NAWAM

Now, got into a bit of a bash with your banger, and it’s off to the workshop? Well, accidents happen. It’s what comes after it that most of us dread – inconvenience of losing the use of your ride aside, you can’t really tell if those repairs are going to be right, or ramshackle. The thing is, sometimes you find out way too late, when you’re already well entrenched in the horror script.

So, what’s there to do about it then? Well, how about being able to review equipment and skills of any collision repairer, know their capabilities, compare prices and locate the ones nearest to you? In short, to be able to make an informed decision?

Sounds like a pipe dream? Perhaps for now, but the first step towards getting to that has been started by the Federation of Automobile Workshop Owners Association of Malaysia (FAWOAM), which is setting out to upgrade the standard of its workshops in the country through an integrated grading system, which will commence with self-regulation.

With this system eventually in place, customers can be assured of the quality of services, equipment and skilled manpower, and will be able to identify the preferred workshops offering the best price without having to compromise on the workmanship and safety issues.

Working towards this, an online portal known as the National Automotive Workshop Administration Malaysia, or NAWAM, has been launched as part of the programme. The establishment of NAWAM was made possible with the strong support of Bank Negara Malaysia, Ministry of Domestic Trade, Co-operatives and Consumerism (KPDNKK) and General Insurance Association of Malaysia (PIAM).

NAWAM will act as a catalyst to create a centralised database for grading of workshops throughout the country. ”This grading system is aimed at propelling the industry and creating an avenue for workshop owners to be seen as credible and being transparent in its dealings with the customers and claims managers from the general insurance companies,” said FAWOAM president Kong Wai Kwong.

The new grading and evaluation system will be based on the internationally acclaimed 4M (Man, Machinery, Materials and Method) concept, which is implemented across all industries. Based on this concept, the collision repairers (workshops) will be classified according to three tiers, namely Silver, Gold and Platinum. Each tier will have specific requirements and price structures supported by two stages.

At the first stage, the collision repairers will be self-evaluated. The results generated will be collated and retained in the system. The second stage will involve independent auditors’ assessment of the workshops. Upon collating and evaluating both reports, the grade of the workshop/collision repairers will be ascertained.

NAWAM will evaluate and audit the collision repairers, while FAWOAM and PIAM will accord the repairers with the accreditation and certification. For a start, the system will be implemented across 500 PARS (PIAM Authorised Repairers Scheme) approved workshops in the country. Eventually, all 2,700 members nationwide will be included.

Workshops identified to be accepted and upgraded by FAWOAM will be able to apply for a loan to facilitate refurbishment – to this end, the government, through KDNKK, has allocated RM36.5 million in soft loans for this purpose.

To complement the grading system, a National Towing Scheme will be implemented that will involve the centralised registration of all tow truck operators and customers service agents to ensure efficient tracking and control. This will be jointly undertaken with the close collaboration between FAWOAM, PIAM and BNM.

Through NAWAM, collision repairers will have the opportunity to upgrade their competencies through continuous, specially designed competency development programmes.

“To help upgrade standards, we will embark on an enrichment programme to empower the collision repairers with technical knowledge, skills and current techniques. For this purpose, we have established an advisory panel that will be instrumental in sharing their expertise and know-how through dedicated training programmes,” Kong said.

The association has secured the assistance of 16 advisory support companies which will conduct training programmes, and these will be facilitated by Netica Solutions, the company instrumental in developing the NAWAM portal.

The advisory support group is made up of Shell Malaysia Trading, 3M Malaysia, Motordata Research Consortium, Automotive Aftersales Industries, Sime Kansai Paints, Stahwille, MSCL Holdings, Spanesi Malaysia, Unipac Engineering, PAC Auto Marketing, Top Results, Newera Equipment Supply, PPG Coatings, Wilayah Products, Links Equipment & Supplies and C & N Advantech Marketing Services.

4 Principles of Spirituality

The First Principle states:
“Whomsoever you encounter is the right one”. This means that no one comes into our life by chance. Everyone who is around us, anyone with whom we interact, represents something, whether to teach us something or to help us improve a current situation.

