A motorist left the workshop to make a claima against NTUC Income. The workshop inflated the bill and submitted the claim through a lawyer. We disputed the claim.
The motorist sent an e-mail to me directly. He complained that we were not fair in handling this claim and labelled it as "Unfair Insurance Practice".
Here is my reply:
-----------------------------------
Dear
It appears that you are insured with another insurance company and you wish to make a third party claim against NTUC Income.
Under our fair practice, you should contact us directly and allow us to settle the claim with you, Apparently, you did not.
You asked the workshop to handle the claim for you. The workshop probably submitted a claim that is much higher than the cost of
repair that can be done by our workshop.
There is also the question about liability. Is the truck insured by NTUC Income liable for the accident? This has to be
established.
I want you to realise that you have caused a lot of problem to us by your unfair approach. But I realise that you were not aware
about it.
I will ask xxxxxxx to look into this case, and see if he can help to expediate the matter. I hope that you agree with my
view.
Tan Kin Lian
CEO, NTUC Income
Monday, February 27, 2006
Take a cheaper medical plan
QUESTION
I attended A talk on medical insurance given by your manager. I was told that the rider (to cover the balance of the bill) has to be paid by cash and the premium will increase as I grow older.
Mr Tan, is there a limit, that is a certain period of age that can stop paying the premium for the rider. Or we must pay until we die. That means a lot of money to pay for the rider.
REPLY
Briefly, you can stop the rider at any time, so that you do not need to pay the increasing premium.
My advice is for you to take a lower cost plan, so that there is sufficient money to pay for the basic plan and the rider for as
long as possible.
I attended A talk on medical insurance given by your manager. I was told that the rider (to cover the balance of the bill) has to be paid by cash and the premium will increase as I grow older.
Mr Tan, is there a limit, that is a certain period of age that can stop paying the premium for the rider. Or we must pay until we die. That means a lot of money to pay for the rider.
REPLY
Briefly, you can stop the rider at any time, so that you do not need to pay the increasing premium.
My advice is for you to take a lower cost plan, so that there is sufficient money to pay for the basic plan and the rider for as
long as possible.
Sunday, February 26, 2006
Principle of profit sharing
QUESTION FROM JOURNALIST
Why do you need to charge higher premiums for takaful-based motor insurance?
ANSWER:
In a conventional product (ie profit not shared with policyholders), the shareholders take the entire risk. All profit or loss is borne entirely by the shareholders.
In a profit-sharing product, such as takaful insurance, a major portion of the profits goes to the participants. It is necessary to increase the premium rate by about 10% to 20%, to reduce the risk of loss (in case of bad claims). As the shareholders take only a modest portion of the profit, it is fair that they should bear a smaller risk of loss.
It is likely that the rebate (or share of profit) will be more than the additional premium, so that the net cost (after the rebate) will be attractive to the policyholder.
The profit sharing will also encourage the policyholders to work in cooperation to minimise the loss, as they can benefit from the share of profit. This will be good for the policyholders in the long run.
Why do you need to charge higher premiums for takaful-based motor insurance?
ANSWER:
In a conventional product (ie profit not shared with policyholders), the shareholders take the entire risk. All profit or loss is borne entirely by the shareholders.
In a profit-sharing product, such as takaful insurance, a major portion of the profits goes to the participants. It is necessary to increase the premium rate by about 10% to 20%, to reduce the risk of loss (in case of bad claims). As the shareholders take only a modest portion of the profit, it is fair that they should bear a smaller risk of loss.
It is likely that the rebate (or share of profit) will be more than the additional premium, so that the net cost (after the rebate) will be attractive to the policyholder.
The profit sharing will also encourage the policyholders to work in cooperation to minimise the loss, as they can benefit from the share of profit. This will be good for the policyholders in the long run.
No extra charge for unlimited coverage
Last year, an insurer raises the lifetime limit on its Shield plan to $5 million and charges premiums that are 10% to 50% higher than a similar plan from NTUC Income (ie Incomeshield).
