Friday, August 14, 2009

Some points on the recent LIA media release

There was a media release by LIA on 12th August about the Life Insurance industry bouncing back after 2 dismal quarters.
I'm actually not so concerned about how many millions of new regular or single premiums and the long statements about new CPFIS monies, etc. There are a few points that catches my attention...

1) The average claims payout under the death benefit worked out to approximately $39,521 per policy in the second quarter of 2009.
* I know that this figure is freaking low and many people are probably cursing insurance advisers for such low death benefits being paid to beneficiaries of the deceased. But to be a bit fair to the advisers, we must also note a few points
a) Those people who get the claims could possibly be the more elderly ones who purchased the insurance many years ago and a $50,000 coverage may seem reasonable at that point of purchase.
b) This figure do not mean that each deceased get $39,521. He or she may owns 2-3 policies, then the payout could be $120,000 and with DPS, it could comes up to $165,000.
c) Not all insurance advisers recommend such low Sum Assured policies...

2) In the second quarter of 2009, the average sum insured worked out to approximately $48,708 for regular premium policies.
* $48,708 is still low. I'm sure a lot of whole life and endowment policies are being marketed everyday. Hence the Low Sum Assured even till today.
* I tried to defend point number 1. But this one hard to defend... No one want to recommend term insurance, what to do?

3) Sixty-one per cent of life insurance applications were received on the basis of a full fact-find or partial fact-find.
* This figure is so contradicting. 61% did fact-find, why still average sum assured still $48,708? Is our need so low? I doubt the quality of these fact-finding...
* My company now have 23 pages of fact-finding forms. Some companies maybe more. With so much admin work, did the situation really changed over the years?

4) The tied agency channel contributed to the bulk of new business, with 59 per cent of new weighted business sales, the bank distribution channel accounted for 24 per, Licensed Financial Advisers contributed 12 per cent whilst other channels, including direct sales, accounted for the remaining 5 per cent
* Only 12%. So sad... Got some improvement but still quite slow. Why are people not joining the Licensed Financial Advisers? Maybe...
a) Not many people heard about us yet especially those who are new.
b) Its tough to give up all renewal commissions earned as a tied agent to move on.
c) Comparatively, FA earns lesser for the same plan that the tied agent sell because FA have to pay for own rental, administrative, marketing, etc
d) FA have to work harder because expectation on us are more. We need to learn about different insurance companies systems and plans. We are probably expected to do more Financial Planning.
e) FA have to be freaking clean before you are able to join the industry. My colleague's MAS license application was delayed for many months due to a jay-walking incident many years ago which he can't even remember...

1 comment:

Anonymous said...

I have always said that regulation and inspection does not mean things will be done right. You get an honest man and even without regulation and inspection he will still do things right. You get all the regulations and inspections and Madoff can still make off with your money for decades. The important thing is getting the right people for the job. But looking at how the most powerful institution in Singapore, Temasek and with interviews by all the million dollar talents including the President of Singapore still did not get close to getting the right person to be the CEO of Temasek simply goes to show that all our highly paid talents are clueless when it comes to getting the right person for a job.