Issue No. 7 July - September 2011
Message from the PresidentIndustry Events
Industry NewsQ&A with Glenn Williams
Q&A with Chris Gill

Message from the President

Hak Leh (Sep 11)Healthy 38 per cent growth in first half 2011

Following positive sales in the first quarter, the life insurance sector saw growth momentum continue into its second quarter. The industry registered a total of $941.5 million in weighted* new business premiums for the first half of 2011, representing a significant 38 per cent improvement over the corresponding period in 2010.

The performance was driven by growth of bancassurance of 100 per cent year-on-year. Weighted regular premiums sales hit $620.2 million, registering a 31 per cent growth over the same period last year, while single premium business doubled by 54 per cent to $321.3 million. Of this amount, 21 per cent comprised CPF-funded sales.

The first half year's performance was buoyed by growth in bancassurance, mostly from sales of savings-oriented products. Growth through other channels maintained a healthy 20 per cent.

*Weighted new business premium is calculated as 10% SPI + 100% API with adjustment for premium payment terms of less than 10 years.
 
Fact-finding

During the second quarter of this year, 80 per cent of life insurance applications were completed with a full or partial fact-find, an improvement of three per cent over the preceding quarter. Fact-finding or 'knowing your client' is gaining momentum to reach its current level.

The industry strongly believes in the value of the fact-find process and our representatives are actively engaging buyers to undergo the process in order to make informed choices of suitable products.
 
LIA radio broadcasts to support financial advisory

Our efforts to promote the fact-find will continue. In this issue, you can read about the 2011 radio campaign mounted by the Association from 27 June to 23 September.
 
Customer Knowledge Assessment
 
Under the new MAS Notice on Recommendations on Investment Products (FAA-N16), investment-linked life insurance policies (ILPs) are classified as an unlisted "Specified Investment Product" (SIP).
 
Representatives are to conduct a "Customer Knowledge Assessment" (CKA) to assess whether the customer has the relevant knowledge or experience to understand the risks and features of an unlisted SIP.
 
Taking effect from 1 January 2012, a customer who is assessed to possess the knowledge or experience may decide to purchase an unlisted SIP without receiving advice. However, the representative is required to offer advice to such customers in every case.
 
We welcome this measure. It supports the life insurance industry's drive to move away from "no advice" sales to business based on the provision of good advice.
 
For customers who are assessed to not possess the knowledge or experience, they may not purchase an unlisted SIP without first receiving advice.
 
The customer who is positively assessed may buy more of the same or similar product during the ensuing one year from that representative who had assessed him without having to undergo fresh CKAs. In all other situations, the CKA is to be conducted for each and every sale.
 
We see that these strong regulatory requirements taken together will pave the way for financial advisory to become widespread and accepted by ordinary Singaporeans. The life insurance industry will continue to be an important stakeholder in providing suitable products and good advisory to its customers.
 
25th Pacific Insurance Conference, 11 - 14 September 2011
 
The recently-concluded PIC Conference was a success, with a total of 313 delegates hailing from Asia-Pacific, Europe and North America, including 93 from host country, Singapore. You can read more about the event in this issue.
 
Policy Owners' Protection Fund Scheme (Life)

On 29 September 2011, hopefully you would have seen the advertisements published in the Straits Times and Lianhe Zaobao by LIA to inform the public that there is now an added safety net provided by the activation of the PPF and the assurance that all members of the LIA are members of the administration agency, SDIC.
 

Hak Leh Signature
 
Tan Hak Leh

Industry Events

25th Pacific Insurance Conference
11 - 14 September 2011, Marina Bay Sands Singapore

Cover for Conference Programme  
   
Welcome Reception Delegates

This is my first time attending PIC and I found the conference very relevant to insurance players and the quality of speakers and their deliveries excellent, with great insights of the trend and developments both globally and in Asia. I also cherished the networking opportunities with delegates from more than 20 countries and I truly enjoyed my time over the three days. Khoo Kah Siang - General Manager, Great Eastern Life

Panel Discussion Monday Evening

The PIC conference was again well organised, and provided presentation topics and discussion that were both interesting and insightful, as well as relevant to the growing needs of the region. The quality of speakers was of an exceptionally high standard, and all were a pleasure to listen to. Having panel style discussions facilitating lots of questions from the audience was well structured and led to very comprehensive and relevant discussion. The dinner on Monday evening was fantastic and enjoyed by all. It was good to have this in a setting other than the conference venue for our foreign guests. Walter de Oude - Chief Executive Officer, HSBC Insurance (Singapore) 