The Second Principle states:
“Whatever happened is the only thing that could have happened”.Nothing, absolutely nothing of that which we experienced could have been any other way. Not even in the least important detail. There is no “If only I had done that differently…, then it would have been different…”. No. What happened is the only thing that could have taken place and must have taken place for us to learn our lesson in order to move forward. Every single situation in life, which we encounter, is absolutely perfect, even when it defies our understanding and our ego.

The Third Principle states:
“Each moment in which something begins is the right moment”.Everything begins at exactly the right moment, neither earlier nor later. When we are ready for it, for that something new in our life, it is there, ready to begin.

This is the Fourth Principle, the final one:
“What is over, is over”. It is that simple. When something in our life ends, it helps our evolution. That is why, enriched by the recent experience, it is better to let go and move on.I think it is no coincidence that you’re here reading this.If these words strike a chord, it’s because you meet the requirements and understand that not one single snowflake falls accidentally in the wrong place!

Be good to yourself. Love with your whole being.
Always be happy.

Hello - We are Hokkien Ren

I found this interesting artile. Hope you are Hokkien and enjoy it.

This is interesting if you're a Hokkien, do you Ancient Imperial Language of China - 2,000 ago. If you're a HOKKIEN Take Note !! How Did it Sound Like? (Mind you, it's no way similar to Mandarin). Has this Ancient Language Survived? Who speaks it today? You'll be Surprised. You have heard it. You, your parents, or grandparents may still be speaking this ancient, archaic language!

Yes, it's HOKKIEN (Fujian/Minnan Hua)

1: The surviving language of the Tang Dynasty (618-907AD), China 's Golden Age of Culture. Note: The Hokkien we hear today may have "evolved" from its original form 2,000 years ago, but it still retains the main elements of the Tang Dynasty Language.

2: Hokkiens are the surviving descendants of the Tang Dynasty. When the Tang Dynasty collapsed, the people of the Tang Dynasty fled South and sought refuge in the Hokkien ( Fujian ) province. Hence,Hokkien called themselves Tng-lang (Tang Ren or People of the Tang Dynasty) instead of Hua Lang (Hua Ren)

3: Hokkien has 8 tones instead of Mandarin's 4. Linguists claim that ancient languages tend to have more complex tones.

4: Hokkien retains the ancient Chinese pronunciation of "K-sounding" endings (for in stance, Hak Seng (student), Tua Ok (university), Thak Chek (read a book/study). The k" sounding ending is not found in Mandarin.

5: The collection of the famous "Three Hundred Tang Dynasty Poems" sound better when recited in Hokkien/Teochew if compared Mandarin

6: Consider this for a moment: Today, the Hokkien Nam Yim Ochestral performance still has its roots in ancient Tang dynasty music. Here's the proof: The formation of today Nam Yim ensemble is typically seen in ancient Tang dynasty paintings of musicians.

7: Astonishingly: Although not genetically-related, Hokkiens, Koreans and Japanese share many similar words that's because Hokkien was the official language of the powerful Tang Dynasty whose influence and language spread to Japan and Korea (just like Latin – where many words were borrowed by the English, French, Italian, etc). Here are just a few words in Hokkien, Japanese & Korean for your comparison:
Hokkien Korea Japanese
Sin Boon (News) Sin Mun Shinbun
Cheng Hu (government) Chong Bu Chon Boo

To all Mandarin-speaking friends out there, please do not look down on your other Chinese friends who do not speak Mandarin and whom you guys fondly refer to "bananas". In fact, they are speaking a language which is much more ancient & linguistically complicated than Mandarin.

Keep in mind that Mandarin is
1: A Northern Chinese dialect (heavily influenced by non Han Chinese) that was elevated to the status of National Language by Sun Yat Sen for the sake of China’s national unity.

2: Mandarin was never spoken by your proud, imperial Tang Dynasty ancestors. It was probably spoken by the Northern (Non-Han) Jurchen, Mongols and Manchu minority.

This aggrogant Mandarin speaking group likes to call us Banana and normally uses the teaching of The Art of War and/or dirty tricks acquired from The Three Kingdom in their daily lives. They are under the illusion that we the Bananas are not aware of their evil plots and doings . Just because we refused to participate in their disgusting behavior does not mean that we Bananas are stupid lah. We know what you are doing and we pray you change your evil ways before your dirty actions consummed you to hell.

Insurance Fraud

KUALA LUMPUR: Insurance fraud, estimated at RM1.74 billion in Malaysia last year, is clearly a "big business" and more alarming is, the public apathy surrounding it.

