I wish to say a few positive words about insurance agents; I know many of them personally over the past years. They sincerely believe in providing a valuable service to protect the financial security of their clients. They work hard to make a living and earned a modest income.
The commission rates earned by the agents of NTUC Income are lower than the market rates. This helped to reduce the cost to the consumers. This was the case in past years; I believe that it is still the case today.
Some people have regulary posted anonymous comments to attack insurance agents, particularly the agents of NTUC Income. These comments were unfair and malicious; I have blocked them.
While most insurance agents act honestly, there are some agents that take advantage of the ignorance of their clients. These bad agents resort to twisting and gave bad advice to earn more commission. They are the minority, but they gave a bad name to the other agents. The insurance companies have to share the blame for the bad practices also.
Insurance companies can play a positive role by designing products that are fair and give good value to consumers, while providing a fair of remuneration to the agents. The correct approach is to simplify the product, improve transparency, increase the productivity of agents and reduce the distribution cost. This will create a positive environment and benefit all the parties.
Tan Kin Lian
Sunday, October 4, 2009
Wasteful competition
Read this excellent article by Conrad Raj in Today paper. It tells about the wasteful competition that increases cost for the public. The example quoted is the bid by SingTel and Starhub to broadcast the EPL football matches for the next three years.
I have written a separate article that competition should be in the delivery of content and that the cable infrastructure should be a regulated monopoly. The same arguments goes for public transport - i.e. the bus and taxi services should be regulated and the individual operators can compete to provide the services on the agreed routes. Read my views here.
I hope that the government will review the current model of "leave it to the market". We need a different approach towards competition, rather than the wasteful competition model that is now being practiced.
Tan Kin Lian
I have written a separate article that competition should be in the delivery of content and that the cable infrastructure should be a regulated monopoly. The same arguments goes for public transport - i.e. the bus and taxi services should be regulated and the individual operators can compete to provide the services on the agreed routes. Read my views here.
I hope that the government will review the current model of "leave it to the market". We need a different approach towards competition, rather than the wasteful competition model that is now being practiced.
Tan Kin Lian
Free market and EPL Football
Football fans are angry at having to change set-top boxes in 2010 when SingTel takes over the broadcasting rights to the EPL football games from Starhub.
This is an example of the waste and higher cost suffered by consumers through free market competition. Starhub and SingTel have be compete aggressively for the broadcasting rights and pass the higher cost, including the additional infrastructure cost, to the consumers.
Consumers have a choice. They can give up watching EPL football. I will take this choice in my family. Goodbye, EPL.
I wish to suggest the following approach to the Media Development Authority. Ask Starhub to set up a separate company to operate the cable infrastructure, and to allow all content providers to rent the channels to broadcast their contents. SingTel can rent the channels to broadcast the EPL games.
This approach is similar to what is being done for the distribution of electricity. One company is responsible for the distribution and billing the power that is generated by different operators.
There is a need for the distribution monopoly (for broadcasting or power supply) to be public owned or to be publicly regulated. We need to develop the expertise to handle these regulated matters, rather than take the easy way out to "leave it to the market". We cannot expect market forces to work when there is no true market, such as the case of a monopoly or similar structures.
In the regulating bodies, the consumers should be adequately represented by consumer advocates, rather than selected from the "establishment".
Tan Kin Lian
This is an example of the waste and higher cost suffered by consumers through free market competition. Starhub and SingTel have be compete aggressively for the broadcasting rights and pass the higher cost, including the additional infrastructure cost, to the consumers.
Consumers have a choice. They can give up watching EPL football. I will take this choice in my family. Goodbye, EPL.
I wish to suggest the following approach to the Media Development Authority. Ask Starhub to set up a separate company to operate the cable infrastructure, and to allow all content providers to rent the channels to broadcast their contents. SingTel can rent the channels to broadcast the EPL games.
This approach is similar to what is being done for the distribution of electricity. One company is responsible for the distribution and billing the power that is generated by different operators.
There is a need for the distribution monopoly (for broadcasting or power supply) to be public owned or to be publicly regulated. We need to develop the expertise to handle these regulated matters, rather than take the easy way out to "leave it to the market". We cannot expect market forces to work when there is no true market, such as the case of a monopoly or similar structures.
In the regulating bodies, the consumers should be adequately represented by consumer advocates, rather than selected from the "establishment".
Tan Kin Lian
Efficient train system
Europe has an efficient train system to connect its major cities. Singapore, Malaysia and Thailand can develop a similar system, but it requires the cooperations of these countries. Read my suggestion here.
RED Portal (15) - URA website
Question: How different is the RED portal from URA website that provide transaction prices?
Answer: I tried using the URA website to get transaction data before. It was quite difficult (at least from my personal experience).
I have designed the RED portal to be easier to use. I hope that visitors will find it easier to get all relevant information about a condo or housing project from the RED portal.
