Interview with
Russell Hutchinson
Director, Quality Product Research
We sat down with Russell Hutchinson, who is the Director of
a company called Quality Product Research Limited, to find
out about how they review different life insurance providers’
insurance policies.
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Russell’s business is all about reviewing how life insurance
policies work – to assess and compare the quality of insurance
contracts and provide that information to advisers, so they
can help make a decision on the best policy for you. They are
researchers who are independent from insurance companies
and advisers.
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Financial advisers that specialise in insurance sales subscribe to our
research. Some other industry organisations also use it.
What is this research used for?
Good insurance advisers review the insurance products available in the
market and select policies most suitable for their clients. We think that
is the heart of financial advice and we designed our research to help
advisers assess which policies are most suitable for each individual client
– customising our research report to each one based on age, gender,
occupation, and exactly what policy options they choose to include.
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How do you conduct your research?
Where does your research go?
Why is your research important?
The insurance market has become too complex for clients or even most
We gather all the policy documents and we chop them up into the most
individual advisers to assess on their own. We have a team of seven staff
important items. To help us work out which items are more important we
and we also call on contract underwriters, medical experts, claims experts,
develop claim models – a picture of what the typical claim looks like – and
reinsurers, and actuaries to help us make our assessments. We think smart
circulate those to experts in the industry for review – reinsurers, insurers,
advisers use independent research to help inform their thinking – other
medical and underwriting advisers, and insurance specialist financial
advisers must either be trying to cover a lot of ground themselves, or
advisers. We then look for the differences between policy wordings and
make do without.
rate each of the items according to the differences and the impact that
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they may have on making a claim.
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What do you consider when ranking products?
Are products really that different?
Yes! The worst trauma product, for example, offers only about half as
much cover as the best.
We have a four-factor analysis process which we apply to each
of the items in a policy:
Definition – which is how likely a claim is under the wordings.
A good example is Melanoma, a type of skin
cancer. Some companies will pay out a Trauma
benefit on a Melanoma which is 1mm in depth,
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others require it to be 1.5 mm.
What makes them different?
What varies is how easy it is to make a claim – so going back to trauma
products, some insurers have definitions that mean that what your
Doctor and Cardiologist calls a heart attack might not qualify. So for some
products it has to be a much more serious heart attack than others.
Another good example is how much is paid for income protection claims:
Incidence – how likely this particular part of the policy
there are three main differences in how payments are made and lots of
is to be used. Continuing with the cancer
minor variations – but the impact can be the difference between a big
example, this has a very large weighting in our
claim, a small claim, and no claim.
model, as it is far more likely than rare diseases
like CJD, and so it is more important to have a
good definition.
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So it’s not just about paying the
lowest premium then?
Frequency – how often this feature will pay out. Usually a
claim is paid just once, but some benefits in
We believe that some cover is better than none. So cheap premiums can
medical insurance and income protection
be a factor, but even if you are on a budget you can buy good quality
insurance can be paid out several times –
cover with the money you are spending. In fact, you need to make each of
so some items can have a higher frequency
those dollars work harder – so quality counts more than ever.
in the model
Amount –
what is actually paid. So if a company puts limits
on a payment or a reduced payment is made we
include a reduced score for the limit in the model.
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Where are Partners Life products ranked?
We customise our research, so you need to get an individual report, but
Partners Life policy wordings score very highly in our process – frequently
We multiply these together to arrive at a score – the bigger the score the
delivering the best definition possible. We have also seen Partners Life
better. Some scores are negative – like the score for exclusions – because
respond quickly to market changes and improve products when a desirable
these take away from the value of a policy.
change is made.
partnerslife.co.nz