Speaker Senior leaders

The PIC in Singapore was a high calibre event - top quality speakers, participation from companies' most senior leaders around Asia Pacific, and our beautiful venue at Marina Bay Sands! Annette King - President and Chief Executive Officer, Manulife (Singapore) 

Group Photo Workshop

The PIC is an unequalled gathering of senior executives from the Asian life insurance industry. The workshop sessions offer a unique opportunity to interact with other industry leaders on the current issues affecting the industry. Andrew Linfoot - Principal Officer & Director (Asia), Pacific Life Re (Singapore Branch)

Opening Ceremony GOH walking in
GOH giving speech GOH at exhibition booths

Excerpts of Keynote Address by Lim Hng Kiang, Minister for Trade and Industry, and Deputy Chairman, Monetary Authority of Singapore

8. Let me touch on three areas the industry can focus on to increase its responsiveness to the needs of the population, and to win their confidence and trust:

  • First, enhancing the penetration and availability of insurance;
  • Second, raising financial literacy and consumer education levels; and
  • Third, improving insurance distribution and safeguarding retail customers' interests.

Enhancing the Penetration and Availability of Insurance

9. Insurance penetration levels in many parts of Asia continue to be low. In terms of life insurance premiums and amount assured, much of Asia lags behind Europe and North America. Life business premiums per capita in 2010 for Asia was only US$208, about five times lower than for Europe.

10. More therefore can be done to increase insurance penetration levels in Asia. The focus for insurers has traditionally been on the middle class, and increasingly, given the rising affluence in Asia, High Net Worth Individuals. However, closer attention should be given to how the insurance industry can meet the specific needs of other segments of the population, in particular, low-income households and the aged.

Microinsurance

11. Despite the growing wealth in Asia, considerable portions of the population are still poor. It is estimated that 70% of the world's low-income population resides in the Asia-Pacific region. The poor have little financial resources to cope with risks and economic shocks, and are often unable to afford conventional insurance products. Therefore, for some of the countries in Asia, the development of a microinsurance industry should continue to remain an important priority. This will also help to contribute to a meaningful increase in insurance penetration levels in Asia.

12. Insurers and reinsurers can play a bigger role in the development of the microinsurance industry. In addition to helping fulfill an important social role, the involvement in microinsurance could potentially create a new client base for its conventional products as segments of low income earners are likely to graduate to become middle income along with improving economic opportunities and rising income levels in Asia.

Annuity and Long Term Care Insurance

13. People in many parts of Asia are also living longer. Japan and Korea are the fastest aging countries with those aged 60 and above expected to account for about 40% of their respective population by 2040, up from 31% and 16% for Japan and Korea respectively at present. In China, this percentage will increase from 12% to reach 29% by 2040. In Singapore, the percentage of the population aged 65 and above is currently 7.3%, and is expected to rise to 19% by 2030.

14. As life expectancies in Asia rise, it becomes increasingly important to enhance the availability of annuity and long-term care insurance products, so that people are able to be financially self-sufficient in their later years. Annuities provide a stream of future income payments, while long-term care insurance products provide regular payouts in the event that the insured becomes severely disabled.

15. The development of an insurance market which can cater to an aging population in Asia presents opportunities to be grasped. More can be learnt from the insurance market's experience in developed countries which have aging populations. Indeed, insurance companies in Japan have already increasingly focused on products which cater to older people, such as policies which offer medical and nursing care.

16. Insurance products catering to longevity risks need not be purchased only when one approaches old age. Delaying the purchase of long-term care insurance until the onset of old age may result in more expensive premiums or failing underwriting tests. In the US, the average age of purchasers of long-term care insurance products has steadily fallen from 72 years in 1990 to 55 today, suggesting a rising awareness of the need to purchase such products earlier. Arising from this trend, long-term care insurance is now commonly offered to working adults in the USA. The long-term care insurance market in the US also continues to grow with competition bringing more innovative products to the markets. The annuity market is also well-developed in the US, and accounts for a good proportion of premiums in the life insurance industry.

17. In Singapore, however, new annuity business by the private sector accounts for less than 5% of the total new life and health business premiums. While this low annuity level is presently augmented by the government through a basic annuitisation scheme offered through the Central Provident Fund, there is still much scope for private sector insurers to play a greater role.

Role of Governments, Industry and Academia in Developing Microinsurance, Annuity and Long-Term Care Insurance Sectors

18. Developing the microinsurance, annuity and long-term care insurance sectors will go some way to increasing insurance penetration levels in Asia. Governments, industry and academia all have important roles to play in helping to achieve this. A strong collaborative partnership among the parties can lead to fruitful and beneficial outcomes for all, especially for consumers.

