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25 Feb 2011, 12.59PM
This case surfaced recently and not reported .
"The insurance agent convinced a woman  to invest $50,000 and instead of putting it into
a single premium policy, the agent changed the application, without her
knowledge, to an annual premium policy. After a lengthy investigation,
which was quite stressful to the consumer, the insurance company finally
agreed to refund the full payment of $50,000."
The case raises a lot of regulatory questions.
Why the case escaped the detection of the agent's supervisor, the manager above him and the compliance department is a great mystery. The truth is this case is representative of the rampant unethical practices and misconduct in the insurance industry because of commission. The agents get very creative , often without the customers knowing, to generate commission.
The above is certainly a case regulatory breach. Surprisingly the top down responsibility has no effect on the CEO.

 comments & replies
28 Feb 2011, 3.29PM
MAS must do and enforce section 27 of the FAA which requires all recommendations to be of  reasonable basis based on the fact find and need analysis. If MAS enforces this stringently I am sure consumers will benefit. There will be no fear of biased or commission driven advice by the greedy and unscrupulous insurance agents.. Currently, the norm in the industry is product pushing  and peddling and this approach has harmed consumers' interest because this approach doesn't consider the customers' interest and needs and ONLY the insurance agents' interest and also the company's, ie the commission and the high APIs at the expense of the customers'. So banning product advice or option 3 is urgently needed. By combining these 2 measures it will result in consumers getting responsible and competent financial planning advice which consumers don't get now.
To put the last nail to the coffin of unethical and incompetent practices by insurance agents MAS should consider banning commission and install a fee based remuneration model . Australia, UK, India, and a few European countries are banning or planning to ban commission from all financial products. Commission is a common evil and has caused untold malpractices and deprived consumers of their rights to responsible advice.Under insurance is one of the results.Losses of hard earned money is another.
I hope MAS will consider my above proposals, ie.
1. to make need based a must approach like doctors' approach to their patients' concerns and more importantly to enforce it and making failure to comply an offence ;
2.ban option 3 or product advice and
3. ban commission and introduce fee based remuneration.
Hope REACH will escalate this to the appropriate agency.
1 Mar 2011, 12.13AM
IIn US more advisers are moving to fee based advisory and commission is banned. MAS should study the model because this is the fairest way to bring about a fair dealing outcome for consumers. This will change the way and the processes consumers' needs are approached. The product pushing and peddling only results in under insurance for the consumers because product peddling is like stealing from the consumers and worse without the goal of the customers mind.
MAS must ban commission to stop the insurance companies and their salesmen conspiring to fleece the consumers. The people before profit is a lie. The products are telling and proof they are lying.
1 Mar 2011, 9.42AM
Why doesn't MAS ban commission? Studies have shown in many countries that commission is the major cause of mis-selling, unethical practice, cheating and conflict of interest.These are the reasons why they banned or are banning commission because consumers are not getting fair dealing outcome.
MAS should know the situation in Singapore. People are still grossly under insured. People cannot retire because  the insurance companies and the agents made the consumers to think that Wholelife insurance is a saving product for retirement.This is ridiculous. The truth is these products give the insurance agents high commission and the companies receive premium or income for life.
How do you think those insurance agents qualify for MDRT, COT or TOT? Is it they qualified because they helped a lot consumers meet the goals? NO!! It is well known in the industry that they robbed a lot of people by selling them unsuitable high commission products that short change the consumers. This is in cahoot with the company which pushed them to sell these unsuitable products because of the high APIs.
The evil must be stopped.
26 Feb 2011, 2.08PM
I have personally witnessed a similar case. Instead of investing the total $250K into a single premium the agent 'recommended'  or conned  her client to invest in a regular 5 year limited payment plan for 15 years because of insurance crap. The result is the difference of cash value at maturity is $85K , ie the single premium yielded higher return by $85K.
For the agent the commission is 1% for single premium and 15% for the regular premium single premium 1% commission is $2500; regular premium 15% commission is $7500.
The problem the customer didn't know the insurance agent manipulated him on the insurance which is higher but slightly higher than the single premium.
The agent's supervisor approved it without questioning and and didn't check the reasonable basis whether it was to the best of interest of the client.
This case is cheating but it seems legal and the customer got cheated under his nose... The agent's argument is the client agreed and signed it because of the insurance coverage. The victim's loss of  $85K could buy him  lots of coverage  for the 15 year period, right?
However, another case of comatose customer. Wait till he wakes up to the fact in 15 years time.. Therefore, I wonder when MAS talked about consumers making informed decision where is the evidence that consumers can. Random street survey we found that 99% of consumers are as clueless as sotong , other than knowing to mention a  few products' names.
27 Feb 2011, 10.45AM
Customers making informed decision? only after an hour of presentation? after given half truths?  after half lies and all other truths concealed? It is a joke, isn't it? if the customers can make informed decision after an hour presentation they can also become  insurance salesmen after this, right?
Why don't you ask them about the functions of the products after they have been sold? I bet they have little inkling of what they bought... Customers are clueless. Cannot push the responsibility to them. The onus must lie with the insurance agents for all liabilities and all the reasonable basis of the recommendation. This is the role of salesmen whether disguised as financial consultants or not. This is fiduciary duty of the insurance agents..
25 Feb 2011, 5.05PM
What has happened to the  top down fair dealing guidelines which the CEO is supposed to implement down the line to create a culture of fair dealing?
What has happened to need based approach that MAS directed the insurance industry to follow? Is the FAA for the history book?
Where is the financial doctor? Instead we are getting peddlers, pushers, koyok conmen and women of snake oil products.

This is happening because of one evil, ie the COMMISSION. Commission has driven insurance agents to commit all sort of crimes, breaking the FAA especially section 27.
LIA reported that many cases were with full and partial fact find. Did they result in higher sum assured sold?
Why? the fact finds were BS to cheat the regulator into believing that industry is moving towards advisory. Rubbish, craps, the industry is still ganging up to cheat the consumers with the report to make it look real.
The truth is the industry is still pushing and peddling rotten products to the consumers without putting the needs of the consumers first. That is why the above case happened. The commission between a single premium and a  regular  premium product is very large, ie between 1% to 40% difference. Imagine that..
The right thing for MAS to do is to get hold of the snake head, ie the CEO to ensure that the everyone in the company has the interest of the customers at heart and NOT saying  one thing and do another thing like saying "people before profit" but pushing the agents to push rotten high commission and high API products to the unwary comatose customers,. This is despicable and shameless tactics of chameleon.
MAS, ban product advice option 3 and enforce section 27 of the FAA and better still ban commission from ALL financial products like Australia will be doing this June.
There is no better time than now to get rid of these conmen and conwomen.
26 Feb 2011, 12.09AM
This is just the tip of the iceberg. If you know of any insurance agent he can give an inside story of who and who  and what they do to get what they want, the commission and to qualify for mdrt.
It seems the management is not in the know or with their eyes closed. After all they and the agents work hand in glove to scratch each other's back. The agents get the fat commission and the company gets the fat APIs. Both laugh all the way to the bank. Worse, the comatose consumers don't even know what hits them unitl 20-25 years later when they start to cow peh cowbu when reviewed by a third party. Any worse they dare not sue their agent or the company or complain to MAS. Why? fear of hassle, (mafun') or the agent is their relative or friend....don't want to see them kenna go to jail or sacked. That is why hardly any malpractice by insurance agents came to the surface, reported  because all harshed up before they create ugly scene for the insurance companies. But in UK it is different... the regulator will not fail to mete very heavy fine if the insurance company misbehaves.The fine can be in hundreds of million pounds..don't play play, hor.
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