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Sovereign website awaits sign-off

A new website selling solely Sovereign insurance products is awaiting final approval from the insurance provider this week.

Monday, February 18th 2013, 9:00AM 19 Comments

KiwiCover has been set up by Alan Kelly, as a subsidiary of National Benefits Ltd.

Kelly said the site had been formulated to market life insurance to the New Zealand market.  “We’ve taken a different approach to other online sites, this doesn’t purport to be a comparison shopping site.

He said sites that offered more than one provider tended to only compare them on price. “Even if they ostensibly offer info on products’ non-price aspects, I don’t believe it’s done in a genuine way.”

Kelly said he was hoping to develop a brand in the New Zealand market and raise awareness of underinsurance.

He expected final confirmation on whether Sovereign approved of the site by Wednesday or Thursday.

He said whether customers would find it cheaper to buy Sovereign products via his website or from an advisers would depend on other advisers. “Sovereign advisers have the ability to tailor their commission to suit.”

KiwiCover provides a 25% rebate on the first year’s insurance premium. 

Kelly said when he was developing the site, he had the opportunity to approach other providers but Sovereign seemed to be a good fit.

An adviser who did not want to be named said Sovereign had indicated it would shut down offerings such as KiwiCover because they conflicted with its own distribution channels.

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Comments from our readers

On 18 February 2013 at 9:57 am JohnnyBroker said:
Pretty clear where this is heading. Sovereign going direct can be the only reason for them to push this kind of website. Remove the "kiwicover" stuff and its just Sovereign direct to the public. Not impressed...
On 18 February 2013 at 10:10 am Charlie said:
What a joke. “Sovereign advisers have the ability to tailor their commission to suit.” Um, how do you reduce commission to match a 25% discount? Can't be done. Looking forward to Sovereign's comment on this....
On 18 February 2013 at 10:56 am Not too worried said:
Wouldn't hit the panic button yet folks! Note the bit about Sovereign not signing it off. Can't see them letting this run in a million years!! Imagine the effect on the good old Sovnet crew! unthinkable!
On 18 February 2013 at 11:56 am Vinny said:
I've been a big Sovereign supporter for the last 13 years, but this type of nonsense makes me reconsider my (and their) loyalty. As JohnnyBroker says.... this might as well be just a Sovereign website (selling direct).
On 18 February 2013 at 12:06 pm Amused said:
Limiting your clients to only one insurer (especially when the insurer in question is now trailing in the slipstream of others in terms of features and benefits) is not doing the right thing by them. As any experienced insurance adviser knows you always need a couple of “options” available to you as this ensures that you always secure for your client the best possible offer of terms. This is especially relevant if the client/s in question have anything other than 100% perfect health!
On 18 February 2013 at 2:32 pm Dirty Harry said:
An interesting story.

On one hand we have 650bn shortfalls in cover - perhaps confirmation that the traditional methods aren't penetrating the market deeply enough. Couple the high upfront commissions they are paying together with the increasing online activity, and it's easy to see where this might go.

But does this come from a place where there is genuine concern for underinsurance, or an opportunistic profit driven ploy?

Because on the other hand; while at top level the insurers may all be keen to develop the direct space, the grass isn’t always greener over there and it will always cause unrest among their supporting advisers. Remember ERGO? What a flop. Dorchester tried recently too. And what about our dear friends at Pinnacle? They have just 1% market share - and I always wonder how good their persistency really is. 100% expense ratios anyone?

Amused: Cigna, Pinnacle and all the banks (I count them as “direct”) sell just one product range. Most are crap product and all involve either little or at times useless advice. Hit and miss at best.

The adviser’s value proposition will always be getting the right cover, at a competitive price. Throw some research and analysis in there and most of the time it’s a winner.
On 18 February 2013 at 3:53 pm Observer said:
Question - Looked at the KiwiCover website and am I not mistaken, they are white labelling the Sovereign Product (have a look at the sample policy wordings).

The site also states that KiwiCover is backed by Sovereign (the impression is this is financially backed). Doesn't this simply suggest that this is a Sovy subsidiary?

Be interesting to see Sovereigns reaction to a site that is live, but supposedly still in development awaiting sign-off.

On 18 February 2013 at 4:17 pm Amused said:
Well said Dirty Harry. The adviser channel will always I believe hold the edge over the banks or “single provider” outfits like Alan Kelly's for the simple reason that we do give our clients choice.

In terms of the channels only offering clients one product range I must confess I scratch my head as to how some clients just merrily sign up with the banks for cover without shopping around first? Most people elect to search out a good mortgage deal, why not the same on their risk insurance? The perception must be that all the insurers are offering the same cover at the same price….advisers know that this is most certainly NOT the case (especially on features and benefits)

Again as I said earlier the danger with one product range is that another provider/insurer may have offered the client much more favourable terms which can make a huge difference on their financial position then in terms of benefits paid at claim time.
On 18 February 2013 at 5:24 pm Vinnie said:
Just did a Google search "online life insurance in New Zealand" and I have a choice 57,400,000 choices - and it includes virtually all the main providers, and a number of brokers with their own online practices, Lifedirect and Insureme are just three examples.

So gentlemen and ladies - this practice is here alive and well whether you like it or not, and will be with us going forward.

Personally I am not all that bothered if any of the providers I use want to have an online strategy - these sites will be appealing to a section of the community that I would probably not normally avail my services to, after all people are becoming more sophisticated with buying behaviours and I would have thought this kind of buying behaviour would at least be a conduit to lead these folks growing into clients that need and request more comprehensive risk insurance reviews.