"This apathy at times, unfortunately, even finds its way into our criminal justice system," Deputy Minister of Home Affairs, Datuk Lee Chee Leong said on Monday.

Research on the public perception of insurance fraud concluded that on average, 30 per cent of the public respondents believed, it is acceptable to pad an insurance claim, he added.

"(Hence), there seems to be a great willingness among normally law abiding people to tolerate low levels of insurance fraud.

"However, the burden of combating such crime should not merely rest with the public sector alone, but also the private sector, particularly, the insurers themselves," Lee said in his opening remarks at the International Insurance Fraud Conference 2010, here, on Monday.

He also said that the Association of Malaysian Loss Adjusters (AMLA) and the Malaysian Insurance Institute (MII) should perhaps take the lead to educate society on the consequences of promoting insurance fraud and how they can help combat the issue.

According to the National Insurance Crime Bureau of the Unites States, fraud inflates the cost of each consumer's insurance premiums by US$200 to US$300 annually.

"Insurance fraud pushes up the cost of everything you buy and use because every company that produces goods or services, pays for insurance as a cost of doing business.

"Going forward, the insurers must also continue to improve their standards of fraud detection by adopting the international best practices and share data and information relating to fraud activities among themselves," Lee said.

Meanwhile, the MII's Chief Executive Officer, Khadijah Abdullah suggested that there should be a unified statutory body to oversee fraud in the industry and compile appropriate data.

"Currently, associations and Bank Negara Malaysia, have their own supervision over the issue but there is no single body that can help compile the information," she said.

Who Is Bai Fang Li

Peddling a trishaw to finance poor students: Mr. Bai Fang Li touched the people of China This story is about an ordinary trishaw peddler who is well-known in Tianjin. From the age of 74, Mr. Bai Fang Li has supported hundreds of poor students using the money he earned from peddling trishaw. In fifteen years time, he has contributed more than 350,000 yuan to finance more than 300 poor students in their tuition fees and living expenses, helping them to complete their studies.

From the year 1986 to year 2000, using the money earned from peddling his trishaw, Mr. Bai Fang Li founded a company called Education Support Company and has contributed more than 350,000 yuan in the form of scholarships. Nobody really knows how many poor students have Mr. Bai Fang Li supported. In May 2005, he was diagnosed with terminal lung cancer. This thin and skinny elder did not keep any money or property for himself, what he has left is only his selfless spirit and love. Reporters have compiled an incomplete list of students whom had been sponsored by Mr. Bai Fang Li before to commemorate this weak and ordinary but noble elder who has touched the hearts of many people.

Saving on clothes and food, every month Mr. Bai Fang Li brings the money he saves to nearby schools and gives it to needy students to be used as their living expenses while he himself lives a frugal life that nobody can ever imagine. His daughter recalls “He suffers throughout his life, saving on food and drinks, stitching his torn pants over and over again. When you throw away his old pants and buy new ones for him, not only that he does not want to wear them but he also gets angry.”

When the elder peddles trishaw, his clothes, shoes and hates all do not match, as if he is a beggar. “I had never bought any clothes before. You see, the clothes that I wear are all picked up from the clothes people threw away. Look at my shoes, they are different, even the socks inside are different! The same applies to my hat; it was also collected from dumpsites.” he said. Besides not buying any clothing for himself, he even scrimps and saves on food. His diet is very simple. He often takes cold water and cold bread as his meal with a little bit of pickles sometimes. People often see him picking up leftover food such as bread or unfinished sausage and eats them. His family members who could not resist looking him like that have advised him but to no avail. In response to that, he simply picked up a bun and said to his children “What is so hard about this? This bun is the product of the farmers’ hard work. People throw it away; I pick it up and eat it; isn’t this a way to reduce wastage?”

It has been calculated that, over years, Mr. Bai Fang Li has peddled equivalent to going round the Earth’s equator for 18 (times?). Mr. Bai has never thought to be rewarded. The money that he donated mostly went through schools to needy students. The old man never inquired about the students’ name. Somebody attempted to find the list of students sponsored by Mr. Bai but he only found a photograph of him with a few children, and that is the only photograph ever taken. When asked about what he expected of the children, his humble reply was “I only want them to study hard, get a good job, be a good person and to give back to the country.”

