Thursday, March 05, 2009

Insurance and technology

How should a country use technology to deliver insurance to its people efficiently and usefully? This  paper contains some of my ideas.


singaporenewsalternative said...

Two weeks ago, I contacted one of the big local insurance company to make some queries about term insurance. I was told that the company do not sell policy directly to client and I have to buy their policy through an agent. I do not want to pay commission to agents as I have unpleasant experiences with them in the past. I hope that will change in the future.

David said...

With so many vested interests, how to change? Who can lead or enforce the change? MAS?

zhummmeng said...

1. For people who know what they need, ie. the kind of insurance and the amount and which company offers the product, they should be allowed to buy directly from insurance company at a steep discount because they don't need advice.
This is the "no advice needed" group as defined in the FAA section 27
2.For people who know what they need but do not know which company sells that product, therefore need comparison by getting the INFORMATION from agent. This is the 'product advice" group which also need NOT pay the full commission, just pay for information.This group is also defined in the FAA.
3. For the groups who need financial advice and NOT product they should be paid a fee or commission which commensurate with the advice and scope of service and recommendations that are of reasonable basis.
This is how I interpret section 27 of the FAA.
This will ensure the responsibility of the adviser who is liable for all recommendations made by him . After all he is paid for making competent and responsible recommendation. As long his recommendations are of reasonable basis he should NOT be afraid of the negative outcome.
This is another way to get rid of salesmen who peddle and push unwanted products and also to ensure the efficiency and efficacy
of the products and advisory service and lastly, to eradicate miss-selling and malpractice.

zhummmeng said...

FISCA can serve as a watchdog for the insurance consumers.
It can raise concerns about products and behavior of the insurance agents.
It can provide education on financial planning.
More importantly FISCA can provide a review service for consumers who want to know whether they have been sold the correct products and whether the insurance agents acted in their best interest. Consumers can have their existing policies reviewed for miss-selling, inappropriate recommendation, conflict of interest and many other malpractices by their agents.
Products and new products can be reviewed for their protection value, cost and return.
Many consumers bought insurance without understanding the products. They trusted their agents to do everything and this is dangerous especially their agents are salesmen and unqualified and are product pushers.It is not surprised that many consumers are saddled with whole life and endowment products which are useless and expensive as
protection and saving vehicles.
Recent report from LIA shows that in 2008 the average sum assured sold was $37,000. This is absurd that consumers need this small amount.Is this enough to take care of the unexpected events or dependents' income needs?
What is the reason?
Whole life and endowment especailly with those cashback anticipated endowment products have been pushed to the trusting and unwary consumers. These products are useless and inefficient to meet the consumers' needs adequately in term of saving and protection. They only serve the interest of the insurance agents and the companies.
Hope FISCA can play this role and make the industry a more level playing field and get rid of dishonest and incompetent insurance agents.

zhummmeng said...

TM life style 15 from TM Asia, limited premium endowment with 15 year payouts after 10 years accumulation period should beat ntuc THE SAIL or the revosave hands down in term of protection and return.
Still it is a dumb product like others. Products like this is the rich's plaything and NEVER good as a saving plan for the poor because it doesn't get them out of the poverty trap, but it only maintains status quo.

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