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.

Tied-agents doing purely insurance business with one principal insurer have more competition ahead with banks stepping up their insurance business, following poorer sales from investments. Without any other perceived value-add, the environment may be tougher for insurance agents ahead in 2010 and 2011.

Original Article: 25 May 2010, Straits Times: AXA to expand S’Pore presence

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

“the Policy Owners’ Protection (“PPF”) Scheme – exists to protect insurance policy owners.  The PPF Scheme is provided for in the Insurance Act to compensate policy owners of life policies and compulsory insurance policies  in the event that their insurer fails.  The existing PPF Scheme covers 90% of the liabilities for life policies and 100% of the liabilities for compulsory insurance policies.”

In the event that an insurer gets into financial difficulties, the existing Insurance Act allows MAS to direct the insurer to stop issuing or renewing policies to protect existing policy owners from any further deterioration of the insurer’s financial strength.

Author’s Comments:

This provides a comfort level that all registered insurers will be able to meet their liabilities:

1) Cash Values, bonuses already declared

2) Insured Value in case of claims

We occasionally get asked this question about what if the insurer collapse. Well, this is the answer.

That’s good news for insurance advisers and financial advisory practitioners.

Original Article: 12 Apr 2011, Straits Times: Better Protection for insurance policyholders

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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.

China has also been supportive of Singapore, signing in July 2010 a S$30 billion currency swap agreement with MAS to ensure yuan liquidity in the city-state. Chinese banks have also been expanding their operations in Singapore.

CITIC Bank International, the offshore arm of China’s CITIC Bank, recently opened a branch in Singapore to provide customers with yuan deposits and trade settlement involving the Chinese currency.

Author’s Comments:

This bodes well for traders buying goods from China, who now has to transact in USD terms. This would simplify the who process and possibly carry less currency risks as the RMB continues its gradual increase vs the USD.

Perhaps in time to come banks may even offer RMB loan facilities.

Another point is that with more yuan players, rates can become more competitive, unlike what is happening now, with RMB deposits giving a pathetic 0.68% vs the actual rates offered in China or Hong Kong: http://rmb.deposits.org/

With more banks setting up operations here, it also helps in the employ-ability of bankers. If you are looking at a career transition into banking relationship manager, priority banker, ultimately to private banker, you can also consider a move first into an insurance company, financial advisory firm as adviser. I’m told by reliable sources, with that experience it’s easier to move into a bank. Around 2 years experience to personal banking, around 3-4 years to get into priority banking.

As for Private Banking, it’s very hard, unless you have the contacts (through your wealthy family) or you already have a client base that is high net worth.

The yuan centre also makes it a top selling point, when selling Singapore to overseas Chinese.

Update (22 Apr 2011):

Since the signing of a S$30 billion currency swap agreement between China and Singapore to ensure yuan liquidity, in July 2010, there has been a bustling of activity. Top China banks , like China Construction Bank (CCB), are now vying to run the first yuan clearing house in Singapore. Other banks include: Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC).

All three banks are also expanding their services here intend to target SME’s on the need for yuan-denominated transactions.

Author’s Comments:

What could this mean for the Singapore Dollar or the economy?

For one, to have a swap agreement means that in a way, the Singapore dollar will gradually maintain a less volatile exchange rate with the RMB, so that traders and businesses do not have to be overly concerned with the wild fluctuations. Currently, however, the CNY is still depreciating against the Sing Dollar as it is largely still pegged to the USD.

With more China bank activities however, that is a boon to the bankers.

Original Article: 16 Mar 2011, Asiaone: S’pore ‘could be offshore yuan centre’

Original Article: 22 Apr 2011, Straits Times: Race is on for big yuan prize

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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.

With Aviva’s traditional strength of healthcare insurance in UK, it’s managed to gained a substantial market share, since it’s entry into the healthcare insurance market in Singapore through the integrated shield plan, MyShield.

Aviva’s term insurance products are also one of the most competitive in the market including level term, mortgage term and disability income. Right now, it is also the only insurer that offers guaranteed premiums for it’s limited pay critical illness plans. It’s term plans also have an enhanced definition for TPD, that pays upon meeting 3 out of 6 activities of daily living or ADLs.

More competition for you? If you can understand the competition, you gain the advantage. Aviva or any insurer have their pros and cons. It’s how you position and differentiate your service or products. Or you may play into niches, where your products are stronger.

Do you understand your company’s strengths and weaknesses? Feel free to drop a note.

Original Article: 05 Mar 2011, Straits Times: Aviva’s life insurance sales double to $715m

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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.

The job profile would include giving advice that are financial needs centric, rather than being just commission and profit driven. Mr. Beyon is against current practices of insurers poaching from each other to be more competitive by offering agents attractive packages to lure them over.

Mr. Beyon in his statement, also let know that there are plans to provide functional products where the other providers are not as competitive. This is considered to be a huge marketing effort that would need a major overhaul of resources.

Look out for innovative products and a huge marketing effort from Tokyo Marine Asia. This is good for consumers, to be given more choices.

It’s refreshing to note that Mr. Beyon, has the consumer in mind, and is against the industry practice of agents hopping from one company to another.

Have you heard of Tokyo Marine Life? They have very competitive in traditional life, and endowment, especially children education funding. In terms of general insurance, they are a very big player in employee benefits, motor insurance, marine and cargo. Find out more about Tokio Marine Life by emailing me.

