Search

Search Results

Showing 1 - 5 of 5 results for Karren Vergara

I am a nearly 40-year-old female with over $154,000 in superannuation. That makes me an outlier. Measure after measure corroborates woeful facts that as a woman, I am expected to retire with about 45% ... I am a nearly 40-year-old female with over $154,000 in superannuation. That makes me an outlier. Measure after measure corroborates woeful facts that as a woman, I am expected to retire with about 45% less than men and that my balance should currently sit at $60,000 (Figure 1). After 22 years in the workforce, my super balance has never received an additional cent in contributions. I recently came back from maternity leave after one year. During my 20s, I took months off to travel and had sporadic but protracted periods of unemployment in between jobs that string together to leave an indelible hole in my bank and super account. I've taken hard-to-swallow pay cuts to switch industries. I've silently sat through salary negotiations, fearful to ask for more or the same amount my male counterparts earn. Topping it all off, I had multiple superannuation accounts with costly retail funds running simultaneously with insurance cover I did not know I was entitled to - which I probably would not have been able to claim. How I managed to more than double my nest egg compared to the average balance is nothing short of a superannuation-gender gap miracle. Entering the workforce at 16, I remember being bewildered with filling out my first-ever superannuation-application form. What was a binding death nomination? I have a younger brother. Does that mean he's my dependent? Or was I a dependent? When it came to the investments section, there was an option to "default". I didn't like the sound of that, so I opted to split my contributions across eight asset classes to add up to 100%. I distinctly recall that Australian shares was at the top of the list by happenstance and allocated a nice, neat figure of 40% to it, followed by international shares, which also received 40%. With my year 10 commerce education in tow, I knew leaving my cash in the bank would guarantee interest, so I allocated the remaining 20% to the cash option. That was a fun exercise, I thought to myself, and oddly gratifying to have a vague level of control for something I had no language or enough understanding for. So, for every job I started and super fund application form I had to fill out thereafter, I never deviated from splitting my money across 40% Aussie and international shares respectively, and leaving 20% in cash. At the onset of the Global Financial Crisis, I was working for an investment bank when the financial world started to implode. As stock markets and capital markets crumbled, a sage colleague told me that he moved all his superannuation to cash. I did the same thing. In mid-2009, as signs of recovery began to flicker, he told me that he went back to equities. I did the same thing. When the coronavirus pandemic hit and ravaged the markets, I moved everything to cash. Four months later, I reverted to my 40-40-20 split. You could hardly say that I was 'engaged' with my super. I left multiple accounts open only to bleed fees for a decade. Prior to becoming a financial journalist for the super fund and investment sectors four years ago, I had no idea what industry or retail funds were, or what a MySuper product was. Even after years of studying and working in accounting, the concept of 9.5% superannuation did not leave the confines of my employment contract. The critical importance of superannuation to me now is the by-product of occupational hazardry. I took my Gen-Z brother out of a pitiful lifecycle product and yanked my husband out of a crummy industry fund that took 10 business days to implement investment switches (it was 20 March 2020 by the time the fund moved all his savings to cash and, by that stage, the market had plunged 30%, leaving me infuriated). The fact that I will retire with a hefty nest egg propped up by an overreliance on equities and unsolicited intra-fund advice is underwritten purely by kismet. To think what could have been if I knew my way around the superannuation system back then - to understand what 'Superannuation Guarantee' meant or the difference between bonds and equities from as young as 14 years and nine months - would solve the current superannuation-financial literacy gap that is much-decried about. Quantifying the financial literacy and socioeconomic capital opportunity costs is distressing, and, at worst growing. I wish that all hard-working, low-income earning women who leave the workforce to have kids; don't have the confidence to ask for a pay rise; or cannot work but want to work because they are experiencing domestic violence have the same luck.Read more