In 2001, Mr. Bai Fang Li donated the last sum of money. Nearly 90 years old, he was unable to peddle trishaws anymore and no longer was he able to run his company. Instead, he looked after people’s car at the station and saved up to 500 yuan before he donated the money. After giving out his last sum of money, he said “I cannot work anymore, I can no longer donate money to others!” and that was the first time in her life his daughter Bai Jin Feng had ever heard her father saying that.

Mr. Bai passed away on September 23, 2005, in a hospital. Hundreds turned up at his funeral.

Asia Life Insurance Outlook

Some of the world’s most powerful governments, financial institutions and high net worth individuals kept an eye on the Hong Kong stock exchange on Friday, October 29 as the once-awesome American International Group (AIG) put its Asian ‘crown jewels’ up for sale to the public - in the region from where the multinational originated more than 90 years ago and towards which the winds of financial power now appear to be shifting.

AIA Group, as it will now be known, emerged at the end of the first day a record 17% up on its initial public offering (IPO) price, having raised a record of US$20.5 billion – the largest ever for an insurance company and the third largest IPO in the world this year. “The IPO is a critical turning point for AIA and we are delighted that it has been so positively received by investors around the world,” beamed Mark Tucker, CEO of AIA, at the listing ceremony declaring independence after a protracted, sometimes ugly battle for credibility if not survival, and reinventing AIA as a potentially unique Asian-based and Asian-focussed financial services player.

The parents seemed pleased as well: AIG was finally returning something to the US (or New York) Federal Reserve Bank in repayment for its US$182 billion bail-out at the apex of the financial crisis just over two years ago; together with the yet-to-be signed US$16.2 billion sale of American Life Insurance Company (Alico), another overseas life insurance operation that is heavily represented by a cash-cow business in Japan – to MetLife, now the leading US insurer – it looks like AIG could pull off its Herculean repayment burden largely on the back of Asia. This may seem like a suitable reflection of the shifting balance of financial power from West to East perhaps, although a glance at the list of investment banks on the payroll for yet another lucrative recapitalization of the financial sector after the collapse – in which they themselves were complicit – might suggest that Wall Street has given up little of its fund-raising power, least of all in Asia.

AIG is only another in a series of post-crisis Western insurers having to sell off Asian assets and often pull out of the region altogether in an attempt to restore their balance sheets at home; rarely has another IPO been possible, but shareholdings in joint ventures in countries from Taiwan and Australia to China and India have been vacated and often filled by hungrier, more innovative foreign insurers or smaller domestic insurance players – and recently by banks in Asia too.

That is why the IPO boom should be followed by a similar bonanza in Asian insurance merger and acquisition activity, believe investment bankers in the region, although the successes are likely to be matched by not infrequent failures at the regulatory level.

In Taiwan, which also has a separate AIG presence outside of the AIA umbrella, Nan Shan Life, Taiwan’s third-rated life insurer, has been embroiled all year in a struggle with the authorities over its US parent’s attempts to sell it off to a consortium comprising Chinese battery maker, China Strategic, and Primus Holdings, a boutique financial holding company led by former Citi head of investment banking, Robert Morse. The authorities in Taiwan detected the hand of mainland China in the bid – a suspicion denied by the consortium, but since made more likely by the presence of China Strategic CEO Raymond Or () in a Chinese group believed to have looked at a straight strategic acquisition of both AIA assets and its rival Prudential.

Regulators were pouring too over the insurance deal in Australia. In November, they finally approved a second bid by AMP, a local financial services group, for AXA Asia Pacific’s insurance assets having previously blocked a bid by National Australian Bank on anti-competition grounds.
Also, foreign insurers are cutting down their shareholdings in joint ventures in India and China (where they feel restricted by limits on their capitalization or geographical reach) in exchange for becoming part of a company that is going somewhere, especially now that Asian insurers, and increasingly banks too, are flexing their muscles and putting into action plans to become regional if not international financial services conglomerates – with the convenient backing of both their regulators and shareholders.

Ironically, AIA finds itself best positioned to play seller or buyer, the local or regional card, now that it has a pan-Asian franchise and presence in 15 separate markets (and a leading role in six of them). Its nearest rival is Prudential of the UK, whose failed attempt to buy the distressed Asian assets of AIG earlier this year opened the door to the second, successful shot at an IPO.