19. In Singapore, for example, the government introduced a number of basic insurance protection schemes to meet the needs of the people as far back as 30 years ago. Together with the contributions to the Central Provident Fund (CPF), these aimed to provide a minimum level of social security. Over the years, the government has increasingly tapped on the private insurance industry to supplement these basic schemes. For example, on top of Medishield, which provides basic health insurance protection, a pool of selected private insurers now offer complementary products, known as Integrated Shield Plans, which allow the insured to enjoy enhanced protection and benefits in the event of serious illnesses. Presently, around 62% of CPF members have purchased additional Integrated Shield Plans.

20. Our Ministry of Health also works closely with private insurers to grow the market for long-term care insurance, and has appointed private insurers to run ElderShield. Eldershield is the national insurance scheme focused on providing long-term care protection for the broad population. The private insurers also offer add-on products, known as Eldershield Supplements, which provide greater choice in benefits such as having a lower disability trigger. The government is currently reviewing the scheme to further enhance the benefits. The pace of development is encouraging: Membership in ElderShield Supplements has increased eight-fold since inception to 189,000 members in 2010.

21. Another area where we can focus our efforts on is deepening research. More comprehensive data on the low-income and aged population segments in Asia can be collected and analyzed, with the aim of better understanding the risks these segments pose and how best to meet their insurance needs. The research findings will in turn assist the development of suitable insurance products, and provide insights into how insurance distribution mechanisms for these segments can be enhanced.

22. In the area of retirement security, the Centre for Silver Security, with the support of the Monetary Authority of Singapore, was launched under the Singapore Management University's Sim Kee Boon Institute for Financial Economics in Nov 2008. The Centre aims to be a premier research centre focusing on retirement security, insurance and pension systems, with the primary focus of facilitating the development of financial retirement security in Singapore and Asia. It conducts and disseminates research on a full spectrum of issues relating to retirement security in the ageing populations of Singapore and Asia.

23. Industry and academia have also come together in the annual Microinsurance Roundtable Forum in Singapore, driven by the Nanyang Technological University, together with Risk Management Solutions, a catastrophe risk modelling firm. Since 2007, this annual forum has served as a platform for discussing how to bring microinsurance to the needy in developing countries. The Forum has also facilitated public and private collaborations on pilot microinsurance projects in Asia.

Raising Financial Literacy Levels

26. The relatively low insurance coverage in Asia is due in part to inadequate levels of financial literacy among the public. People may not realize the importance of having adequate financial and insurance coverage, or may not know how to do proper planning for their insurance and retirement needs.

Improving Insurance Distribution and Safeguarding Retail Customers' Interests

30. In Singapore, like many other Asian countries, insurance agents remain a major distribution channel for insurance products. Consumers rely on agents to provide them with sound, quality advice. It is important that agents carefully consider their customers' financial needs and risk appetites before recommending suitable products. Agents should not engage in product pushing to maximise commissions. Agents must remember the important social role in helping customers get adequately insured for their future.

31. Insurance companies must also be customer-centric in their approach. They should not encourage the creation of a large agency force simply to compete for market share, or to push sales. Incentive structures must take into account how well the needs of customers are met, not merely sales volume. A strong fair dealing organisational culture will inculcate the right values for representatives to deal fairly with customers at all times.

32. MAS issued Fair Dealing Guidelines in 2009, and we charge the board and senior management of financial institutions with the responsibility to deliver fair dealing outcomes to their customers. MAS will continue to actively engage financial institution to ensure that they deal fairly with customers, including in their marketing and distribution of products.

33. MAS has also introduced stronger safeguards when financial institutions market insurance policies and investment products to retail customers. These include:

  • First, requiring financial institutions to ensure the suitability of the investment products they offer to customers;
  • Second, requiring financial institutions to provide key information on products sold to their customers in plain language, and in a format prescribed by MAS; and
  • Third, requiring financial institutions to ensure that customers understand the products they buy. If customers lack the relevant knowledge or experience, financial institutions have an obligation to advise on whether a product is suitable for the customer.

For the full text of the speech, please go to www.mas.gov.sg
 
LIA Radio Broadcasts for Consumers
27 June to 23 September 2011

On Air

Consumers find out more about life insurance...

People in different life stages and from different generations have needs and distinct goals they want to achieve. It's easy for us to appreciate that, but consumers may not realise it.

