Letter: AIA disputes PlanTech's findings

A few years back I wrote a couple of articles criticising PlanTech, and other research houses, for ignoring two significant factors which advisers would likely take into account in the product selection and recommendation process, namely price stability and product 'sustainability' in relation to claims loss ratios.

I also suggested that the research houses should take a 'base year' against which to measure product price movements, say 1996, when the industry-wide premium income for this product became more significant.

Is PlanTech signaling to the market that all the expertise and resources of this research house can only find price movement information going back 2 years? How strange!

As I have stated previously, AIA's disability income pricing was widely regarded as a bit on the expensive side between 1996 and 1999/2000. As other offices such as Sovereign, AXA, and Royal & SunAlliance pushed their disability income premiums up over that four-year period, the pricing differential closed and eventually left AIA, in certain cases, below the market.

If PlanTech had taken some more care in conducting its so-called research, it would have discovered that AIA was last to increase prices in that period for two primary reasons

1. We were the most recent entrant to the disability income market, and,
2. We had consequently a much smaller book from which claims would eventually emerge.

To suggest that we were offering "ridiculously" low premiums is a gross distortion of the truth, and calls into question the competency of this "researcher" to carry out objective, impartial and meaningful research.

Price increase information is normally announced by a life company to advisers and policyholders in advance of that price increase taking place.

This is therefore information which relatively easy to access with a little professional and focused effort.

It clearly seems to be beyond the wit and competence of PlanTech to carry out adequate research into the history of disability income pricing in the New Zealand market.

Ask each company for a five-year disability income price history, and if they decline to respond, publish that refusal to release the data as one of the research findings.

Had PlanTech stirred itself to carry out proper research and produce something meaningful, rather than the emotive blather in the article, he would have discovered that over a five year period between 1995 and 2000, Sovereign, the clear market leader, had increased its premiums by 100%.

Rather than fire off ill-considered and poorly researched allegations of irresponsible pricing, PlanTech should take a more professional and considered approach to the issue and apply proper research techniques to arrive at some meaningful conclusions.