Flatlining: The future of underwriting

KARREN VERGARA

Eight years ago, researchers from the University of Oxford analysed over 700 jobs to determine which will likely fall prey to computerisation. The famous research found insurance jobs (which had a good ... Eight years ago, researchers from the University of Oxford analysed over 700 jobs to determine which will likely fall prey to computerisation. The famous research found insurance jobs (which had a good representation of life insurers) in the US are highly at risk of becoming digitised - well ahead of cashiers, telephone operators and machinists. The study by economist Carl Benedikt Frey and academic Michael Osborne determined insurance underwriting roles had a staggering 99% chance of being overtaken by artificial intelligence. Insurance claims and policy processing clerks (98%), and insurance sales workers (92%) are also at risk. Data from Seek in Figure 1 paints a bleak picture of the declining demand for underwriters. Job advertisements for underwriters tumbled starting roughly the same time as the release of the Oxford study, with the index peaking 120 points then plummeting about 95 points in 2020. Contributing to the decline was the introduction of UnderwriteMe, a rules-based engine backed by global reinsurer Pacific Life Re in 2015, which has since become the dominant technology used by major players like Zurich, MLC Life, while boutiques such as NEOS Life and Integrity Life have recently jumped on board. Meanwhile, Munich Re's proprietary technology ALLFINANZ is gaining momentum as TAL and ClearView put it to use. Seek's data reinforces the accuracy of the Oxford prediction - but how much is attributable to the rise of automation given the life insurance sector is taking a hit on several fronts? Adrian Karloci, a director at B&K Consulting specialising in recruitment in wealth management, life insurance and superannuation, does not see life insurance underwriters becoming extinct. He believes traditional underwriting roles will continue to exist as changes the industry is undergoing tend to be more cyclical rather than structural. "The underwriter's role will continue to evolve. The development of underwriting rules engines and technology in underwriting has provided an alternative career path in the space," he says. "Some roles definitely have an automation aspect to them and technology will help add value." The advantages of AI moving in for most or some portion of underwriting functions are well pronounced: the removal of mundane and laborious tasks paves the way for strategic high-level work. "Digital skills are the obvious skill set life insurance underwriters will need to adopt, together with an analytical mindset to interpret data and increased client-facing communication skills," Karloci says. Chenthuran Suthersan, the head of protection advice at UK-based boutique life insurer Anorak, says technology like UnderwriteMe can significantly help with less complex cases, but more complex cases and medical exams are still being referred to human underwriters. "So while there are less cases that underwriters see, the ones that they do see are complex so the reduction in need for underwriters is not proportional to the number of cases that they will see," he says. Financial advisers are still reliant on human underwriters. Most advisers will pick up the phone to speak to underwriters to get a decision as well as understand what the issues are. "That allows us to communicate with the client about what to expect and why. That ensures that we look more knowledgeable to the client, but also the client will be more understanding of the outcome," Suthersan says. In a 2009 global study, Deloitte examined life insurers' underwriting strategies and found that less than a third (29%) adopted a system to streamline the process. At the time, all the systems analysed used some form of insurance application to base decisions; 65% incorporated either a traditional application or one with reflexive questioning digging deeper into applicants' responses. Twenty-six percent of insurers used traditional applications, while the minority used reflexive applications only. "Nearly half of these reflexive applications are relatively basic (10 or fewer drill-down questions), but one-third of them do have detailed follow-up (over 60 drill-down questions)," Deloitte found. Fast forward to 2020-21, Deloitte found in a separate study that many insurers are in the early stages of underwriting transformation projects going well beyond automating routine, labor-intensive data gathering and processing tasks. Insurers' ultimate goal is to better leverage AI, alternative data sources, and advanced predictive models to augment an underwriter's capabilities and eventually transition them to higher-level, multi-faceted roles, Deloitte said, in terms of portfolio management and increased interaction with brokers and customers. In the year ahead, North American insurers are prioritising underwriting automation, but this is less so for Europeans and those in APAC. It isn't just the power of technology that is threatening jobs, the cost of regulation is forcing life insurers to hike prices and scrap some products. Structural changes to life insurance policies have resulted in many policy definitions changing, says HLB Mann Judd Insurance Services risk adviser Andrew Kennedy. Prudential regulator APRA's intervention on income protection to improve sustainability guidelines resulted in life insurance, particularly within industry superannuation funds, has increased premiums significantly - some as much as 40% in recent months, he says. To make matters worse, the local life insurance market is contracting, driven by the major banks fleeing the industry over the last five years. Bancassurance, in the Australian context, is becoming a thing of the past. AIA Australia swallowed up CBA's CommInsure; Zurich took over ANZ's life insurance arm via OnePath; while NAB's minority stake in MLC Life Insurance hangs by a thread. Westpac is the only major bank tied to life insurance via subsidiary BT Wealth Connect, but even that strategy is up for review. Life insurance, which was the lifeblood of AMP, was sold off to Resolution Life for $3 billion, while Suncorp divested its unit to TAL. This has left the door wide open to foreign conglomerates, running thriving life insurance operations in their respective countries, to try their hand at the local market beset by red tape and suffering blows to profitability. Foreign companies currently control the majority of Australia's life insurance industry. According to Plan For Life, Dai-ichi Life Group's TAL holds the largest market (28%), followed by Hong Kong-based AIA Australia (17%), Swiss firm Zurich (14%) and Nippon Life's MLC Life (11%). Consolidation has inevitably led to redundancies and many employees reapplying for their jobs in the merged entity. A former life insurance underwriter who still works closely in the industry told me some underwriters are having such a tough time finding roles that they have turned to jobs outside of life insurance well below their skill set. The life insurance market has undoubtedly shrunk, another experienced life insurance underwriter told me on the condition of anonymity, and the workload has spiked for those left behind. This is not because of AI or consolidation, the underwriter said, but because a shift back to human underwriting is taking place. The industry is currently feeling the negative impacts of straight-through acceptance and automated underwriting in claims. What's more worrying is that insurers are not creating additional human underwriting roles. This is because the numbers were crunched years ago when insurers budgeted how much money they will save by not paying underwriters' salary. Now, it is the underwriters slogging it out and feeling the pinch of outdated modelling and cost savings, the underwriter said.Read more

