An insurance agent in Indonesia sold a large investment-linked policy to a senior government official. The annual premium was SGD 15,000 a year. The policyholder was angry when he learned that 15% of the premium was deducted as first year charge. He was not told about this deduction by the agent. He lodged a complaint with the insurance company.
The insurance company was worried that this official could give a lot of problem. They asked the agent to accept a lower commission of, so that only 5% was deducted, allowing 95% of the premium to be credited to the policyholder's investment. The agent agreed. Although this deduction was probably mentioned in the benefit illustration, the policyholder was able to get this special treatment because of his high position.
Actually the deduction of 15% was quite reasonable. In Singapore, 80% of the first year's premium is deducted, leaving only 20% to be invested. Most policyholders were probably not aware about this high deduction. When they found out, they are probably to ashamed or reluctant to lodge a complaint.
Agents there are more "garang" and ruthless. It looks like agents everywhere are robbers with a license.
ReplyDeleteIn Singapore all you have to do is to sit for a 'tikam tikam' exam and pass it and you are licensed to lie , cheat, mis sell, mis represent and to bullshit.
The victims are the poor and the man in the street.These are the people who suffer most in the hand of insurance agents and the bank 'consultants'.
A lawyer has to pass a 4 year course and to be relicensed every year in order to practice. He pays close to $5000 yearly to renew his license. He has to wait in his office for walk in clients or referrals. He cannot stand at the MRT or have roadshows to solicit his business. HE CANNOT PROSTITUTE HIS SERVICE. If found to have breached the rules it is disciplinary action for him.
If lawyers are so regulated insurance agents are so free to do anything , from prostituting his or her service to robbing consumers in broad daylight. This vocation is so open to abuse and yet not regulated stringently.These people should be policed and checked like the prostitutes at Geylang for straying and operating without a license or not registered. I heard of raids from time to time. The authority is strict with prostitutes how come they are not with insurance agents.
The agents are left freely to roam to seek out, to solicit their victims. They are not even audited internally.
MAS is sleeping or purposely sleeping. They only talk but no actions since the recommendations in 2001 by CEDLI. These recommendations are broken daily by insurance agents , by the companies. Why have the guidelines, the directives , the notices? Are they meant to keep someone busy or to appear busy. This regulator is like a tiger without teeth and claws, for show only.
15% deduction from regular ILP product is quite reasonable if you compare to what others companies offer. (ID7 from business centre alot better)
ReplyDeletequite unfair that someone get special treatment due to his high position.
15% as commission is more reasonable to the consumers, basically it would be close to a "Buy-Term-Invest-the-Rest" (BTITR)configuration. See my example on http://www.waynekoh.com/2008/07/btitr-part2.html
ReplyDeleteIn my example, the annual BTITR premium is $3600 ($300 x 12 mths) and agent's estimated commission in $554, therefore 15.38%.
hmmm, I wonder if ILP sales would tank if the commission were to be lowered to such level?