Hi
I recently came across a practice by some agents which i find rather uncomfortable. But there is nothing much I can do about it so I hope you can raise some awareness about this so as to prevent more people from falling victim.
The scenario is as follow: Agent/financial advisor went back to all his/her existing/orphan clients with an regular ILP plan and told them about a new plan which is a similar ILP(change in version/name) and advise them that they can get more coverage with the same regular premium. client took up the plan without realising that the first ILP will be going into non forfieture.
After 2 years, the client can terminate his first ILP and get back a sum of money.
This is very unethical as the client as the client could have avoid unnecessary charges by maintaining the initial plan instead of getting the new ILP.
Agent/FA gets away with the commsion, production as non forfieture is not considered as replacement for some Insurance company.
I guess you have better resources to educate the client or to engage the relavent department to put a stop to this. Hope to clear the bad name of insurance.
REPLY
It is very sad that insurance agents are acting unethically and the insurance company and the regulator are not taking action to stop the abuse. This type of case is quite rampant. It is easy to catch the financial adviser who engage in this abuse, if the regulator is willing to take the trouble.
I wonder why MAS is not doing anything. For FSA UK the insurance agents and their company will be punished severely. The fine is usually hundred of millions of pounds and compensation to the victims.
ReplyDeleteThe only time that MAS was actively curbing abuses was when LHL took over the chair, late 90s to early 2000s. That was when KYC/FNA was enforced, supervisors and above must be diploma holders or above (not simply based on past sales track records) etc.
ReplyDeleteSadly but frankly, GCT doesn't look like too much bothered, as seen in the mini-bond crisis. In fact after GCT took over the chair, even NTUC Income was allowed and even encouraged to take the commercial profit-driven path departing from the original GKS co-operative ideals.
The presence of a co-operative is important to market price stabilisation. Commercial companies can't overcharge by too much a margin as the co-operative holds down the price to just reasonably profitable levels.
But if it's just a co-operative in name but no longer in practice, then the purpose is lost. Unlike the massive number of general insurers operating in a more or less free competition market, life insurers number about 10 or so (excluding NTUC Income) operating more or less as a price-fixing cartel when they're allowed to.
That's why low-income high-risk workers who needed life insurance most but couldn't it, and that's why GKS founded NTUC Income for them. Humble agents (known as organisers) willing to sell and service humble policies for humble premiums at humble commission rates (known as honorariums). That forced the commercial cartel to relook at their policies and a virtuous cycle that even benefits the middle and upper classes.
However, now it seems that NTUC Income has also joined the cartel.
I used to b an rep fr the one of the insurance co. Sadly to say, this method s relatively common n widely found in my ex-colleagues.. N they r top producers....
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