The digital push

KARREN VERGARA | In Technology

The subject of life insurance does not spark interest for many, typically because it's perceived as boring, complicated and expensive. Over the last decade, however, the life insurance industry accelerated ... The subject of life insurance does not spark interest for many, typically because it's perceived as boring, complicated and expensive. Over the last decade, however, the life insurance industry accelerated its efforts to shed this perception by launching new products, lowering costs and modernising its processes in the name of innovation. Nowhere is this more evident than underwriting. With a click of a button, FaceQuote guesstimates a person's age and then calculates a quote for a premium - based on a selfie. Zurich UK introduced FaceQuote three years ago hoping to reach the masses. This is a way, Zurich says, to make life insurance "fun" in the hope more people will engage with it. Lapetus Life Event Solutions takes it one step further, launching CHRONOS, an end-to-end underwriting platform that predicts a person's life expectancy by scanning a person's face to extract information like body mass index, physiological age and how fast someone is ageing. Most Australian life insurers are automating their underwriting capabilities by partnering with established providers. UnderwriteMe has since become the most popular piece of technology used by major players such as MLC Life, Zurich, while boutiques such as NEOS Life and Integrity Life have also partnered with the UK-based firm. Munich Re's proprietary technology ALLFINANZ meanwhile has been adopted by TAL and ClearView. While Australia's life insurance is facing its own challenges - consolidation, lower profit margins and higher claims - its global counterparts paint a different story. Demand for life insurance overseas remains solid, buoyed by a large cohort of the population that is not insured or underinsured. COVID-19 has also helped spur demand. Life insurance is a large part of the global economy and the interesting thing is that it is a high growth area, says according to Sunil Rawat, the co-founder and chief executive of Omniscience, an artificial intelligence start-up based in Palo Alto, California. About 200 million new life insurance policies are written every year, he says, with the US market growing about 3% to 4% per year. Omniscience helps underwriters make complex decisions faster using maths and algorithms that underpins the technology, which according to the firm's last measure, accelerated life insurance decisions 1000 times or more. "A blood report would have common things like. cholesterol - extra tests like C-reactive protein and other markers and factors that get more and more complex. My BMI could be the same as an obese person's BMI but could have dropped due to my diet; I could have reduced my medication as a result and be in better health. "Where we shine is taking all of these factors that are very complex and make decisions based on those computations," he says. Currently, Rawat and his team are looking at 14,000 variables. In Germany, the life insurance market is thriving, says Laila Neuthor, the chief executive and co-founder of we4 Impact. She is seeing a spike in demand for life insurance products since COVID-19 hit, not only for personal cover for loved ones, but also products that cover mortality or mobility issues like death, loss of income and loss of ability. "It is surprising, even with the coronavirus, how many more people seem to be aware that illnesses can prevent them from earning their living. They are buying more of those types of products that can protect their family's financial situation," she says,Read more

