Tuesday, July 3, 2012

fee-based model may leave more underinsured

in a recent interview with the straits times, mr tony wilkey, the chief executive of insurance at Prudential Corporation Asia commented that moving the renumeration model to a fee-based one could leave even more people underinsured.

"It is a different value proposition for the consumer to write a personal cheque in advance to get the advice before a product is delivered.

The affluent customer is more likely to pay, but historically in other countries, the mass market consumer has not been seen as willing to write cheques.

This concerns me because if they are unwilling to pay for advice, then the likelihood of them purchasing what the family needs could be impacted. Theoretically, we could end up increasing the underinsurance gap."

two other CEOs, mr chris wei of great eastern life and ms annette king of manulife also raised similar concerns.

my comments:

mr wilkey was giving his comments on the likely sweeping reforms by FAIR set up by the Monetary Authority of Singapore in march and will make it's recommendations by the fourth quarter of the year.

my take is there is no one perfect renumeration model or one size fits all approach to the renumeration structure, just as every individual is unique.
the answer may life in adopting several structures and as mr wilkey has opined that we may end up increasing the underinsurance gap if a pure fee-based one is implemented.