Rules review on agent poaching
Life insurance body plans new guidelines
The Life Insurance Association Singapore (LIA) is reviewing policies around the recruitment of rival agents and plans to issue new guidelines in the near future.
The move comes after the shock migration of 300 or so Great Eastern (GE) agents - nearly 10 per cent of its agency size - to rival AIA's newly set-up financial advisory arm, AIA Financial Advisers.
Sources said one new guideline includes specifying the number of months during which migrated agents must be accompanied by managers on client meetings.
This will up the ante. Now agents with more than two years' experience and with a gap of no more than 12 months from their previous appointment are typically exempted from this requirement.
Such rules will help address concerns about potential mis-selling or churning of policies by agents under pressure to meet sales targets at their new firms.
Meanwhile, GE has set up a dedicated advice service to help customers unsettled by the news. Apart from calling its hotline (6839-4565), clients can also e-mail wecare-sg@ greateasternlife.com with inquiries.
The firm said affected policyholders will be advised about the new agents who will look after their insurance needs and measures taken to protect their interests.
New agents will be assigned once a customer's current representative has served the notice period.
GE also advised that customers who want to change policies must note that switching plans could mean re-underwriting, which could bring premium increases.
Industry observers said GE is the third biggest insurer here in terms of agents with about 3,500. AIA and Prudential are estimated to have around 4,400 each.
Great Eastern Holdings group chief executive Khor Hock Seng said GE's business is "all about trust".
He said: "Our priority at this time is to provide advice and guidance to help these policyholders make informed decisions and update them on measures taken, in particular the assignment of new representatives to look after their needs."
Financial experts do not view agent poaching as a positive practice. They feel it could result in mis-selling by crossover agents under pressure to meet sales targets at new firms.
In the GE case, the AIA offer to the GE agents - believed to be an estimated $100 million - included sign-on bonuses and a five-year "bond" period during which the monetary incentives could be clawed back if sales quotas are not met.
Mr Khor said the mass poaching of its agents is "unhealthy for the industry".
"It could be detrimental to customers' interests in the long term. We have expressed our concerns to the regulator and will continue to work with them to ensure that customers' interests are protected at all times."
The Monetary Authority of Singapore (MAS) said large-scale movements of representatives from one institution to another could give rise to risks of improper switching of insurance policies. Offering high sign-on bonuses and other incentives may drive up costs.
It added: "LIA will be working on some parameters on movements of representatives and MAS will be monitoring developments closely."