Flatlining: The future of underwriting

KARREN VERGARA | In Technology

A united front

KARREN VERGARA

In May 2019, Sunsuper completed its fourth merger in two years - this time it integrated 74-year-old corporate superannuation fund CBH Super. Last year, we talked to Sunsuper, Kinetic Super and AustSafe ... In May 2019, Sunsuper completed its fourth merger in two years - this time it integrated 74-year-old corporate superannuation fund CBH Super. Last year, we talked to Sunsuper, Kinetic Super and AustSafe Super about getting the difference between 'mergers' and 'acquisitions' right. Considering the possibility of a merger is the ultimate litmus test for superannuation funds. Before recruitment industry fund Kinetic Super, with $3 billion and 270,000 members, merged with Sunsuper in May 2018, its chief executive Katherine Kaspar says the fund was performing well on all accounts. "But as a board we wanted to explore how we could deliver 'more,'" she says. A process, which Kaspar says involved undertaking an intense journey of better understanding member and employer needs. Kinetic then matched these needs against potential partners - an extensive due diligence of identifying a fund with similar values, vision, complimentary member demographics and history of success. AustSafe Super chief executive Craig Stevens says the boards have put the long-term interests of members first - which can be difficult for any organisation. In considering a merger, any board that says it is going to vote itself out of existence - first and foremost - is commendable, he points out. AustSafe's board looked at all the options and saw the benefits for the future of their 100,000 members with $2.5 billion of funds. "The fund is performing extremely well and AustSafe as a whole has performed exceptionally well. But we haven't let that cloud our strategic vision," Stevens says. In merging with Kinetic and AustSafe, Sunsuper chief executive Scott Hartley says both are high quality funds with a strong performance track record - and were under no pressure to merge. The trustees looked into the future on behalf of their members' best interest to determine what would give them the best chance to have a sustainable and competitive outcome, Hartley says. "It is a very selfless and honourable action both trustee boards did in making those decisions." External pressures The superannuation industry is facing intense pressure to consolidate. One recommendation the Productivity Commission is pushing for following its three-year review into the efficiency and competitiveness in super is for more consolidation to eventuate, despite the fact that mergers have been plentiful. Members would clearly benefit from an increase in merger activity, particularly among funds with less than $1 billion in assets, it said. Members in underperforming funds can cost them $635,000 at retirement. In the banking Royal Commission final report, Commissioner Kenneth Hayne wants trustees to conduct an annual scale assessment to determine if members would benefit from merging the fund with another to create scale with more assets and beneficiaries. Hayne warned that directors shouldn't be focused on whether they will have a place on the new board, rather what is in the best interests of members. But the unfortunate reality of mergers is redundancies. Stevens says: "We were really conscious around the fact that our people were made to feel secure through the whole process and that they play an important role in the final outcome." Hartley says some roles (mostly short-term contractors) were made redundant in the case of Kinetic, while most employees had a choice to take a redundancy payment or continue in the merged opportunity. "We try to minimise job losses." Pleasingly, Hartley says most decided to stay on and close to 50 employees joined in the Kinetic merger, while about 30 employees will join from AustSafe. Project management Sunsuper approached each merger slightly differently with some variances in how Kinetic and AustSafe were transitioned. "Following a heads of agreement, the first thing we did was form a joint project steering