A key reform that will let consumers buy basic insurance products directly instead of having to use an agent looks likely to be delayed. Insurers were supposed to open direct sales channels for such products by the middle of this year but that date has passed.
The Monetary Authority of Singapore (MAS) and the Life Insurance Association Singapore (LIA) have yet to announce plans or updates on the change.
But The Straits Times understands that MAS will be providing an update on Fair initiatives at the end of the month.
LIA president Khoo Kah Siang said: "LIA Singapore and our member companies are working closely with MAS on the Fair recommendations, including the offer of basic insurance products through a direct sales channel."
Fair refers to the Financial Advisory Industry Review that made sweeping proposals about the insurance industry in January last year, including setting up direct sales channels.
These would allow products to be sold directly, possibly for a nominal administration fee, either online or at customer service counters. It was hoped that by bypassing an insurance agent, commissions would be avoided, making buying an insurance product cheaper.
The MAS adopted the proposal last September but gave no specific start date except to suggest by the middle of this year.
The executive director of the Consumers Association of Singapore (Case), Mr Seah Seng Choon, who was also a member of the Fair panel, wants a faster implementation process.
"Certainly, we are hoping that they can speed things up because it's already the middle of the year and we are still waiting for MAS to work with insurers to get this out so consumers can benefit.
"I don't know the cause of the delay because the Fair committee is out of the picture at this time, but they should keep to the timeline to implement it as soon as possible."
Mr Christopher Tan, the chief executive of Providend, a fee-only financial advisory firm, noted that allowing consumers to buy insurance products directly online would be difficult for several reasons.
Unlike car or travel insurance, where the factors for considering premiums and acceptance of coverage are relatively straightforward, Mr Tan said life and health insurance products are a lot more complex.
"The amount of information needed is massive and not suitable to be done online, unless we do business only with a 100 per cent healthy person and not help people with some medical background get coverage."
Mr Tan added that life insurance policies require a witness when the applicant signs documents.
His firm has launched a Web aggregator at www.diyinsurance .com.sg that allows consumers to do 90 per cent of the required steps online, needing only to visit the company to sign the forms.
The website enables consumers to compare prices of certain types and brands of protection and savings products marketed by Providend.
It comes ahead of another Fair recommendation calling for a comparison website or Web aggregator to be set up by the end of this year that will let consumers check out a wide range of life insurance products.
Mr Tan also notes that setting up a direct sales channel will be costly and will impact the insurers' business model.
He added: "I really don't envy the insurance companies' position. Most have sales agents and by creating a direct sales channel, they will be competing directly with the agents who have been working hard for them."
This article was first published on July 18, 2014.
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