I also developed the concept of BMP (benchmark pric), AMX (amenity index) and comparables (i.e. similar projects in the same postal sector).
Answer: I tried using the URA website to get transaction data before. It was quite difficult (at least from my personal experience).
I have designed the RED portal to be easier to use. I hope that visitors will find it easier to get all relevant information about a condo or housing project from the RED portal.
I also developed the concept of BMP (benchmark pric), AMX (amenity index) and comparables (i.e. similar projects in the same postal sector).
Direction and future of our society
I spoke to a friend at a coffee shop about the changes that are necessary to make life better for the people of Singapore. He interrupted me on a few occasions and said, "that is engaging in politics; is it wise"?
I explained that I have no interest in "engaging in politics" but it does not prevent me from speaking as a citizen. We need more people to come forward to express their views about the direction and future of our society for our children and grandchildren.
My wishes for the future of Singapore:
a) Honesty - to be honest in our dealings and stating the truth
b) Fairness - to be fair and just
c) Courage - to have the courage to express our views
d) Positive - to express what is right (and not what is wrong)
e) Public service - to work in public interest and not for personal wealth
I explained that I have no interest in "engaging in politics" but it does not prevent me from speaking as a citizen. We need more people to come forward to express their views about the direction and future of our society for our children and grandchildren.
My wishes for the future of Singapore:
a) Honesty - to be honest in our dealings and stating the truth
b) Fairness - to be fair and just
c) Courage - to have the courage to express our views
d) Positive - to express what is right (and not what is wrong)
e) Public service - to work in public interest and not for personal wealth
Life insurance products can give good value
Life insurance products, including whole life, endowment, annuity and investment linked products, are useful to consumers if they are properly designed. They encourage consumers to make voluntary long term savings and manage the risk of premature death, disability or other calamities of life and improve the financial security of the insured families.
These products should be designed to be fair and give good value to consumers, by adopting the following approaches:
a) use the asset share method to distribute the fluctuating investment gains
b) keep distribution cost low
c) make the products transparent and easy to understand
There is also a need for the Government to review the tax incentive to encourage long term savings.
The asset share method is already adopted for the investment-linked products. They can be the platform for the future products.
It is possible to keep distribution cost low by educating the public on the purpose and value of life insurance products and the tax incentives that comes with them. When consumers want to buy insurance products, the sales people can be more productive in selling these products. The commission can be reduced or replaced by a fixed transaction fee.
It is useful for some tax incentive or subsidy to be provided for insurance products. If the interest earned in the life insurance fund pays a lower rate of tax (like in France) or is tax deferred (like in USA), the inherent advantage will make the life insurance products attractive to consumers. Alternatively, the premiums paid on insurance products can be allowed a modest rate of tax relief or subsidy (for people who do not pay tax).
To avoid any abuse of the tax incentive, a system of regulatory control has to be implemented, including meeting of performance indicators on cost, efficiency and benefit to consumers. This cannot be left to "the market". Predatory products that are unfair to consumers or designed to abuse the tax incentive should not be approved.
Singapore can learn from the positive experience of many countries in using tax incentives to develop a vibrant and efficient life insurance industry to encourage prudence, long term savings and financial security to the insured families.
I hope that the Government will consider my suggestion to provide tax incentive to encourage people to make voluntary savings for the financial security of their families.
Tan Kin Lian
These products should be designed to be fair and give good value to consumers, by adopting the following approaches:
a) use the asset share method to distribute the fluctuating investment gains
b) keep distribution cost low
c) make the products transparent and easy to understand
There is also a need for the Government to review the tax incentive to encourage long term savings.
The asset share method is already adopted for the investment-linked products. They can be the platform for the future products.
It is possible to keep distribution cost low by educating the public on the purpose and value of life insurance products and the tax incentives that comes with them. When consumers want to buy insurance products, the sales people can be more productive in selling these products. The commission can be reduced or replaced by a fixed transaction fee.
It is useful for some tax incentive or subsidy to be provided for insurance products. If the interest earned in the life insurance fund pays a lower rate of tax (like in France) or is tax deferred (like in USA), the inherent advantage will make the life insurance products attractive to consumers. Alternatively, the premiums paid on insurance products can be allowed a modest rate of tax relief or subsidy (for people who do not pay tax).
To avoid any abuse of the tax incentive, a system of regulatory control has to be implemented, including meeting of performance indicators on cost, efficiency and benefit to consumers. This cannot be left to "the market". Predatory products that are unfair to consumers or designed to abuse the tax incentive should not be approved.
Singapore can learn from the positive experience of many countries in using tax incentives to develop a vibrant and efficient life insurance industry to encourage prudence, long term savings and financial security to the insured families.
I hope that the Government will consider my suggestion to provide tax incentive to encourage people to make voluntary savings for the financial security of their families.
Tan Kin Lian
Restructure of taxi service
Survey: Free Market
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