Purest play
“The IPO will establish a new identity, allowing it [AIA] to explore acquisitions with the potential retreat of global insurers,” says Patricia Cheng, vice-president and financial services analyst at CLSA, one of the only houses that commented on the company in the lead up to the IPO. “We expect a turnaround upside, but its biggest rivals are actually local plays and banks.”

Despite the record numbers in the end, however, AIA wasn’t “a screaming buy”, as Cheng had said. It is not the perfect China story super fast growth stock that is Asia for many investors, but it is a bang-on proxy for the broad insurance business across different jurisdictions in the region.

Or put another way, AIA should “focus investor attention on the Asian life insurance sector as the first pan-Asian pure play, [offering] a more diverse range of investment options than single-country exposure”, says Chris Esson, insurance analyst at Credit Suisse. The AIA listing helped lift the sector’s representation on stockmarket indices which in itself widened the net to drag in a whole lot more index-tracking investors. Esson sees insurance in Asia as “a generational growth story”: the continued development of Asia’s tiger economies should underpin solid GDP growth, rising household incomes and deepening capital markets that are expected to support robust growth for Asian life insurers of a bottom-up estimate for the region of 11.5% to 21.6%.

AIA was valued at 1.32 times price to embedded value, while China Life and Ping An Insurance, the world’s largest insurers that are still growing much faster, trade at 2.38 and 2.6 times embedded value estimated for 2010, while the 2010 doyen of the mature Asian markets, Dai-ichi Life Insurance and Samsung Life Insurance, trade at a measly 0.37 times and 1.11 times forecast 2010 embedded value respectively, according to a Merrill Lynch report published in September.

European insurers are valued at an average of 0.8 times embedded value, which puts the wider Asian market in perspective and explains why surviving European and American life insurance companies – along with the more adventurous of the Japanese and Korean insurers – are surveying the insurance landscape in the region to identify those assets that are in play – with the Chinese giants standing behind them with a big bag of cash but a discernible nervousness about putting their own name to an acquisition in what is, after all, a less than wholly understood, rock solid or even stable asset class. Just thinking about what two dozen hot shots in AIG’s financial products division managed to do must make for understandable caution, especially among leaders of state-owned financial institutions.

All in all, though, thus far, the AIA listing was a perfect way to top a string of hugely significant domestically-focussed IPOs launched in Japan, Korea and China within the last year that have seen insurance companies burst out of the shadows of the larger banking system in Asia to become one of the most substantial constituent groups in the current global equity universe.

China leading
The 2005/2006 coming out of China’s financial sector in the historic IPOs from what are now the two world-leaders, China Life and Ping An Insurance, set the stage for the even grander triumphs of its three biggest banks. It was also China that revived the market for the first time since the financial crisis in December 2009, when China Pacific Insurance (Group), China’s third largest life insurer, launched a US$3.1 billion Hong Kong IPO in December 2009 via CICC, Credit Suisse, Goldman Sachs and UBS, and it will be China that provides much of the action going forward.

The Hong Kong listing followed an earlier US$4.1 billion IPO in Shanghai but with those shares gaining 134% last year (compared to the Shanghai Composite Index’s 80% rise) the offshore offering was designed, says one equity capital markets banker, mainly to rope in international insurance heavyweights Allianz of Germany, Europe’s largest insurer, and Japan’s Mitsui Sumitomo, as well as give private equity firm, the Carlyle group, a six times return on a US$800 million investment – if it hadn’t been locked in for another year.

Then the Korean stockmarket reopened for big ticket offerings after a moribund decade: Korea Life, the second-ranked domestic insurer, stormed ahead with a US$1.5 billion deal despite dreadful market conditions in February. Arranged by Credit Suisse, Goldman Sachs and J.P. Morgan, Korea Life was determined to get to market early; it was priced below the indicative level only to be massively oversubscribed in an early sign of the unpredictable nature of the nascent insurance market. Samsung Life Insurance then scorched its way to a record US$4.4 billion IPO in May that had Koreans going insurance crazy as domestic investors swamped the international tranche that Goldman Sachs, J.P. Morgan and Deutsche Bank were arranging.