Following the encouraging experience of last year's 'Know your financial health' campaign, LIA embarked on a 13-week radio campaign this year, which hit the air waves on both the English (938LIVE) and Mandarin (Capital 95.8FM) radio stations on 27 June. The last clip was aired on 23 September.

Focussed on three themes - Financial advisory; Value of investment and protection; Investment and wealth management - true-to-life scenarios were used to highlight situations calling for protection of the financial risks.

Takeaways for consumers

  • Seek professional financial advice before purchasing a life insurance product to ensure you make an informed decision.
  • Life is fragile and full of uncertainties. Appreciate the importance of being adequately insured to protect you and your family.
  • Life insurance offers financial solutions to help you acquire investments to grow your wealth for future generations.

Industry News

'Amnesty' for GST-related errors
- A briefing by KPMG Services on 27 Sep 11 

GST Briefing - Attendees GST Briefing - Speaker

A briefing by Ms Gan Hwee Leng, Executive Director for Indirect Tax at M/s KPMG Services Pte Ltd was co-ordinated by LIA for member companies to be updated on recent changes to GST, common errors to avoid and the Assisted Compliance Assurance Programme (ACAP) recently launched by IRAS.
 
Thirty staff from member companies attended the talk. Companies that sign up for ACAP will not have to pay the penalty fines/charges for any past errors filed. Fifty per cent of the professional fee charged by the ACAP Reviewer will be borne by IRAS.

AXA consolidates operations at AXA Tower

AXA - Photo1 AXA - Photo2
AXA Group Vice Chairman for Asia-Pacific, From left to right: Mr Chua Kim Soon, CEO - AXA
Mr John Dacey and Deputy Prime Minister & Insurance Singapore, AXA Group Vice Chairman for
Minister for Finance and Manpower, Asia-Pacific, Mr John Dacey and Mr Glenn Williams,
Mr Tharman Shanmugaratnam CEO - AXA Life Singapore
 AXA - Photo3
Guests mingling at the Official Naming Ceremony of AXA Tower

Underscoring its commitment to Singapore, French insurer AXA has consolidated its life and general insurance teams at the newly named AXA Tower in the central business district.

According to Mr Dacey, "Asia is home to more than half the global population with high demographic growth prospects. With enviable economic growth and accompanying improved standards of living, Asia is an important region for insurance as it has among the highest savings rate worldwide. The AXA Group has enjoyed tremendous success within the region and in Singapore, and recognises that there are further opportunities for growth. Our new offices at AXA Tower represent our long term commitment to grow our presence in Singapore and our focus on strengthening our position in Asia."

Located at 8 Shenton Way, this move brings 650 AXA staff into a single location. The office at AXA Tower was officially opened on 18 July 2011 by Deputy Prime Minister & Minister for Finance and Manpower, Tharman Shanmugaratnam. AXA Group Vice Chairman for Asia-Pacific, John Dacey, was also present at the ceremony to mark the official renaming of the building to AXA Tower. One of the world's tallest cylindrical buildings, the Tower now sports the AXA logo on its crown. Further, in a signal of AXA's move to greater customer centricity, it also houses AXA's Customer Service Centre at the basement with easy access to public transport.

Dealing with Fair Dealing Outcomes at Aviva

Aviva - Photo1 Aviva - Photo2

On 15 August 2011, Aviva's Customer Service Hall received a new look, showcasing its commitment to the Fair Dealing Outcomes and providing customers with useful information.

Posters, brochures and other collaterals were developed and installed in the Customer Service Hall at Shenton Way, aiming to educate Aviva's customers on what the MAS-stipulated FDOs are, why they are relevant to customers and how Aviva implements them.

In the creation of this campaign, Aviva made it reassuringly human: All models on the posters and other collaterals are Aviva employees.

Q&A with Glenn Williams

Standing tall as the CEO of AXA Life Insurance Singapore Private Limited, Glenn Williams has a simple vision in place - to lead AXA to become a significant industry player in the local market in a sustainable fashion. "AXA is the number one global insurance company and I believe that AXA Life Singapore will continue to expand and we will achieve our ideal market position," said the fellow of the Institute of Actuaries.

As an Economics and Mathematics (Honours) graduate from Loughborough University in the UK, Glenn has close to two decades of experience in the life insurance and reinsurance field. He began his career as a student actuary in 1992 with Guardian Assurance in London and Lancashire, UK. Prior to starting at AXA in 2002, he also worked at the Swiss Re Life and Health in the UK and in Hong Kong for seven years in various actuarial and sales roles.

