulatory Authority’s (APRA) move to discontinue certain types of Income Protection (IP) insurance. As a result of that communique, we are undertaking a number of client reviews to ensure they have the best possible IP cover in place to meet the needs prior to the first round of product changes ‒ ceasing the sale of Agreed Value IP policies ‒ becoming effective from 31 March 2020. While the next round of significant changes to IP insurance are not coming into force until 1 July 2021, these will not impact, contractually, any IP insurance policy with Agreed Value in place prior to 31 March 2020. This then, is the key issue for now and as such we ask you to consider which of your clients may be impacted and encourage them to contact us for a review if they have not yet already done so. The APRA intervention is likely to also mean the introduction of a higher capital requirement for insurers to hold in reserve to pay future claims. So, as we flagged in December, this could potentially manifest higher premiums across the board and we can expect industry-wide rate rises for products that already saw some double-digit cost increases last year. While it is important to note that existing policyholders’ contractual terms will not change (subject to the 2020 deadlines for new Agreed value IP business), we will be working hard to manage clients’ expectations around – and reactions to – any premium increases. Their cover is now more valuable than ever and we will assist them, as much as we are able, to retain it. All these factors again point to the importance of regularly reviewing your clients’ current circumstances to ensure they have the best possible risk mitigation strategies in place to meet their current needs. In this context, perhaps it is timely to revisit a case study we first published in April last year. It is the story of how a client was concerned about increasing insurance premiums and was seeking to reduce his level of cover. During the AFRM review process it became clear that the client’s circumstances had significantly changed since his last review and in fact he had not lodged an entirely valid claim that he was entitled to under the exact same policy he was seeking to change. In closing, our view is that it is always wise to have a program in place to routinely review your clients’ existing cover to confirm it remains appropriate for current circumstances – and particularly this year, before the ability to optimise IP protection is permanently lost. Yours sincerely, Nicholas Hatherly Managing Director
We had a client last year called William [name changed to protect client privacy], approach his AFRM adviser, Rob Vitnell, General Manager of AFRM Victoria, to conduct a review of his insurances because he was concerned that premiums were increasing and becoming financially out of reach.
William and Rob then met for their regular review meeting, during which AFRM’s Rob took the time to ask William how he was going generally? Had he been well? What was happening in his life? Had anything changed in his life circumstances since his last review?
In short, Rob took the time to renew the personal relationship and to check on William’s general wellbeing rather than simply focussing on the initial concern raised – that of increasing insurance premiums.
Through the course of this discussion William disclosed that he had been diagnosed with Type 1 Diabetes earlier in 2019 and is now being treated with insulin injections four times per day.
Accordingly, AFRM advised William he had a claim against the very cover he was seeking to reduce. William simply did not realise his current circumstances merited a claim.
If Rob had not taken that extra time “to go the extra mile” and ensure a thorough review process included those important discussions around current state of health - really digging deeper to assess whether it would be wise to reduce cover - William would likely have never made a claim because he was unaware that his policy included a diabetes benefit.
To say William is grateful to Rob and AFRM is an understatement. In fact, he has thanked Rob numerous times for his advice and for AFRM’s quality of service.
Soon after the trauma claim money had been deposited into his bank account, William called Rob and said: “I paid off my mortgage yesterday and it feels great, thank you.”
William then went on to again thank us for our advice, the thoroughness of our review process and the level of service we provide.
Rob noted that it was such a simple gesture but incredibly powerful at the same time.
“We really do make a difference in people’s lives. Even for someone like William that is very confident and successful, you can clearly see that this insurance claim experience and the outcome we have achieved for him has had a profound and positive impact on his and his family’s lives,” Rob said.