Life insurers will focus their efforts this year on enhancing protection for the public and improving industry standards, according to Mr Mr Patrick Teow, the President of the Life Insurance Association Singapore (LIA Singapore).
He said that the life industry's three priorities are:
- Spearheading initiatives to help individuals get adequately insured with the release of the Protection Gap Study in late March which will shed light on mortality and Critical Illness protection gaps in Singapore,
- Ensuring healthcare accessibility with ongoing efforts by the Health Insurance Task Force (HITF) and key stakeholders including the Ministry of Health (MOH) to act on recommendations put forth by the independent HITF – initiatives including but not exclusive to product redesign of plans to control unnecessary consumption of healthcare, and
- Close collaboration between MAS and the industry on guidelines for the recruitment and migration of financial adviser representatives. MAS will conduct a public consultation on this at a later date.
Mr Teow was speaking at the annual luncheon last week of LIA Singapore, at which the guest of honour was Mr Ong Chong Tee, Deputy Managing Director for Financial Supervision, Monetary Authority of Singapore (MAS). Mr Ong highlighted the importance for life insurers to ride the technology wave to bridge the protection gap, and to ensure good market conduct.
He said: “This brings me to the potential for FinTech, or more specifically InsurTech, to help reduce the protection gap. Technology solutions offer exciting possibilities to alleviate many pain-points associated with the understanding, buying and servicing of life insurance products.
“To be sure, the insurance sector has always employed technology tools and is a large user of data. This is also part of the problem. A recent McKinsey report stated that 90% of insurers identified complex legacy systems as the key barrier to digitisation. It is only in the more recent one to two years that InsurTech has been recognised as a change driver.”
Referring to conduct gaps, Mr Ong said: “Recent episodes of large-scale movement of representatives have cast the industry in an unfavourable light. Such mass recruitment of representatives by one firm gives rise to heightened market conduct risks, with respect to aggressive sales tactics and improper switching.
“MAS has worked closely with LIA on measures to address these risks and we will be issuing a public consultation soon to promote responsible recruitment practices in the financial advisory industry.”
Meanwhile, LIA members have agreed that they, as well as their Financial Advisory (FA) subsidiaries will go ahead to adopt a number of these measures which include:
(a) Capping a representative’s sales targets and sign-on incentives in the first year after the representative joins the new FA firm. This reduces the pressure on representatives to engage in aggressive sales tactics to meet inflated sales targets;
(b) Spreading sign-on incentives over a minimum period of six years, to create longer- term alignment between the representative and his new FA firm. This will foster better quality after-sales services to customers;
(c) Reducing the entitlement to sign-on incentives if the persistency of the policies serviced by the representative at his previous firm falls below industry norms, to deter improper switching; and
(d) Requiring the FA firm to undertake enhanced monitoring of its representative’s sales transactions to verify that the sales and advisory process has been properly conducted, which will include customer call-backs conducted by an independent external party.
The annual luncheon was preceded by elections of office bearers of the association that took place during the Annual General Meeting held on the same day. Mr Teow and Mr Ken Ng were re-elected President and Deputy President for 2018-19, extending their tenure for the second and fifth consecutive year respectively. They are joined by Mr James Tan who began his first term as Deputy President.