AXA has indeed been looking forward to increasing it’s distribution of life insurance products via other sources other than through the registered individual agents ,brokers, financial advisors and financial planners. Banks have now been targeted as potential sources and means to distribute the life insurance products. This doesn’t come as quite a surprise primarily because Asia has been a target market for AXA to expand its business, as recently announced by the regional chief operating officer for AXA Asia Life.

Bank insurance tie ups are not a new thing in the competitive nature of the insurance market. There have been many such instances in the past. Some of the note worthy tie-ups has been -May bank with TM Asia, OCBC with Great Eastern, DBS with Aviva, Standard Chartered with Prudential, Citibank with Manulife. Some banks like HSBC has its own insurance unit do not tie up with a competitor’s products.

The probable way to go through the banks include tie ups with major banks and focusing on the health related and long term savings and insurance products. AXA Asia Life currently stands at a revenue base of $6.1 billion in the year 2009. The earnings are estimated to cross $500 millions. This has been possible due to the aggressive drive of the banks and tie up agents. Read it all..

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On the back of better economic growth, life insurance sales in Singapore in 1Q2011  is up 45% compared to 1st Quarter 2010, driven mainly by a 65% increase in single premium sales (mostly short-term endowments).

Weighted regular premiums increased by 35% while, Health insurance sales fell 13%.

Banks accounted for 37% of sales (up 14%), a significant portion of which from single-premium endowments, while Financial Adviser (non-tied) distribution added 12%.

Other important statistics: Sales with partial or full Fact Find improved to 77%. Tied insurance agents numbers declined from 13,581 to 12,869.

Authors’ Comments:

While Financial Advisers (non-tied) portion of insurance sales remain fairly stagnant, the bank’s share of the insurance pie has significantly increased. With the observation of much revenue actually derived from Single-Premium endowments, you can see that the bank’s capture client base has a big potential for insurers, thus competition for FAs and tied-agents.

For practitioners, it’s important to note that sales involving partial or full fact-find has increased very significantly to 77%. Do you benchmark your practice to achieve this? More importantly, is the spirit of the fact-find: to have a reasonable basis of recommendation.

Original Article: Robust Q1 growth in life insurance sales,  Life insurance industry starts 2011 on a high note

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Monetary Authority of Singapore (MAS) has been approved by the parliament to include key measures to deal with an insurer before or after it goes into liquidation, and powers to amend the priority ranking of liabilities if an insurer becomes insolvent or is unable to meet its obligations.

This is in addition to the Policy Owner’s Protection Scheme, under the Insurance Act which states: Read it all..

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Singapore has the financial infrastructure to become the next overseas trading centre for the Chinese yuan, after Hong Kong.

More than 3,000 mainland firms already operate in Singapore, many involved in trading commodities that China imports.

China began allowing its currency to be used to settle international trades in 2009 through a scheme involving several Chinese cities along with Hong Kong, Macau and various Southeast Asian countries including Singapore. The scheme was extended to the rest of the world in 2010. Read it all..

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Strong economic growth in Asia doubled Aviva’s life insurance unit in Singapore to S$715m. This makes Singapore the fastest growing market for Aviva in Asia.

Better economic conditions have made people more willing to buy life insurance.

Aviva plans to increase it’s market share by distributing more products online and via DBS Bank, financial advisory firms and a newly set up tied agency force of under 100 advisers. Read it all..

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Senior minister Mr. Goh Chok Tong has recently mentioned in the dinner hosted to commemorate the 40^th anniversary of the NTUC Income, that average Singaporeans are underinsured. He had cited the reports by the global insurer Swiss Re that the penetration rate of life insurance in Singapore is only 5.1 percent.The highest percentage is in Taiwan where it is 13.8 %, followed by Hong Kong, Japan and South Korea.

A study in year 2007, by the Life Insurance Association showed that the average Singaporean is under insured by an amount of $362,000. Mr. Goh believes this is a notion that comes from the average Singaporean that they cannot afford a full fledged insurance policy to cover their lives. Read it all..