Original Article: 08 Jul 2010, Straits Times: TM Asia Life to grow market share to 5%

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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.

As per Straits Times Report, since June 30, the credit co-ops will be barred from investing in corporate bonds, unit trusts as well as buying shares. As a result, the members would earn lesser profit.

The Registry of Cooperative Societies was notified of all the changes. As per the registry, the co-ops would now be able to invest only in only Singapore government securities and board bonds, and retain their shares in FairPrice. They can also make Singapore dollar deposits in banks.

This changes come in the wake of the financial fiasco, where in as much as 33% of the deposits was washed away in case of several co-ops. As per the World Council of Credit Unions’ guidelines, the co-ops can invest only up to 2% of their total assets in financial instruments.

The credit co-ops will have option to restructure itself as a financial institution or an asset management company in case they want to continue with their exposure to risky financial investments.

The new regulations will help to maintain healthy balance between the risk vis-à-vis the returns, and at the same time protect its members.

Returns which have been good over the years (as high as 6% pa) will drop, due to limitation to lower risks instruments. In our opinion the restrictions are overly severe, should also include high grade corporate bonds and allow a small portion (maybe 10%) in shares and related vehicles. The only reason probably a sweeping rule like this need to be in place is because the existing co-ops do not have their own trained investment team, unlike mega-rich university endowments in US, which uses even sophisticated vehicles like hedge funds, yet turning very good results despite the global recession.

I’ve heard of horror stories of other co-ops who were sold structured products that went belly-up. Financial advisers have to be careful of the product recommendations and ensure that the risks are disclosed AND understood by the investors. For investors, they have to be mindful of their rights to pursue action, but at the same time take responsibility in understanding the products they are getting into.

Original Article: Straits Times, 09 Mar 2010, New Rules to protect members’ savings

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This includes a proper remuneration framework for the sales staff, working on the training & supervision, better enhancement of the Sales and Advisory Process, conducting a better and more improved investment risk profiling and client suitability profile and providing a clearer and transparent product information for customers and clients alike.

The Monetary Authority of Singapore also stipulates that the management and the Directors can be held accountable for whatever failures are occurred while meeting these commitments. In the present case, The Monetary Authority of Singapore has helped in rectifying the flaws occurred by the three banks and put them back on track.

The Monetary Authority of Singapore is taking stringent measures to make sure that the banks work in a decorum set, and there’s no further fiasco and customer unrest as had happened with the DBS Bank, London-based Royal Bank of Scotland (RBS) and May bank. The probe initiated by the monetary authority of Singapore was a seven month probe and almost ten financial institutions had been found not passing the basic requirements and criteria’s. Some of the banks were badging controlled products with a lower risk of rating than what they had been warranted. They were given bans which ranged from a minimum of 6 months to a maximum of almost 2 years.

Consumers of today are becoming more proactive as far as understanding of their rights is concerned.  Protests by customers complaining they have been mis-sold complex structured products, raised investigations that uncovered banks failures in: Labeling structured products with a lower risk rating than they warranted, and failing to ensure that sales staff were adequately trained with accurate and complete information.

For Consumers: Do you know your rights as a consumer? Do you know what are the Fair Dealing Guidelines under the Financial Adviser Act?  Do you know how the banks have to deal with you in fairness, example a 3-day cooling-off period for investments and 7-day cooling period for insurance?

Implications for Financial Advisers:

Is your financial advice complying with Fair Dealing Act? Do you adopt a recognized Financial Planning approach like Certified Financial Planner, procedures? Email to find out more.

Original Article: 14 Feb 2010, Straits Times: MAS lifts ban on three banks

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Hardly anyone I know keeps those goals, others simply give up making them. Why is this so?Because most of them talk about it in the future like: “I’m going to grow my income by 40%”, and most don’t break it down into weekly or even daily challenges.

Speaking in the future puts you into a procrastinating mode. How about  changing it to affirmative present tense, with measurable actions:

~  “I increased my income by 40% by focusing on quality referrals and bi-monthly direct mail campaigns”

~ “I outsourced my admin and increased my prospecting activities by 25%”

This affirmative language sets the brain into motion, and attracting people or resources you never knew you had to achieve them.

Take a trip into the future and list down all the goals and achievements you want to see by this time next year. Be specific and give deadlines. List down sales goals, as well as personal, professional development and family goals.

Do it right now, before going any further.

Click Here for a Sample Goal Setting Template

Next you need an action plan to meet your goals. Start by answering these questions:

1. How do I see my business one year from now, what must have had happened? Think about the clientele you are serving, classes of business giving you income, family time you have.

2. In this year, what do I need to do to reach those goals? Think in terms of lead generation, client acquisition, business processes, skills and knowledge needed.

Breakdown the numbers into monthly, weekly and even daily targets. Example: To increase my network, I will join one association and attend at least one weekly networking session in the local chamber of commerce.

3. Because time is finite, where do I focus my attention at? Which areas can I streamline or out-source?

4. What are possible challenges and where can I get help?

Finally, most people leave their goals as it is on paper, and never carry through. Sometimes you just need to have a little push from an external force. Run through the Goals and Action Plans with your accountability buddy or coach. Get them to give you a nudge when you are behind.

Make the most out of your year! Make it the Best Year yet!

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