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[GRTV] Full Interview: Sam Tremethick

AIA’s Sam Tremethick talks to GRTV on claims trends through Covid, adviser cashflow and gives his take on dealer groups.

Friday, June 12th 2020, 4:48PM

With me now, is Sam Tremethick from AIA. Sam's in charge of the partnerships the company works with.
At AIA, what has your claims experience been around Covid?

Good question. We've had a number of redundancy claims come through, as a result. Whilst it's not significant, it's not insignificant. And obviously that's a reflection of the economy.
The other interesting thing is we've dealt with two death claims, as a direct result of Covid. And whilst it's a tragic circumstance, it's really humbling to be there for [the] families that need.
I think, interestingly though, if we've got the 30% market share, and we just do the numbers, that may be six of the 22 victims that have been insured.

So is that low?

Essentially 75% of victims haven't had cover. Some of it, you could argue, might be product design. But I think what we really need to call out is, there's a massive under-insurance problem still here in New Zealand.

So is that something an adviser should talk to clients about, and use it as an example?

I'd be fearful of using it as an example, but I think it highlights the need, and the under insurance here in New Zealand.
We are living in a world of volatility and uncertainty. So the need for insurance is ever present.

And redundancy claims? Has that been a big number?

Yeah, look, I don't have the number off the top of my head, but there has been a number that have come through. But that's reflective of the environment in which we're operating in.

But it's showing your products are working?

Well that's why they're there, and that's really pleasing. For us, making sure that we've been able to keep our products open, through the whole programme, or the whole event, has been really important for us.
We've kept our redundancy cover available for new clients, albeit we've made it incredibly explicit, the need for a six month waiting period, et cetera.
But I think, as an insurer, you can't just be there for the good times.

No, that's exactly right. And you've just this week rolled out some extra support for advisers. Can you talk me through that?

We went out to our advisers ... And again, reflective of the economy, 65% of them said their biggest issue was cashflow. I think they've done an amazing job retaining support staff, and supporting clients through this time. But we really wanted to address that main problem, which was cashflow.

So we've introduced, from this week, a small-business-support payment. So that's an additional commission payment, to the tune of 40% on new business that comes through via eApp. That's really important for us, in the sense of, does it go all the way to make up for the shortfalls, and loss in revenue? No, but it supports those businesses.

So it's also a bit of a drive for you to get the eApp used more?

Without a doubt, but never make light of a crisis. The crisis really drove up take up, and we're sitting at about 80% usage now.

So cashflow was a big issue for advisers? I'm surprised. I would have thought a lot of them had good trail books?

Yeah, trail was definitely a part of their income stream. And advisers are advisers, and obviously they've got different business models. Some that are well placed and established in the marketplace, would have a good trail book. Some that have just started out, don't. And those that may have entered into various partnerships, where they share trail commission with referral partners, or whatnot, are also struggling. I think, as a generalisation, everyone is doing it tough. From a new business perspective, and also from a cashflow perspective.

So this is AIA's way of helping out at the moment?

Yeah, we were trying to get the balance of speed to market, and something that we could implement quickly. But also aligning to that point of under insurance. There is more than enough opportunity out there. And whilst things are different, and the world's different, the need for insurance is ever present.

What are you seeing in terms of new business now?

We're returning to where we were pre-Covid.

So how big was the drop?

In the adviser market, it was circa around 30%. And it was interesting. There was some advisers, and you can speak to them directly, some would have really suffered significantly. Others, and whether it was mindset, attitude or just the way that they'd structured their business, actually out-performed during that time.

What are the lessons advisers can take out of this Covid experience?

I think those advisers that have been successful ... and this is nothing new … this is not a result of Covid … but I think those that have done really well through this process, have a clear value proposition to their clients, and have a clear client-first mentality.
Those that have had that relationship with their clients, have been able to nurse them through their situation. They've understood their financial needs, and been there for them. Those that have been more transactional, would probably have been more heavily hit.

Yeah, so that's one of the things which I think this whole experience has done, is actually focus people on what their value proposition is.

If you look at any other industry, it's a key for a successful business … knowing what you are, knowing what you provide, and ultimately who you're providing it to.

And other predictions for the future of advice?

So what has this told us? I think it's told us the importance of being relevant. And I think from a product manufacturing perspective, that challenge is on us. Making sure ... When I talk about the under-insurance challenge that we have here, I think we've also created that problem, in the sense that our products are very feature-rich and very expensive. So, how do we make sure that we're able to offer products to a broader part of the community?

So we might see product change come out of this?

Yeah, I think so. And that's not to say it's taking on less risk, but I think it's adapting to people's needs, and people's wants.

Yeah. And the other thing ... I saw you in a video during lockdown. One of the many videos I've watched. Dealer groups … how do you expect them to evolve after this? I guess I'm really interested in that one of your competitors has gone down the track of paying the overrides to the FAPs. Is that the way you guys would go?

I have a personal bias. I believe that dealer groups are good. I think they provide a really rich service to the adviser. There's arguments to go and do it yourself, and there's a lot of reasons to do that. And if you're that way inclined, then you should. But it's also a lot of admin. And it's also a lot of compliance that you are actually responsible for, on top of the standard advice compliance. If that's not your skillset, are you actually better to outsource that to a dealer group type relationship?

I think it'll evolve, and it will mature, but I think there's some really strong dealer group offerings in the marketplace. I think there's a really important thing, which is probably underestimated, and that's the collegiate nature of a dealer group. Advising's a lonely business.
So that ability to meet up with your peers on a regular basis, and professional development days, continuous education. Getting access to speakers that you couldn't actually afford by yourself. But [which] your dealer group, through their bargaining power, can actually bring in. I think that's really powerful.

I think, each to their own decision. And there's pluses and minuses in any decision. But I think there is definitely a strong place for dealer groups, going forward here in the New Zealand market.


« [GRTV] ANZ Investments' CIO Paul Huxford [GRTV] Depressing imbalances in IP market: Hutchinson »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.45 7.05 6.85
ANZ 8.64 7.99 7.49 7.35
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.39 6.89 6.75
ASB Bank 8.64 7.39 6.89 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼7.29 ▼6.85 ▼6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.89 ▼7.45 ▼7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.15 - -
Co-operative Bank - Owner Occ 8.40 7.35 6.89 6.75
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.85 7.39 7.25
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.85 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.59 7.29
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.35 7.89 7.65
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.35 6.89 6.75
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.90 7.39 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.95 7.45 7.29
SBS Bank Special - 7.45 6.95 6.79
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 7.05 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.19 7.55 7.55
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.39 6.75 6.75
Unity 8.64 6.99 6.85 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.45 7.37 6.77

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