NTUC Income has recently removed the limit on lifetime claims. The policyholder can claim beyond $5 million a year.
We did not change our premium rates. Our premiums are much lower than the other Shield plan, and yet our coverage is better.
NTUC Income has recently removed the limit on lifetime claims. The policyholder can claim beyond $5 million a year.
We did not change our premium rates. Our premiums are much lower than the other Shield plan, and yet our coverage is better.
Saturday, February 25, 2006
Agents still selling critical year
Some agents are still selling the "critical year" concept. They tell the customer that after paying for 10 to 12 years, they do not have to pay any more premium, and that this is guaranteed.
The agent ask the customer to read 50 pages of policy illustration that are written in vague language.
Here is my advice to the customer.
Write to the insurance company. Ask them to confirm the guarantee in writing. Ask them to specify that this guarantee does not depend on the future bonus rates and investment return.
You will get a different answer from the company.
Here is a better advice. Contact NTUC Income. We will give you our Ideal plan with a decreasing term rider. It is a better plan. It offers you the coverage and a better return.
The agent ask the customer to read 50 pages of policy illustration that are written in vague language.
Here is my advice to the customer.
Write to the insurance company. Ask them to confirm the guarantee in writing. Ask them to specify that this guarantee does not depend on the future bonus rates and investment return.
You will get a different answer from the company.
Here is a better advice. Contact NTUC Income. We will give you our Ideal plan with a decreasing term rider. It is a better plan. It offers you the coverage and a better return.
Friday, February 24, 2006
Insurance should be based on sharing, fairness and transparency
Takaful insurance is operated on the Islamic principles of sharing, fairness and transparency.
In my view, all insurance transactions should be operated on these principles. As a cooperative society, NTUC Income has been observing these principles for the past 36 years.
When a person buys insurance, this person is joining an insurance pool. The premium should be calculated on the total claim amount and the expenses of operating the insurance pool, and shared fairly among the participants.
The insurance operator has the responsibility to manage the insurance pool well, pay the legitimate claims, keep the expenses low and make a fair margin. In this way, the premium can be kept low for all the insured participants.
The insurance operator should not charge a high premium and make excessive profit for shareholders. This will be unfair to the participants.
Sometimes, the insurance can produce a higher profit than expected. This could arise if the claim experience is favourable, or if the investments earn a better return.
Under takaful principles, a fair portion of the profits should be shared with the insured participants. The proportion to be shared should be fair and disclosed to the participants at the start.
Similarly, if the insurance pool pays more claim than expected, it is fair that they pay a higher premium and do not expect the shareholders to bear the loss.
It is possible for takaful principles to operate on general insurance, such as motor insurance and personal accident insurance.
Under this system, the premium charged to the participant has to be slightly higher than the market rates, maybe 10 to 20 percent higher.
The insurance operator should continue to manage the claims and expenses well and produce a profit. A fair portion of the profits should be shared with the insured participants. If this profit sharing is more than 10 or 20 percent of premium, the net cost to the insured participant will actually be lower under takaful insurance.
The insured participants can help to lower the cost in the following ways:
- avoid making excessive claims, eg motor repairs or health claims
- cooperate with the insurance operator to minimise the claims
- discourage other participants from making excessive claims
- reduce the admistrative cost by staying with the insurance operator for many years
Through this cooperative effort, the total cost can be reduced. This will be good for the insurance participants (ie the policyholders) and the insurance operator (ie the insurance company). It is win-win.
NTUC Income will be studying how to apply these principles to general insurance. We may introduce this profit sharing for certain products, such as personal accident insurance and motor insurance over the next 6 to 12 months.
We need to educate the public about the principles of sharing of risks and profits, and the principle of working together in cooperation.
We will offer a choice to our policyholders:
- pay a market rate based on a commercial contract
- pay a slightly higher premium rate and enjoy a share of profits
The profit sharing concept will be made available to Muslims and non-Muslims. Muslims like this concept as it it based on Syariah principles. Non-Muslims may like it as well.
