Friday, February 12, 2010
Vancouver is rated the world's most liveable city
I visited Vancouver last year and found it to be a nice city to live in. It has been rated the most liveable city in this report. Seven of the top 10 cities are in Canada and Australia. I hope that Singapore can learn from the lessons to improve the quality of life here.
Achive top position in life insurance sales
Life insurance companies compete yearly to achieve the top position in life insurance sales. This is an indicator of success and the productivity of the sales force. Several decades ago, the competition was based on annual premium on new policies, but in recent years, 10% of the single premiums are added to the annual premium to get the weighted premium as a measure of the sales.
To achieve sales and energize the sales agents, the life insurance companies introduce new and innovative products every year. These new products are variations of the old products, but have some changes to allow the agents to market the product. The variations may take the following forms:
a) a shorter period to pay the insurance premium
b) additional risks that are being covered
c) change from guaranteed to investment-linked payouts or back
As each new product is launched, the insurance agents have the chance to go back to the old customers and get the customers to terminate an existing policy and buy a new policy under the new product with the special features.
The customers are taken for a ride. They are not aware that the existing products give better value and that replacing the products is costly and against the interest of the consumer. In most cases, the consumer has to give up two years of premiums as upfront cost. The customers were also not aware they can buy separate insurance, at low cost, to cover any new needs. (I shall write separately on these matters).
Some insurance agents make a good living by replacing the existing policies of their customers every few years with the new "better" products, but making their customers poorer in the process. With the huge loses on the replaced products, the consumers are never able to accumulate sufficient savings for their retirements, even if they had been frugal.
An insurance agent can achieve the top sales position by making it possible for the sales agents to exploit the ignorance of their customers through the replacement of existing policies. The sales agents are happy with this arrangement, as they can earn high commission by selling the new policies, and it is easier to replace existing policies than to find new customers.
This bad practice of replacing policies, also known as "twisting" is made illegal in some countries. It is discouraged in Singapore, but the enforcement is weak.
An ethical insurance company will protect the interest of its customers by disallowing replacement of existing policies. An unethical company will make it easy for the sales agents to explot the ignorance of the existing customers to make new sales by replacing existing policies, and achieve the top sales position.
Tan Kin Lian
To achieve sales and energize the sales agents, the life insurance companies introduce new and innovative products every year. These new products are variations of the old products, but have some changes to allow the agents to market the product. The variations may take the following forms:
a) a shorter period to pay the insurance premium
b) additional risks that are being covered
c) change from guaranteed to investment-linked payouts or back
As each new product is launched, the insurance agents have the chance to go back to the old customers and get the customers to terminate an existing policy and buy a new policy under the new product with the special features.
The customers are taken for a ride. They are not aware that the existing products give better value and that replacing the products is costly and against the interest of the consumer. In most cases, the consumer has to give up two years of premiums as upfront cost. The customers were also not aware they can buy separate insurance, at low cost, to cover any new needs. (I shall write separately on these matters).
Some insurance agents make a good living by replacing the existing policies of their customers every few years with the new "better" products, but making their customers poorer in the process. With the huge loses on the replaced products, the consumers are never able to accumulate sufficient savings for their retirements, even if they had been frugal.
An insurance agent can achieve the top sales position by making it possible for the sales agents to exploit the ignorance of their customers through the replacement of existing policies. The sales agents are happy with this arrangement, as they can earn high commission by selling the new policies, and it is easier to replace existing policies than to find new customers.
This bad practice of replacing policies, also known as "twisting" is made illegal in some countries. It is discouraged in Singapore, but the enforcement is weak.
An ethical insurance company will protect the interest of its customers by disallowing replacement of existing policies. An unethical company will make it easy for the sales agents to explot the ignorance of the existing customers to make new sales by replacing existing policies, and achieve the top sales position.
Tan Kin Lian
Thursday, February 11, 2010
Logic9 (pocket sudoku) $4
Logic9 (pocket sudoku) vol 3 and 4 is now available at Internet shop. Each volume contains 128 puzzles at 4 levels (32 puzzles for each level). It can be kept in a pocket and can be used on the train, bus or plane. This is available at a discount of 15% during February (net price $3.40). Order here.
The Future That I Like To See
A reader asked me to summarize my views on social, economic and political topics, which have been expressed in various postings in this blog. I have made my first attempt here.
Government regulation
Some people expressed surprise that I advocate more regulation. They point to examples of oppressive and bad regulations.
Society need to be regulated. The poor and the weak have to be protected against abuse and exploitation. This has to be achieved through law and regulation. Regulation should not and need not be intrusive. They do not need to impinge on personal freedom. So, there has to be a proper balance.
In a democratic and free society, the citizens will help to determine where the line should be drawn between regulation and freedom. So, we need a democratic and accountable authority. I am giving some brief thoughts here, and will develop this idea more more in subsequent postings.
Tan Kin Lian
Society need to be regulated. The poor and the weak have to be protected against abuse and exploitation. This has to be achieved through law and regulation. Regulation should not and need not be intrusive. They do not need to impinge on personal freedom. So, there has to be a proper balance.
In a democratic and free society, the citizens will help to determine where the line should be drawn between regulation and freedom. So, we need a democratic and accountable authority. I am giving some brief thoughts here, and will develop this idea more more in subsequent postings.
Tan Kin Lian
Risky new financial product
A new financial product has been created that could cause systemic risk. Read about it here.
America addresses its shortcomings
The American system has its strength - openness, accountability and freedom. However, it has its weaknesses - a political system in gridlock. It is difficult for American to take the actions that are needed to address its shortcomings, due to the obstruction caused by some legislators.
The shortcomings have been acknowledged and some people, including President Obama, are stepping forward to deal with these issues, to find a way to get the country to act and solve its long term problems. The willingness to recognize its problems, to discuss them openly, and to act on them, may well be the strengths of the American system. I hope that they will succeed in this challenge.
I hope that Singapore can adopt some of this new approach, and find new ways to solve problems that have not been solved for several decades, such as the high cost of living, long working hours, poor quality of life and the low birth rate.
Tan Kin LianPublish Post
The shortcomings have been acknowledged and some people, including President Obama, are stepping forward to deal with these issues, to find a way to get the country to act and solve its long term problems. The willingness to recognize its problems, to discuss them openly, and to act on them, may well be the strengths of the American system. I hope that they will succeed in this challenge.
I hope that Singapore can adopt some of this new approach, and find new ways to solve problems that have not been solved for several decades, such as the high cost of living, long working hours, poor quality of life and the low birth rate.
Tan Kin LianPublish Post
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