Tan Kin Lian's Blog: Fair treatment of policyholders

Wednesday, February 27, 2008

Fair treatment of policyholders

Dear Mr. Tan,
Thank you for your explanation about the anticipated endowment policy. Based on your example, the policyholder is worse off, as he has to pay an additional premium and get back only a part of it (after deducting expenses) as the annual cash benefit.

MAS has published guidelines on the fair treatment of policyholders. In your opinion, will the board and senior management get into trouble by selling this type of product, as the policyholder appears to be worse off?

What about the insurance advisers who sell this type of product? Are they in breach of their duty to give good advice?

REPLY
In my view, it will be difficult for the board, senior management or insurance adviser to explain how this product is better for customers, compared to an ordinary endowment policy.

In the past, insurance companies have the leeway to design products that are pay high commission for agents, make good profit for their shareholders, but give poor value to the policyholders. This may change with the new MAS requirement.

This is just my guess. I do not know how MAS intends to implement the new regulations. We have to wait and see the future developments.

5 comments:

Anonymous said...: Everyone involved in the delivery of the products to the consumers will be held accountable, the CEOs , senior management, and the insurance agents.The guidelines address all these people's behavior towards the consumers, from products to the agents.We hope consumers will benefit,bad products not introduced,unethical agents eliminated and the playing field leveled. Everybody abides by the same rules, which is not currently.
Hope this is the new milestone for the industry.; February 27, 2008 12:25 PM
Anonymous said...: "Defective" products like anticipated, revosave, prime savers, prucash and all other cashback products should be recalled. Refunds
to customers who have been mis-sold
plus opportunity cost lost. Agents committed mis-selling and unethical selling should be censured and suspended.; February 27, 2008 12:59 PM
Anonymous said...: Despite the fact Mr Tan has repeatedly said he delivered products that give good value, he designed the Anticipation plan when there were better value products like Endowment around. Anticipation is Revosave's predecessor. Personally, I find this an irony. I hope Mr Tan do not take offence in me bringing up this blunt fact.

blackbox; February 27, 2008 9:49 PM
Anonymous said...: Revosave is not a "pure anticipated product, therefore not giving the 'true value'. It is a 'constipated'
product where buyers are short changed in all areas of the features.
Buyers should realize the constipated benefits.; February 28, 2008 9:45 AM
Anonymous said...: Hope those who bought revosave will wake up to realise that they have been fleeced. Hope that MAS is not a NATO.
Too much resources went down the drain that would have otherwise gone into retirement funds or other financial needs.; February 28, 2008 8:37 PM