After all - this may be a vehicle for those start to address the horrendous levels of underinsurance in New Zealand.
On 18 February 2013 at 8:51 pm jmpddm said:
Sov must be having a field day seeing as they own Life Direct too. Wonder who is the primary supplier there. Are these stories true or just some bored folk not spending enough time selling.
On 18 February 2013 at 8:53 pm Headmaster said:
How much ‘choice’ do you really give your clients, Amused? In some postings you preach about choice, and then in others you defend Partners Life as if you were the subsidiary. You talk about choice here, but just today in another posting on Good Returns (“Most Kiwis Wary of Insurance Industry: Study”) you say that choice should be taken away from your clients, and that they should be forced into taking life and income protection cover against their wills.

You say that “A growing majority of kiwis can’t be relied on nowadays to make the right decisions for themselves”, in support of your argument that their choices should be taken away. In reply, Brent Sheather (understandably) said that he had not heard of anything more ridiculous.

So which is it, Amused? Is it choice or no choice? Is it choice when it suits you, and not when it doesn’t? Is it choice for you and not for others? Or is it simply your choice to go with the latest newcomer to the insurance scene, regardless of the financial strength they bring to your clients?
For you, isn’t this just a case of Sovereign yesterday and Partners Life today? In that case, who will it be tomorrow? Who will you ‘choose’ for your clients then?
On 19 February 2013 at 9:46 am LennyK said:
Typical Headmaster. As soon as things don't go there way it becomes everyone else fault.

What Sovereign are doing here is nuts. I am sorry but I can't support a company that doesn't value me, the adviser.
On 19 February 2013 at 10:09 am Mathew Harrison said:
Any true industry professionals who are focused on providing the best overall advice and service will be focused on improving their own businesses instead of worrying what others are doing in the market place.

It's about articulating to prospective clients the value of true objective and impartial advice in comparison with other direct channels or even aligned advisory practices.

Not a hard thing to do, if you genuinely care about your clients.
On 19 February 2013 at 10:34 am Observer said:
Had a chance to look at this further.
Let’s break it down - Allan is quoted as saying: "..whether customers would find it cheaper to buy Sovereign products via his website or from an advisers would depend on other advisers. “Sovereign advisers have the ability to tailor their commission to suit.”
Did a quote from the Kiwi Cover website for a 35 y/o male non-smoker - $1.0m YRT life cover.
Here’s the comparison between Sov and KiwiCover for premiums:
1: Quotemonster – Sov = $58.54
2: FYPC - Sov = $58.54
3: Sov website = $58.54
KiwiCover website quote = $58.54
So this suggests that it is in fact no cheaper for the client to purchase on line or via an adviser. Another direct model that does not offer personalised advice, yet the premiums are not less than full advice. The client still pays the full premium each month.
On the topic of rebate, interesting. Quote for the website:
Payment of the 25% rebate does not depend on you having commenced your monthly premium payments — in most cases you will receive your rebate before you've even paid your first monthly premium.
This suggests that once the policy has been issued the rebate is paid, and is not linked to the policy remaining in force (or not that I can see from the website). So if I have read this right, the client receives an email that the rebate has been paid as the policy has been issued, they can then cancel the policy in the free look period, not pay a premium, yet still receive the 25% rebate …….hmmmmm (sustainable model???)
Regardless of the rights and wrongs, this is a great way to generate top up business. An adviser that comes across a client via this site still has a wonderful opportunity to provide full advice – at the same price, adding value.
On 19 February 2013 at 2:58 pm Mathew Harrison said:
Observer, good point. If you can get the opportunity to provide full advice, via this site then fair play!
On 19 February 2013 at 4:16 pm David Drillien said:
We’d like to clarify a few things here.

KiwiCover approached us with a proposal that offered Sovereign the opportunity to be the only life provider on their new online sales website. We were very open to the proposal – as we would be open to any proposal received from an adviser.

We are a few days away from giving Alan Kelly and his team the green light, but we were very impressed with his original proposal and naturally are delighted that Sovereign has been chosen as the sole provider.

Buying life insurance online, as in many industries, fills a gap for those members of the public who feel comfortable making decisions this way. It does not replace the valued relationship an adviser holds with a customer and our commitment to support advisers remains our priority.

Finally, KiwiCover is a completely independent company – Sovereign has no equity in the company whatsoever and we do not own Life Direct.

David Drillien

General Manager Marketing and Product
On 19 February 2013 at 4:58 pm Amused said:
@ Headmaster.

I must say your pseudonym is entirely appropriate after that little lecture! I’m not so sure actually that removing certain people's choice around them having compulsory life and income is so ridiculous as you and Brent Sheather might think. If we don’t stop excusing people’s inability to be financially responsible for their loved ones we are never going to come close to addressing the issue of underinsurance in New Zealand.

Please don’t try and go down the path of trying to dissuade advisers from placing their clients with Partners Life because of that company’s current financial strength rating. That makes you look very out of touch with the subject matter that you are "supposed" to be giving your clients expert advice on.

And for the record:

Choice - consists of the mental process of judging the merits of multiple options and selecting one or more of them. That’s how I select an insurer for my clients. It’s never a case of one provider getting all the business.
On 22 February 2013 at 10:05 am 6ftndr said:
Never been worried by any on-line presence, and this latest offering doesn't change my view on that, they are not my competitors.
On 22 February 2013 at 10:24 am Kerryo said:
If you compete on price, there will always be someone cheaper. Quite frankly, I don't want to buy a "cheap parachute".

Add value to your clients by being, non-aligned, providing a choice of providers/benefits that clients with education/advice from you of the issues that apply to them.

However, understand that the problem with choice is that it brings confusion, so we need to cut through the bullS#%t and explain in plain english.

Go and find clients that will value your advice.

If it was easy, everyone would be doing it.

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