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My comments about Agent’s holding sway over Consumers’ decision about Insurance was featured in the Straits Times forum on 21 Nov 2010. This was after reading two mis-guided interpretation of SM Goh’s comments about Term Insurance. I just felt that I had something to say, and was glad to have a hearing from the Forum. My post also got the attention of Mr Tan Kin Lian, who posted the article into his blog!

I’m not bashing insurance agents here, but merely stating a fact, and trying to suggest ways to improve the quality of advice for practitioners.

Here’s the comments I posted in Straits Times Forum:

But agents exert powerful sway over buyer’s choice
SENIOR Minister Goh Chok Tong’s observations about keeping life insurance coverage affordable focused on the conventional practice of recommending whole life or savings plans instead of term insurance (‘Keep insurance affordable: SM Goh’; Oct 23).
This practice is evident in a finding published by the Life Insurance Association of Singapore, which stated that Singaporeans are under-insured by 67 per cent, or by as much as $329,223 based on average household expenses; when term insurance is, by contrast, far more affordable. One aspect of Mr Tan Kin Lian’s comments on Wednesday (‘Two key factors insurance buyers don’t know’) describes the inherent conflict of interest between a fatter commission and the consumer’s immediate protection needs.

Usually, if a proper financial needs analysis is done prior to making the sale, a buyer’s required insurance protection may well amount to hundreds of thousands of dollars. Instead, what usually happens in an insurance sale is that the recommended products, while meeting the buyer’s budget constraints, do not satisfy his protection needs.

In fact, private bankers or insurance agents who sell savings plans with embedded insurance protection often use the savings elements to attract and keep consumers to a long-term commitment of their budget, thereby depriving them of a future budget for protection needs and giving them the impression that insurance protection is costly.

If responsible advisers recommend term insurance, consumers can easily meet coverage needs without resorting to high-premium, low-coverage products like whole-life or endowments. Last Friday’s reply by Mr Jeffrey Tan, president of the Insurance and Financial Practitioners Association of Singapore (‘Choice of insurance plan hinges on affordability, buyer’s needs’), omitted an agent’s powerful influence on the client’s choice. There are three ways to better police recommendations:

• Agents should be trained to offer needs-based advice rather than just product advice.
• Conduct compliance checks on an agent’s recommendations to meet protection needs;
• Check whether a client who picks a savings plan over protection needs has been given a booklet which tells him about the benefits of term insurance within the free-look period, so he can reconsider his choice.

Brendan Yong

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Insurer Tokio Marine Asia is aiming at boosting and lifting its  market share from a mere 2 percent to 5 percent. And this is target is piqued to be achieved by the year end of 2014. There is also a keen effort to see the expansion in the agency force from the present number of 110 to 500. TM Asia has hopes to cash in majorly on its goodwill and reputation that makes it noticeable as a fair insurer in the insurance providers market

They have a reputation of never cutting the bonus rates that is meant for the participating policy holders. Mr. Beyon, who is the chief executive officer of TM Asia, has major plans for the company. They have plan to hire people new to the insurance sector and train them in the advisory filed. Read it all..

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MAS is planning to introduce a test for bank relationship managers in Singapore. According to MAS, the test will judge the credentials of the bank relationship managers so as to serve the customers more fairly.

These test ideas were initiated by the financial regulators and fielded to financial industry players for comments.  Now, these moves will be studied and implemented. The latest test rule was introduced after bank relationship managers were blamed for mis-selling the mini bonds of Lehman Brothers in 2008. Read it all..

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Following the Lehman Brother disaster, the Government is now determined to place stringent controls over the cooperatives like AUPE and the manner in which these credit cooperatives manage and invest their finance. This is done to protect the member’s funds.

According to the Ministry of Community Development, Youth and Sports (MCYS), credit cooperatives are not similar to financial companies or banks and as such, their primary focus should be loan services and thrift. The major chunk of the total assets of the Member’s funds should not be invested in financial instruments, as this would be risky. Read it all..

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