Taiyang Life, the fourth-ranked player, had listed last year in an experimental move designed at tapping investor demand for sophisticated insurance products – which the introduction of corporate pensions this year was expected to bring in by freeing up the retained savings of Korean firms – ahead of the big boys. Third-rated Kyobo Life is due to tap the market too within a few months, which means the bulk of the sector will have gone public within one year, creating a national insurance sector asset class out of almost nothing. “We expect that the recent listing of life insurers will enhance capitalization and financial flexibility,” says Eunice Tan at Standard & Poor’s in Singapore. “We expect the public listing to propel the sector’s growth as well.”

And it won’t end there: foreign companies, not least AIA, according to CEO Tucker, have vowed to add to the competition, while smaller insurers are beginning to pile on the pressure as the listed firms look to use their funding in overseas expansion, including acquisitions, in a demonstration of the value-added competition that is driving insurers across the region.

That was why Dai-ichi Mutual Life Insurance stirred Japan Inc out of the doldrums in April with a US$11.1 billion-equivalent fundraising that – apart from being the largest equity offering in the world since Visa Inc’s US$19.7 billion IPO two years earlier – was the country’s largest for more than a decade, even accounting for the sum total of IPOs over the last five years.

Dai-ichi Life Insurance, as it is now called, is shifting to a holding-company structure that will employ international accounting standards, and it is targeting China, where it has set up offices in Beijing and Shanghai and hopes to start selling insurance by 2012. Its first step was the de-mutualization and listing that persuaded hordes of new account holders to invest in a tired, old cradle-to-grave household name trying to reinvent itself as fast-growth Asian hot stock. But it was not long before disillusionment set in, as the stock fell 25% in three months stirring up shareholder activists demanding a more aggressive foreign business strategy. The Japanese are not lacking resources and have started acquiring assets in Southeast Asia, India and even China.

Untapped demand
“A fair number of multinationals and Asian insurers, particularly from Japan, do view the Asian emerging economies as a major market for them to develop and further grow their business,” says Price­water­house­Coopers’ partner Sridharan Nair. “Asia is an attractive market for insurers in view of the relatively under-insured population.” Life insurance penetration across Asia was 4.4% in 2009, according to a Sigma Swiss Re report. Most analysts see 10% to 15% growth for life insurers in Asia; while China and India are looking at a compound growth rate of over 20% in the next few years. “Asian banks too are increasingly looking to buy insurers as a way to further their market share and spur business growth,” says Nair. “This is partly due to the greater appetite of insurers for M&A activities, since on balance the insurance sector has come out of the financial crisis better than the banking sector.”

“The Japanese and Korean deals highlight both the huge untapped demand for Asian insurance stocks and the lack of alternative investment vehicles, especially when the authorities clamp down on property speculation,” says a head of equity capital markets at an international investment bank in Hong Kong. “Both were dominated by domestic buyers and the largest equity offerings within their countries for more than a decade. But they also show the unpredictable nature of valuing Asia’s largely unknown insurance sector as an asset class.”

South Korea, in particular, is proving difficult to gauge the correct price for an insurance stock – for investment banks, analysts and investors. Korea Life, for example, had to price at 8,200 won (US$7.24) – below an indicative range floor of 9,000 won suggested to Koreans but at the level demanded by foreign investors. Here was early proof of the difficulty that everybody was having in coming to grips with an insurance company in terms of equity valuation.

So too when Samsung Life shares soared 9% on the first day despite the downward trend in the local stockmarket, but soon slipped below the initial price as part of an overall plunge in the local stockmarket and an overseas bond market sell off. Thousands of new converts to shareholding had become fed up with the low but stable price of their investment and were joining media campaigns attacking the company and demanding that they boost earnings by investing in developing countries’ insurance prospects. Such is the cycle of the search for growth – as taken to its colossal and absurd global conclusion by Prudential in its bid to treble growth in AIA operations in Asia by charging high margins, cutting labour cost and all the other cutting edge management drives – that governments don’t readily welcome it.

The issues seen in the last 12 months from Japan, Korea and China make up big figures even for the global equity markets; for the fledgling market of listed Asian insurers the world of the investor had been turned on its head. And there’s still India to come. The Indian market is dominated by Life Insurance Corp of India, the state-owned life insurer, which up until the last decade was the only insurance company permitted in India’s heavily regulated and closed financial sector. But a growing private sector is on the verge of publicly listing equity for the first time – pending an increase in foreign investment limits from 26% to 49% which should spark considerable consolidation and drive for capital replenishment among insurers.