In my view, all insurance transactions should be operated on these principles. As a cooperative society, NTUC Income has been observing these principles for the past 36 years.
When a person buys insurance, this person is joining an insurance pool. The premium should be calculated on the total claim amount and the expenses of operating the insurance pool, and shared fairly among the participants.
The insurance operator has the responsibility to manage the insurance pool well, pay the legitimate claims, keep the expenses low and make a fair margin. In this way, the premium can be kept low for all the insured participants.
The insurance operator should not charge a high premium and make excessive profit for shareholders. This will be unfair to the participants.
Sometimes, the insurance can produce a higher profit than expected. This could arise if the claim experience is favourable, or if the investments earn a better return.
Under takaful principles, a fair portion of the profits should be shared with the insured participants. The proportion to be shared should be fair and disclosed to the participants at the start.
Similarly, if the insurance pool pays more claim than expected, it is fair that they pay a higher premium and do not expect the shareholders to bear the loss.
It is possible for takaful principles to operate on general insurance, such as motor insurance and personal accident insurance.
Under this system, the premium charged to the participant has to be slightly higher than the market rates, maybe 10 to 20 percent higher.
The insurance operator should continue to manage the claims and expenses well and produce a profit. A fair portion of the profits should be shared with the insured participants. If this profit sharing is more than 10 or 20 percent of premium, the net cost to the insured participant will actually be lower under takaful insurance.
The insured participants can help to lower the cost in the following ways:
- avoid making excessive claims, eg motor repairs or health claims
- cooperate with the insurance operator to minimise the claims
- discourage other participants from making excessive claims
- reduce the admistrative cost by staying with the insurance operator for many years
Through this cooperative effort, the total cost can be reduced. This will be good for the insurance participants (ie the policyholders) and the insurance operator (ie the insurance company). It is win-win.
NTUC Income will be studying how to apply these principles to general insurance. We may introduce this profit sharing for certain products, such as personal accident insurance and motor insurance over the next 6 to 12 months.
We need to educate the public about the principles of sharing of risks and profits, and the principle of working together in cooperation.
We will offer a choice to our policyholders:
- pay a market rate based on a commercial contract
- pay a slightly higher premium rate and enjoy a share of profits
The profit sharing concept will be made available to Muslims and non-Muslims. Muslims like this concept as it it based on Syariah principles. Non-Muslims may like it as well.
Loss of earnings lead to less babies
The Institue of Public POlicy Research in the UK pubished a report. Many families delay having children, because women prefer to work and to earn an income. The cost of raising a child, ie the loss of earnings, is too high.
When they decide to have a baby later, it is too late. The women are less fertile. It was difficult to have a child at an older age.
This problem is faced in Singapore and in other countries. The problem in Singapore is probably worse.
What is the solution?
I have a radical proposal.
- give the mother $500 a child each month, until the child is 12 years old
- this is limited to 2 children per mother
- give free or subsidised further education to mother with 2 children
The cost of raising 2 children in each family will be borne by society. This gives an attractive option for some mothers to raise a family first, before they embark on a working career later.
I think that some countries, eg in Scandinavia, has adopted a bold approach and seem to be more successful in encouraging their people to have more children.
When they decide to have a baby later, it is too late. The women are less fertile. It was difficult to have a child at an older age.
This problem is faced in Singapore and in other countries. The problem in Singapore is probably worse.
What is the solution?
I have a radical proposal.
- give the mother $500 a child each month, until the child is 12 years old
- this is limited to 2 children per mother
- give free or subsidised further education to mother with 2 children
The cost of raising 2 children in each family will be borne by society. This gives an attractive option for some mothers to raise a family first, before they embark on a working career later.
I think that some countries, eg in Scandinavia, has adopted a bold approach and seem to be more successful in encouraging their people to have more children.
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