Hi Mr Tan,
I read your blog about the new regulation on the par fund. How can the policyholder ensure that they are fairly treated? Is it fair for the fund to reduce the bonus in bad times, and take a long time to restore the bonus? Is this fair?
To your credit, NTUC was quite fast to restore its bonus rates when you were there as CEO. Will they continue to treat the policyholders fairly?
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REPLY:
NTUC Income is a cooperative society. When I was the CEO, I ensured the following:
* the fund is invested to earn an attractive return, at an acceptable risk level
* the expenses are kept at a low level
* 98% of the surplus is kept for the policyholder (shareholders take only 2%)
This is why NTUC Income was able to declare better bonus rates compared to other insurance companies. The return is much higher.
Many insurance companies spend too much money on the following:
* paying high commission and sales contests to advisers and agency managers
* advertising their products aggressively
* paying high salaries and other expenses
These expenses come out of the par fund, and will ultimately reduce the return to the policyholders. This is not fair to the policyholders. However, the policyholders do not have much choice, as they are stuck with their contract for many years.
I hope that the new regulations on the par fund will help to reduce this problem. (But, it may take a long time for the results to show).
Very good that the new Income management has closed down the loans unit and some of the other non-core businesses like line dance and snow city.
ReplyDeleteThis will allow for better pay to be offered to the rest of the employees.
Income should close all the non-core businesses and refocus on insurance.
ReplyDeleteThis will improve its bottom line.Money saved, use it to improve the skills of its agents who are lacking badly in this area.
Rubbish, The Income that maintains the loans policies and other value added services was the Income that has a heart! This is very lacking in the society of today. Nowadays Income spent lots of money advertising full colour full page advertisements that does not add any value to the policyholders at all. As Mr. Tan has said, this takes away money from the Par fund and reduces distributions to policyholders. At least the other services add value to Income policy holders lives and help them in times of need.
ReplyDelete