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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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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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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The three banks, namely the DBS Bank, London-based Royal Bank of Scotland (RBS) and Maybank, that had been given a 6 month ban from selling any structured products, had their ban effectively lifted from now. However there are still seven more banks who are serving their term. Banks are now supposed to be more cautious and implement measures that make them deliver better Fair Dealing outcomes for their customers. Read it all..

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According to the Chief of the Law Society in Singapore, Michael Hwang, the number of complaints against lawyers, have considerably increased from previous years.Lawyers are required to act in good faith towards their clients and complaints can generally be avoided if only lawyers were more careful about what they promise their clients.

The increase in complaints indicate that people have become more litigious. This trend should serve as a red flag for financial advisers too. Read it all..

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Recent articles on 28 and 29 October in Straits Times highlighted that customer satisfaction fell in various industries like retail, food and beverage and education. This is despite four years of efforts in various ways, such as training and awareness campaigns.What exactly is happening? And how does that affect your Financial Advisory Business? Read it all..

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Superwoman Financial Solutions, an Australian-based financial services company is expanding it’s services to Singapore, targeting at female clients, sovereign funds and charitable organizations. Headed by Mr Colin Grant, they hope to bring understanding to investment products. They feel women generally prefer things that they can touch and feel. Most likely riding on the a fund manager’s license, they are set to roll out more investment products like water, luxury brand goods and food themes over the next 18 months.

The article is however unclear as to whether they are also providing financial advisory services as registered under MAS Financial Advisers Act.

Read it in this article here.

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Asia remains the place for Private banks to hunt for new wealth to manage, as an article on Straits Times 06 Oct stated. Major banks like HSBC, Julius Bear,, Merril Lynch are all boosting their relationship manager numbers.”China is expected to be one of the most important markets for us in Asia for domestic private banking …” SG Private Banking.

Read the full article here.

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UOB is selling it’s life insurance unit via an auction to divest it’s non-core business with Prudential and Manulife among the suitors. Without a strong distribution arm like Great Eastern for OCBC, UOB Life Insurance has been a minor player in the multi-billion dollar industry. What’s the impact on the industry? Read it all..

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