When asked about his career at AXA, Glenn was notably enthused about the key roles that he has held in Asia since joining AXA when it first established its Asian headquarters in Hong Kong. He finds it remarkable to see how the AXA Asia team has grown since it first started. A few of his most challenging roles include his position as the interim CEO of Bharti AXA Life in India and the Integration Director for the MLC acquisition by AXA in Hong Kong.

"AXA has provided me with many interesting career opportunities. I believe that my ability to adapt swiftly to new challenges has given AXA the confidence to offer me these opportunities since I joined."

Amidst his strengths, it is true that every man has his own weaknesses to overcome, and it is not an exception for Glenn. He finds that he can make decisions too quickly at times, but learning from his mistakes, he ensures that he looks for additional input from his team early in a project, ensuring that the team starts off on the right track.

Outside of work, Glenn is an avid sports lover who enjoys running, watching the English Premier League (every English man's favourite) as well as the Formula One Grand Prix, all of which he has ranked as his top three leisure pursuits. Whilst on the topic of running, he was very thrilled to share with us a fact that not many knew about - that he had 'ran' the '100 km' MacLehose Trail in Hong Kong under 20 hours. Unfortunately, trail running also happens to be an activity he misses the most since his relocation to Singapore. Despite the lack of running trails here, Glenn still enjoys living in a country with a tropical climate and not having to live through any cold and dark winters.

Glenn is married with two beautiful and adorable daughters. He shares his personal life and motivations with Lifewire.

Glenn William Photo

Q: How do you unwind after a hard day's work?

I like to run or watch a game of sport (pretty much any sport!) at the pub.

Q: What do you hope to achieve in life? 

I want to make a difference, have plenty of fun with my loved ones, and definitely retire as a happy man!

Q: What drives/motivates you?

I like to see my colleagues grow.  I keep in touch with current and past team members to find out how they are progressing, be it in AXA or at other companies.

Q: What irks you the most?

It's definitely inconsiderate drivers who drive their car down the white lines, taking up two lanes on the highway.

Q: A couple of my proudest moments were....

Without a doubt, it was when my two daughters were born!

Q: Complete the sentence:  I love life because....

You never know what the next day may bring!

Q&A with Chris Gill

Chris Gill - Photo1A loving father-of-two and a dedicated husband, many envious eyes are curious on how Chris Gill, the General Manager and Principal Officer of the Friends Provident International Limited (Singapore Branch), manages his well-rounded and fulfilling lifestyle.

Undoubtedly, this family-oriented General Manager's notable success can be attributed to his optimistic outlook on life and his determination to strive for the better. Chris' natural gift in relating to others, be it towards his fellow colleagues or his precious little ones, has given him an upper hand over his peers. "Being a father of two mischievous boys under six, it is essential to possess the skills to get on well with people and stay calm when under pressure."

Chris graduated with a Bachelor degree in Economics from Durham University, one of the elite universities in the United Kingdom (UK), and had subsequently gone on to enhance his academic portfolio by achieving various investment and insurance qualifications from the UK and Hong Kong. He travelled across borders frequently to Europe when he was assigned to an international cross-border business development role when he was based in the UK, and around Africa when he was based in the Friends Provident International Limited, Hong Kong Branch for the same role.

Having spent three and a half years in Hong Kong developing businesses through intermediaries and banks in the North Asia, Chris finally set foot in Singapore with a mission to set up a local office here. However, the difficulty in setting up a new operation from scratch proved nothing to him as the business of Friends Provident International Limited grows steadily and successfully in Singapore under his watchful eye.

Chris has been living in Singapore for five years now. He describes Singapore as: "a place with friendly people, a great climate and the most efficient airport in the world!"

In his leisure time, the busy man takes on a simple way of life by spending quality time with his wife and kids, following his favourite sports on television and engaging in some tri-athlete sports. We caught up with the Irishman recently to unravel what he does beyond work.

Q: How do you wind down after a hard day's work? Chris Gill - Photo2

I often ride my bike to work. I find this very relaxing way to start off and end my day! Not only that, it saves me some money and the planet as well!!

Q: Having already spent many years in Asia, is there anything about the UK that you miss?

Coming from Belfast, Northern Ireland - definitely a good pint of Guinness!!  (No offence to all Irish pubs in Singapore)

Q: What do you hope to achieve in life? 

Be healthy, be happy and be authentic.

Q:  A couple of my proudest moments were....

Becoming a daddy twice - once in Hong Kong and another in Singapore, and seeing how Friends Provident International's business has grown so successfully in Singapore.

Q: Complete the sentence:  I love life because....

I have a wonderful and loving family, a fantastic team at work, and I live in a great country!

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