Insurance agents, public lose out with new initiative
I refer to the report “Commission-free insurance policies available from April” (March 5).
I refer to the report “Commission-free insurance policies available from April” (March 5).
While I applaud the initiative to try to save costs for the general public in the purchase of life insurance products for basic needs, by bypassing financial advisers, I believe the public good is not served through cost savings alone.
Buying a life insurance policy involves a long-term or even a lifelong commitment. It must be done with prudence and a clear understanding of the product. That is why the role of a professional and caring financial adviser is important: Because the individual buyer’s needs must be analysed properly before the right plan is recommended and because there must be regular follow-through.
However, in Singapore, the public do not generally regard insurance agents, now known as financial advisers, highly. Many of them are not professional or trained well.
They often find it hard to continue because their remuneration structure encourages and focuses on new business. When they run out of prospects, they leave because they cannot support themselves or their families.
Those who bought policies from them become “orphans”. The agency or company is still around, but it is not the same as the original agent, so they are not served properly. In the long run, the public lose out in terms of regular reviews of their coverage and updates of new products and services.
The direct purchase channel sounds good, but the public may not be served well. To the big insurers, it means more business and more shareholder profits. While they cannot lose, their agents have no choice but to live with it. Livelihoods will be affected, to a greater or lesser extent, but there will be an impact. Marginal agents, some with valuable years of experience, will leave.
The Monetary Authority of Singapore should study how to further develop professionalism within the ranks of financial advisers, including examining the remuneration structure in big insurers. This is harder to do, but it would bring an overdue, lasting and beneficial change to an industry dominated by big companies with their own agenda, rather than that of the higher public good.