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.
That is his opinion....he is a fear monger and unfounded. He is worrying about his salary being reduced because the industry will weed out the the unethical product pushing agents and part of his salary is in the embedded commission.
ReplyDeleteTell him to tell this to FSA.
FSA fines Barclay $250 million over interest rate rigging.
DeleteMAS should do the same to insurance companies and the banks.
Yes, this ceo's worry is definitely not about more people being under insured. Since when insurance companies worried about people under insured? They created under insurance.
ReplyDeleteHis worry is he may lose his job.
Dismantling the MLM commission structure and reducing the commission to 60% and disbursed over 6 years for wholelife products at agent level should be fair proposition.This will improve the protection and the return.
ReplyDeleteTo be FAIR to consumers the MLM structure must be torn down and the 160% commission to reduce to 50% to be paid over 5 years.
ReplyDeleteSalary of CEOs cannot exceed $200K a year.
FEE BASED MODEL MAY LEAVE THIS CEO POORER.
ReplyDeleteConsumers must beware of products from AIA and Prudential. They are the worse products in singapore.
ReplyDeleteu have to ask.. why would anyone pay 2.5k up front for fee base advisor? who would do that rationally?
ReplyDeleteThis is misleading. Fee can be paid monthly in installments or upfront, hourly or one off. This is disclosed upfront. The customers can decide or negotiate before the advice begins and not pressured into buying a product. This is very much cheaper than paying the hidden commission. If the customers know that it is one off instead of the many hidden commissions not disclosed to customers they will accept willingly.
DeleteEg, if you buy a 10 year limited pay wholelife with premium of $10K, the commission is $5k plus the residual commissions for next 6 years.A fee based may charge only $2K one off, because it is simple case.This $2K may be even higher than a lawyer's earning for legal advice.
Do you see how much the insurance agents are earning from commission and how much advice given? So, is it irrational to pay lesser?
The truth is all the insurance companies and their agents are resisting it because it will affect their earnings and without the knowledge of the customers. This is cheating.