Among the top private players that are bidding to become the first Indian insurance to list is HDFC Standard Life – or rather HDFC. The joint venture between mortgage lender HDFC and Standard Life was rebranded in November without the presence of the 184 year old British firm in its title. Despite that, the plan is for Standard Life to increase its stake to 49% when it is allowed to.

Most insurance companies are either making losses or have slowed down expansions in the absence of funds so they can at least report profits, say investment bankers. The reason for this seeming paradox is that insurance companies are like young tigers that need red meat to grow into fine animals – that is the analogy of Gerry Grimstone chairman of Standard Life, who was in India to see his company’s name taken out of the joint venture. “Any new insurance company requires capital,” he says. “Our company is now very close to the tipping point where it no longer requires capital from its promoters for its existing business models.” HDFC Standard Life Insurance, in the three months up to the end of September, lost 645 million rupees (US$14.1 million) compared to 414 million rupees a year earlier.

“The enabling bill is in parliament and expected to pass by year end,” says Deepakh Parekh, chairman of HDFC at the rebranding. “The entire insurance industry is waiting for that to happen.” Reliance Life has been talking to foreign players about buying a 10% to 15% and then listing the remaining 10% portion, according to statements made to Indian media by directors. Swiss Re was reported to be interested. Prudential-ICICI , the leading player, is another IPO contender.

China provides a perfect contrast in the shape but not the substance of Standard Life’s joint venture strategy. It is about to become one of the few foreign insurers to own a stake in a domestic Chinese insurance company, but that involves giving up half its stake in a joint venture Heng An Standard Life (HASL) that it has operated with state-owned investment agency Teda International in Tianjin for the last seven years.

Selling your shares in exchange for a smaller role in a larger company might sound like a sad retreat from the US$100 billion-plus market. But maybe it is more an acceptance of realities. If Standard Life’s joint venture with Bank of China comes off, HASL will no longer be restricted in the business it can write and it acquires a massive distribution network across China – just like that.

The plan is for Bank of China to acquire 50% of HASL, buying 25% stakes from both parties. Chief executive officer, David Nish, who took over the Edinburgh-based pensions and insurance giant in January after it revealed it was close to a deal, was part of the biggest UK government delegation to pay tribute in Beijing in November led by David Cameron, the UK Prime Minister, with several other Cabinet ministers and corporate bigwigs.

Mother of all insurers
China will unleash more of its insurance companies in the next year. Next up will be Taikang Life, in which Goldman Sachs is set to buy Axa’s holding, and China Reinsurance Group, with both valued at around US$7 billion; after them several dynamic expanding smaller firms are hoping to persuade the regulator to approve their bids for going public.

They had better get a move on it, because the ultimate prize or challenge – for the government at least – is around the corner. China has set in motion plans to complete the first stage of the corporatization and recapitalization of its own insurance sector by approving the listing of the People’s Insurance Company of China (PICC), its largest non-life insurer and parent of China Life and many others – having been established as the vehicle for the nationalization of the insurance sector in 1949 which involved confiscating foreign assets, which included those of AIG in China (with whom it went on to have a more positive relationship following the opening up of China in the 1980s). A listing will help PICC to support the rapid expansion of its subsidiaries, (it is fast expanding another life company, having given up China Life in the 1990s), while maintaining a solvency ratio that will satisfy the regulator’s minimum requirement of above 100%.

Solvency will be a crucial stipulation for an insurer in getting approval to secure the IPO funding it probably requires if it is to move to the next stage of its rapid growth. The smaller insurance companies have been taking market share off the market leaders that had all the advantages handed them by the government when it sought to kick-start the industry in the1990s, but the danger for those dynamic middle-tier players is that they need to keep growing at that pace to retain the support of investors, distribution partners and the strict and pro-active regulator, China Insurance Regulatory Commission, that governs the market primarily with a mind to its long term development. China offers investors extra rewards and challenges to other markets in Asia and further diversification for an asset class that may be too young and historically unproven to have been clearly defined.

