The regulator has also to pay attention to all four duties, as follows:
- Maintain insurer solvency
- Compensate for inadequate consumer knowledge
- Ensure reasonable rates
- Make insurance available
Consumers are not well versed in insurance and may be badly treated through legal contracts that are not transparent and not fair. A common example is the use of irresponsible projection to entice consumers to invest in insurance contracts, and to give a final payout that is much lower than projected. Badly worded or unclear language in policy documents also place consumers at a disadvantage as the consumers are not able to afford the legal fees to have the contracted interpreted in the court.
The regulator has also to ensure that the insurance rates are reasonable and that consumers are not overcharged due to their ignorance of the market or their inability to judge the value of the insurance protection that is provided.
At the other extreme, the regulator also wants to prevent irresponsible price cutting that may lead to insolvency of the insurers. If an insurer cuts price to an inadequate level, other insurers may be forced to follow, to protect their market share.
The regulator also aims to ensure that insurance is available, especially for people or risks that are considered to be unprofitable. As motor insurance is compulsory, it is necessary to ensure that it is available to people who are considered to be high risk, as they would otherwise by denied the right to drive a car.
Tan Kin Lian
4 comments:
I wonder when will MAS be able to take the kind of action as in the below article. In this case, the insurer in question had to top up the product's fund by GBP102mil (S$244mil), and also agreed to cooperate and quickly settle for a reduced fine of GBP2.45mil (S$5.86mil).
http://www.citywire.co.uk/personal/-/news/other/content.aspx?ID=377790
MAS is pro FIs and the insurance companies and 2 hoots to the consumers.MAS told consumers to open their 2 eyes big big when the insurance agents and the companies are allowed to blind themselves to rob the consumers of their hard earned money.MAS is owned by the FIs and its existence depends on the FIs so it won't shoot its own foot.
You will see consumers losing more money when MAS allows product psuhing and peddling.
The FSA, after handing a hefty fine Standard Life Inurance.
"Margaret Cole, director of enforcement and financial crime at the FSA, said:.
‘The fine announced today demonstrates our commitment to the principle of credible deterrence. It is critical that consumers are given an accurate understanding of the nature of investment products and the risks involved. Without this information, consumers are unable to make informed decisions about whether investments are suitable for their individual investment strategy.’
‘Throughout 2010 and beyond, the FSA will continue to take strong action when a firm’s financial promotions fall short of the requirement to be ‘clear, fair and not misleading’ and customers have not been treated fairly.’
S
MAS assumes investors and consumers buy with their eyes wide open thus die is their business. Unlike FSA, consumers are assumed clueless and unwary and gullible and cannot make informed decision and need protection.And FSA is the body to protect them unlike MAS which protects the FIs and insurance companies.
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