Life insurers urged to improve service, transparency levels

Life insurers here are being urged to place consumers at the heart of what they do.

Monetary Authority of Singapore (MAS) assistant managing director Chua Kim Leng delivered the message as guest of honour at the Life Insurance Association (LIA) annual luncheon yesterday.

He said nearly half of the complaints received by MAS last year against life insurers revolved around service standards. MAS was unable to provide more information on the number of complaints.

In the light of this, insurers should ensure their service quality is up to standard and meets consumer expectations. One way of improving service levels is for LIA to regularly review its Code of Practice to ensure it remains fair, proactive and prompt in dealing with customers.

Mr Chua said: "There continues to be complaints on mis-selling due to poor advice or misinformation.

"Insurers should review their sales process and consider ways to provide appropriate and sound advice, and communicate more effectively with customers."

Using the example of participating life or "par" plans, Mr Chua highlighted that there is room for insurers to enhance disclosure on governance for par fund management, as well as provide clarity on how bonuses are determined and the basis for illustration rates.

With greater transparency and disclosure, insurers could better assure customers that they are being offered quality products and being treated fairly. This is what the LIA is trying to do, having embarked on a review of par policies which is expected to be completed this year.

Yesterday, LIA president Khoo Kah Siang reiterated that policyholders can look forward to enhancements on disclosure of insurance policy details relating to illustrated investment returns and bonuses. A key reform will involve including the projected yields to maturity or net returns in the benefit illustration of "par" plans.

Insurers were also assured by MAS that the industry is not expected to hold higher levels of capital under the current review of the risk-based capital framework, known as RBC 2, which seeks to reflect the relevant risks that insurers face. The objective of implementing RBC 2 is to enhance risk sensitivity so that capital requirements are more aligned to an insurer's business and risk profiles, said Mr Chua.

He added that the framework must be able to promote sustained long-term growth of the insurance sector, and not inhibit insurers from meeting consumers' protection and retirement needs.

A version of this article appeared in the print edition of The Straits Times on March 10, 2016, with the headline 'Life insurers urged to improve service, transparency levels'. Print Edition | Subscribe