Churning of Life Insurance

Letter published in Straits Times

WITH reference to last Saturday's report ('Windfall for jumping ship'), there are many factors in the scrum by insurers to lure agents away from rival firms.


One is the client list of the agents, a consequence of which will lead to a churning of insurance policies. In such scenarios, clients are persuaded to cash in their existing policies to buy a new one.


To lessen the risk of such negative effects, the Life Insurance Association should consider organising seminars to educate the public. 


The association should have rules to ensure that agents fully inform their clients on the implications of surrendering their policies for another one. These measures seek to ensure that the public know the effects of churning and that their decisions are informed ones.


In the report, the association remarked that it took a serious view of churning or any activity that hurts a policyholder's interest. 


The association should inform the public about its penalties against errant agents who actively resort to churning. Such transparency may also deter agents who are thinking of resorting to this practice.


Such measures will not only help safeguard public interest against errant agents, but also maintain the high standards and reputation enjoyed by the profession.


Javern Sim 

http://www.straitstimes.com/STForum/Story/STIStory_554143.html


My view
The churning of insurance policies has been a serious problem over the past decades.  Many consumers had been the victims of this unethical practice and have lost large amount of their savings. 


The insurance companies are partly to blame, as they introduce new products, supposedly with better features, and give the chance for their agents to get unsuspecting customers to replace their policies. 


To overcome this unethical practice, it is necessary for the regulator to place limits on the amount of commission that can be paid on life insurance policies. This problem has been recognized in many countries and the appropriate action has been taken by the regulator. 

Non-renewal of credit card

Last year, my bank charged me $700 as annual fee for the renewal of the credit card. This was the first time that the annual fee was imposed, as I was given the free use of the credit card for the previous years. They bank did not notify me in advance of this fee. I could have easily overlooked it in my statement.

I telephoned the hotline of the bank. Before I could ask about the annual fee, the bank officer offered to waive the fee and to restore the forfeited points, as he noted that I had used the credit card extensively for my payments (for which the bank did earn a commission). I thanked him for the kindness.

As the year is ending, I have just faxed this letter to the bank:

"I wish to inform you that I do not wish to renew my credit card on its expiry. Please acknowledge this instruction by reply to me at kinlian@gmail.com. I thank you for the wonderful service that you had rendered to me for the past years."

I feel that it is dishonest for the bank to try to levy a hefty annual fee, without getting the prior agreement of the customer.

Tan Kin Lian

Motor Insurance

Read this article. It explains the different types of motor insurance policies (apart from the comprehensive cover) and how you can get a lower premium by getting online quotes from websites.

Goldman Sachs settles securities claim

Read this report about the Goldman Sachs settlement.


Goldman Sachs has agreed to pay $550 million to the Securities and Exchange Commission to settle charges of securities fraud linked to mortgage investments sold to investors, a person briefed on the matter told The New York Times's Edward Wyatt.

Under the terms of the deal, Goldman will pay $300 million in fines to the S.E.C., with the rest serving as restitution, this person said. Goldman will not admit wrongdoing.

The S.E.C.'s director of enforcement, Robert Khuzami, is scheduled to hold a press conference late Thursday afternoon.



My view
The regulator in USA is willing to take action on behalf of investors and make a settlement with a financial institution on the charges of fraud. The settlement is made without admission of liability. It would be impossible for the public to take legal action on their own.

I hope that this approach can also be taken by our regulator in Singapore. After all, we are following the same "free market" practice as in USA. Being "pro-business" does not mean that they are allowed to take advantage of the public.

Financial Fraud

Dear Mr. Tan

Could this happen here?

http://www.manulife-victims.net/

Expensive outsourcing project

Read this report.

My view
Many government agencies and commercial organizations spent millions of dollars on consultants and outsourcing projects and get poor results. This allows the management and the board to point fingers at the external parties, in case of any shortcoming.

I hope that leaders should take responsibility for decisions that are outsourced, and that if the mistake is serious, they should be held responsible and accountable, together with the outsourced parties.

World Cup and Youth Olympic Games

In my opinion, the biggest winner of World Cup 2010 is South Africa. I read about the pride of the people of South Africa in hosting the World Cup and the warm hospitality that they extend to their million of visitors.

I watched the opening ceremony over television and was amazed by the pride and joy of ordinary people, the speech given by Bishop Desmond Tutu and the respect given to the former President Nelson Mandela, popularly called Madiba (i.e. Grandfather). We may have read media reports about the high crime rate and lawlessness in that country, but the people were able to project a different image to the world during this historic event.

Singapore is now hosting the Youth Olympic Games. I am worried that, in spite of the the hundred of millions of dollars that are being spent on the games (which is three times over the original budget), there is so little excitement among the people of Singapore. There was even a media report that the ticket sales is poor, and that the schools have to be asked to buy the tickets.

I hope that our leaders and the organisers of the Youth Olymic Games realize that this is not just their show, and that it belongs to the people of Singapore. Time is running out. Let us use the remaining time to engage the people.

Tan Kin Lian

Pinnacle Notes

If you have invested in Pinnacle Notes that have turned bad and you wish to join the legal action to be filed in US courts, please send an e-mail to tkla.km@gmail.com, giving your name and contact number. We will send you a Q&A and a form to provide further particulars.

Comments in this Blog

Two vile persons continue to post personal attacks against me in this blog. They made more than 10 attacks on some days. Their purpose is only to attack, rather than to post their opinion. I have posted some of their vile comments that are relatively tame, but have blocked those that are outright vicious and vulgar.

I believe that they have been paid to harrass me, and stop me from posting my views on financial products that rip off the public. I have decided, for the time being, to allow posting of comments only from Google accounts. This will allow me to trace the identity of these vile persons, if they continue their activity.

If you wish to post a comment and do not have a Google account, you can send an e-mail to kinlian@gmail.com.

Tan Kin Lian