committee with the merging party and ourselves and that team is essentially overseen by myself, the other chief executive and the respective boards," Hartley says. The steering committee, which typically comprises three to four people from each side, spends time thinking about design and how best to merge the funds. The joint project team - which is much larger - is established to monitor the execution of the merger. For example, the Kinetic team had more than 30 people, a combination of Kinetic and Sunsuper people working together. In the case of Kinetic, Hartley says insurance arrangements were grandfathered for a period of time. Meanwhile, insurance arrangements with AustSafe will be harmonised with Sunsuper. "It is important to be able to get the scale benefits they need to be integrated in a similar design on a single platform while allowing for some differences, where it makes sense for the membership of the fund. Kinetic's integration was a good example of that," he says. During the Kinetic merger Kaspar ran dual strategies: one team ran the business strategy while the other focused on the merger. Sunsuper set up a joint advisory committee comprising its directors and ex-Kinetic directors exploring and recommending ways to continue to support the recruitment industry, and help contingent or casual workers achieve better retirement outcomes. In searching for a potential merger partner, AustSafe had to ensure it could connect with a fund that already had the scale and capabilities, and was strategically aligned. Once that was determined, Stevens says the process happened quite quickly. AustSafe has merged with small funds in the past and as part of its strategy has been looking at other merger opportunities. "What we found is people are already aware of the Sunsuper brand. About 75% of our employers that partner with us also partner with Sunsuper." Top of Stevens' mind is getting the communication piece to employers right. Interacting and supporting them through the change is important, he adds. "From a member point of view, our values with Sunsuper are actually quite similar. It's been quite easy to integrate and work with the teams." Synergies Each fund going into a merger had significant requirements and plans to ensure synergies were maximised. From Sunsuper's end, an advisory board, which comprises directors from each trustee board, was established to provide oversight of the merged entity and to ensure specific strategies are executed to maximise member value. It oversees management to monitor how the merged entity is operating in terms of retaining and growing members and employers, and overall making sure the value of the merged fund's legacy is maintained. Hartley says the same governance structure for Kinetic will be established for AustSafe whereby the advisory board oversees Sunsuper's management of the merged operations. Kinetic and Sunsuper members will benefit from combined synergies of about $30 million per year. For the AustSafe merger, this calculates to about $10 million per annum. In total, members will be better off $40 million per annum. In March 2019, when the AustSafe merger is expected to complete, Sunsuper will overall have close to 1.4 million members and $60 billion in assets. On top of that, IAG & NRMA Superannuation Plan will merge into Sunsuper sometime in 2019 after determining it can no longer operate as a standalone corporate super fund. It's important to know, Hartley says, that mergers are not takeovers or acquisitions. "Some people might be cynical about that, but that is the mindset that we approach these exercises with," he says.Read more

PAGE:

► AFSL Support Services	► Research Houses

► Cash Flow Financing	► Research Services

► Contracts for Difference	► Retirement Products

► Education & Training	► Reverse Mortgages

► Industry Associations	► Stockbroking Services

► Investment Managers	► Structured Investments

► Managed Accounts	► Super Funds Personal

► Margin Lending	► Super Funds SMSF

► Online Brokers	► Super Funds Workplace

► Portfolio Services	► Technology Providers

► Recruitment Firms	► Third Party Marketing