LIFE insurers have been warned to stamp out questionable recruitment practices - a move that is set to bring direct benefits to policyholders.

One key problem that the Life Insurance Association (LIA) aims to crack down on, by imposing stern penalties, is the mass poaching of rival agents.

If life agents switch employers, there is greater potential risk of policy 'churning'.

This is when clients lose money after being persuaded to surrender a policy and use the proceeds to buy a new plan with another firm.

The code warns life insurers against making unsolicited approaches directly to agents of other member firms by phone, SMS, e-mail or mailer on a mass communication basis.

As part of the drive to clamp down on churning, the new code also states that all LIA member firms should carry out reference checks, share information on churning and impose sanctions such as commission claw-backs if churning occurs.

Read the full story in Wednesday's edition of The Straits Times.