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Southern Cross – service or not?

Jon-Paul Hale gives his take on what Southern Cross's change to trail commissions means for advisers.

Friday, July 26th 2019, 4:43PM

by Jon-Paul Hale

While I agree with Barry Read, there is little evidence that there is a correlation between higher premiums and higher service need.

The on the ground coal face reality is a client aged 40 and looking at a medical situation is much more able and capable of managing a good part of the claim process than an individual who is 60-65 with significant health conditions and lack of understanding of the process.

While we continue to measure outcomes based on where we stand today, we overlook the reality of the people advisers are helping, those that can't navigate phone and internet like a fit, healthy 40-year-old. They struggle to get out of bed, let alone drive a computer. They need the support of an adviser because they have impairment the people making these decisions have not faced nor do they understand.

If they did, they would be increasing the support not pulling the rug out.

The pointy end of the support advisers provide at this end of the scale is not seen by SX, because their call centre people aren't out here where we stand.

It is the 50-year-old with a crap diagnosis, who does not know where to go or how to access what is needed, they have never had to before.

There is a fantastic example with a testimonial from a client on my website on precisely what this looks like from their perspective. 

And often, under the current approach, with SX not paying for that help on that client, because they originated from an SX scheme.

The social contract that we have had has been swings and roundabouts, what we don't get paid for in service comms another will. It is the pooling of this revenue from SX that enables us, in the field, to help the people most in need.

So while there isn't a link between commission and service; we know from what we do as advisers that the time and energy needed to help a difficult medical claim through the process for an older life is significant. It is much more than that of the younger ones, which is why the linking to premium made a fair representation of the service need.

Is there a correlation that can be accounted for, maybe, though not without a lot of additional work that probably won't show us anything we don't already know.

Frankly, Southern Cross has demonstrated to the market that they do not respect the adviser, as they suggested in their letter, quite the opposite.

Southern Cross has demonstrated their disdain for the adviser, the role they play in claims, and the support they provide. The support that Southern Cross to date hasn't paid for in many cases.

They have taken a somewhat lopsided situation and capsized the boat.

Those supporting Southern Cross in their approach have no choice, they're tied to them with the business they have, it wags them and their business like a tail.

I don't have the exposure to one provider like Southern Cross and am quite vocal as most know.

I will call this as it is, a betrayal of all things held dear to genuine people focused advisers. A slap in the face by Southern Cross that follows all of the rhetoric about the industry and the view of advisers.

For those that are professional, competent, and longstanding client advocates in their advice businesses, this is insulting at a level no raving AFA, MP, or regulator, has ever fired in a life insurance advisers direction.

We have an aging population, this population has a need, and Southern Cross has just said to the market, they do not care.

These people are someone's parent or grandparent, Southern Cross have said they don't matter. Those that are in groups and are working and earning matter.

Working-age group members represent the future increase in premium for Southern Cross while existing non-group retail clients represent the increasing claim responsibility Southern Cross has.

Some smart arse has figured out that advisers help people claim, remove the advisers from the equation, and Southern Cross have fewer claims to deal with.

It is a simple issue about money. It has nothing to do with empathy, compassion, or doing the right thing.

It has demonstrated that Southern Cross can not be trusted, and continues to be an organisation that can not be trusted.

And to add fat to that fire, Southern Cross did this will a letter with 30 days notice. Not a 12 month we're planning to. Not a 90 day, here's some time.

Southern Cross has turned off the tap on adviser businesses with 30 days notice. Turned off the revenue streams to many advice businesses that now need to figure out how to pay staff, how to pay the bills, with 80% less income.

Southern Cross has done the New Zealand people and insurance market a disservice at a level that is astounding for a non-profit. Maybe for a corporate, but we haven't seen one act so ruthlessly in a long time.

It may be a sign of things to come for advisers, I hope not. Because the New Zealand public did not ask for less support, they want more.

Tags: Jon-Paul Hale

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