New kid on the block AIA Financial Advisers (AIA FA) is on a hiring spree for agents, with Great Eastern (GE) the latest casualty in the poaching battle among insurers.
AIA FA is said to have offered $100 million to entice GE's 400 or so agents - who operate under the so-called Advisors Alliance Group (AAG) - to jump ship. AAG is an agency unit at GE.
More than 300 GE agents have apparently decided to join AIA FA, likely making it the biggest one-off act of poaching seen in the insurance sector here.
It will dwarf last year's mass resignation when insurance veteran Peter Tan led 250 agents under his eponymous Peter Tan Organisation, an agency unit of Prudential Singapore, to join rival insurer Aviva.
AAG's founder, Mr Tan Koon Chuan, is himself leaving GE for AIA FA. An insurance veteran, he joined GE 40 years ago in 1977 and is now a senior executive director.
The ball started rolling when AAG invited its 400 agents to attend a three-day "seminar" in Batam from Aug 29 to 31, where the benefits of the new firm were extolled. Many agents signed the "migration contract" on the spot.
The offer to the GE agents included sign-on bonuses and a five-year "bond" period during which the monetary incentives could be clawed back if sales quotas were not met.
AIA FA said the new firm has been receiving strong interest from "a diverse range of candidates". "This includes our own AIA tied agency, professionals within the financial industry and career switchers new to our industry," said AIA FA chief executive Tan Chuan How.
He said: "AIA FA adopts sound recruitment practices to protect consumers' interests and strongly advocates that packages offered to experienced representatives should be commensurate with each individual's qualifications, track record and experience."
GE said that "some agents recently tendered their resignations". However, it declined to comment on where they moved to.
It added: "Our priority is to ensure that our affected policyholders' interests remain protected as we continue to deliver the best service and trusted professional advice. We will continue to invest in our strong, established distribution channels to further grow our business."
AIA FA is a wholly owned subsidiary of AIA Singapore that will begin operations in the fourth quarter of this year. It was set up to expand AIA's distribution channels and complement its large agency force. The firm will offer AIA's suite of life and selected accident and health plans, and may introduce other solutions to complement existing product offerings in the future.
The practice of poaching agents has been ongoing for several years as insurers race to drive growth by expanding their agency forces amid intense rivalry. It typically involves insurers and financial advisory firms trying to outbid one another in wooing top performers and their teams by offering better and more tempting sign-on deals with upfront lump-sum payments and bonuses.
Financial experts do not view this as a positive practice as it may result in potential mis-selling by agents under pressure to meet sales targets.
Insurers may also increase premiums or reduce cash values to recoup the costs related to such poaching activities. When that happens, consumers will be the ones who get the short end of the stick.
Other players, including Aviva, GE and Manulife, have set up their affiliated financial advisory firms as a means to cater to consumers' preference for choice. However, not all of these financial advisory firms allow their representatives to offer third-party products.