Bonus on participating policies

Dear Mr. Tan
I have several life insurance policies with X. They reported higher investment income for 2007. I hear that they will reduce their annual bonus on their policies and increase the maturity bonus. Is this fair to policyholders? If not, what action can the policyholder take?

REPLY
The life insurance company and its appointed actuary is required to act fairly in the distribution of the annual bonus. They have to follow the principles set out in their contract or in their company bye-laws. Recently, the Monetary Authority of Singapore has issued a guideline on the distribution of bonuses on participating policies.

In the situation that you have described, the company X has to give a convincing explanation on why they are reducing their annual bonus, in spite of an increase in investment income. If you are unhappy with the explanation, you can lodge a complaint with MAS or with FiDREC.

You can ask MAS to verify if Company X has met with their obligation under the MAS guidelines.