Questions for the AGM of NTUC Income, 29 May 2009

I have submitted the following questions for the annual general meeting of NTUC Income on 29 May 2009. They summarised the questions sent to me from policyholders during the past year.

If you are a policyholder and wish to attend the annual general meeting, you can send your request to the cooperative secretary at this address (lakshmi.b@income.com.sg). You can also send in your own questions.

Questions for the Annual General Meeting of NTUC Income, 29 May 2009
I wish to ask a few questions on behalf of many policyholders who bought life insurance from NTUC Income on the understanding that it is a cooperative working in the interest of its policyholders.

NTUC Income reduced its bonus rates for several series of policies last year, in spite of excellent investment results. At the annual general meeting, the chairman gave the following assurances to the policyholders:

a) While special bonuses are not guaranteed, they are designed to ensure that the reduction in annual bonus is compensated. As I have indicated earlier, the new bonus structure is aimed at improving, the total payout to policyholders.

b) Should the special bonus in future reduce due to adverse financial conditions, we are committed to restoring it when conditions improve.

c) I have stated that this Board will look after the policyholders’ interests. Towards this end, the Board will ensure that the bonus allocated to policyholders result in payouts is fair and consistent with the experience of the Life Fund. 

There is an announcement that the bonus cut will be extended to all other series of policies this year.

My questions are:

1. What is the total amount of bonus that were reduced in 2007 and 2008 compared to the bonuses that would have been declared if the bonuses had been maintained at the same rates declared in 2006. Please provide the actuarial value of the bonuses that have been reduced, in millions of dollars, for the policies that were affected.

2. What is the amount of management and selling expenses incurred for the life insurance business for 2006, 2007 and 2008. Are steps being taken to reduce these expenses in line with the reduction in bonuses suffered by the policyholders?

3. Please explain how the reduction in bonus can achieve a better payout to policyholders? With the reduction in the bonus last year, was the cooperative able to invest the undistributed surplus to earn a higher return for policyholders?

4. Will the cooperative be able to maintain the special bonus payable on maturity and surrender, which was adjusted to compensate for the reduction in the annual bonuses? Is there any likelihood that the special bonus will have to be reduced, due to the global financial crisis?

5. For policies which have matured since the last AGM, was the cooperative able to meet the promise that the payout will be fair and based on the actual experience of the fund? Where the actual payouts were short of what is due to them, does the cooperative intend to make the appropriate adjustment for these policyholders?

6. Based on renewals made in recent months, what is the average rate of increase in motor insurance premium paid by policyholders who did not make any claim during the past year? Does the cooperative intend to control its expenses and claims to allow it to reduce the premium rates for its policyholders? What steps are being taken to achieve this goal?

Tan Kin Lian