“It’s a great equity story, but those looking at the credit side are a little concerned,” says Sally Yim, vice-president at Moody’s Investors Service in Hong Kong. “Some of the Chinese insurance companies that want to list are growing so fast, but they are financing all that required growth by issuing large amounts of subordinated debt, which means they have to keep growing even faster to pay it all back.”

Investment banks in Asia are perceptibly inexperienced in advising the insurance industry. “It is staggering if you consider how few listed insurers there were in the region a year ago,” says one bank analyst, who cannot even talk to the media about the insurance sector because her bank was working on the AIA IPO, and like many has had it added to her work remit. “To be honest, it has been quite hard work for everybody getting up to speed on an entire new financial sector that used to be hidden within the banks in our coverage. That’s what has made them so hard to value, especially finding comparables across borders, and having to factor in aspects like their role in the nation’s consciousness, and the regulator’s view of them in the general scheme of things.”

And many investors, especially in the domestic markets – perhaps like new customers – see insurance pretty well entirely as exposure to rising middle-class incomes in the region and with few other attractive investment options available (especially in China) they are classifying insurance stocks in the broader retail asset class, say analysts. That is partly why the high street banks are so keen to rope in insurers the same they would auto manufacturers and the like, for something to pack into the wealth management products they offer, as a form of hire purchase. It is also why the foreign insurers have been so slow to catch on to the guanxi-led approach to referral business in China.

With regulators clamping down on solvency protection and non-core assets in financial holding companies, they are encouraging some insurers to sell and others to raise capital. Governments in the region believe the development of comprehensive long-term insurance systems will help them catch up with runaway demographic problems and hope the wider distribution of insurance products can help compensate for the unequal distribution of wealth and lack of social security that have become by-products of their surging economic growth models. Looking at their financial systems, they want to smooth over the barriers between – and redefine the roles of – the banking sector and insurance.

The business of insurance is becoming more complex,” says Mary Trussell, an insurance advisory services partner at KPMG in Hong Kong. “This is partly due to product innovation, but also the result of insurance groups entering other areas of financial services, entering new markets and seeking new partnerships and alliances to distribute their products.”

Regulators are increasingly focusing on their risk management – “as a way to capture opportunity, as well as to guard against difficulties and losses” and the direction of progress is becoming quite clear: it is following the example of the banking sector in the years after the introduction of Basle II. “Those who start their enterprise risk management journey early will not only show a more favourable image of their company to the regulators, rating agencies and investors but may also have the opportunity to influence the shape of regulation in this area,” recommends Trussell.

That is why the AIA sale was expected to have important ramifications for the Chinese insurance sector: “It could provide the Chinese insurers with an opportunity to expand into the rest of the region, and tell us something about how major international insurance companies see opportunities in China,” predicted one financial services consultant before the listing.

That was the hope – that it could prise open the stasis that solidified the sector since the financial tsunami. But it hasn’t; or rather it has highlighted the caution that Asia’s financial heavyweights have exercised when buying up another country’s assets.

“AIA is now potentially that rare thing – a genuine multinational financial services player rooted in the fast-growing East that doesn’t have to worry about being held back in the West,” says an investment banker in Hong Kong. “That is something that might make the established players over here think about, when defining themselves as Asian or global or whatever, and assume they speak for the region or sector while reporting to their shareholders and head office back home.”

AIA has the past to match its vision: it is after all the only foreign insurer with a wholly-owned licence to operate in China. Shanghai is where the original company actually began in 1919 and was soon occupying an office on the Bund next to HSBC, Chartered Bank, the Japanese and Russian finance houses and the rest. It is still there and may compete with the descendants of the first two names for the privilege of listing on the Shanghai Stock Exchange.

Apart from being the only international life insurance company operating (and the market leader among them) without the restrictions a joint venture involves, it is also a substantial shareholder in PICC, which it helped in its transformation from being the state warehouse of China’s insurance agreements in 1949 into what is now China’s largest non-life insurer. PICC’s own IPO will bring it all back home, and could be said to wrap up Beijing’s first (and probably final) stage of the liberalization of its insurance sector.

And now China is ready to join the party on the investment side: “Having been slow off the mark shortly after the financial crisis, Chinese financial institutions are ready to buy the assets on offer,” says one investment banker in Hong Kong. The financial tsunami caught everybody unawares by its speed and thoroughness, but nothing shows better how unprepared Chinese companies were for grasping the mantle of international market leadership. How could China Life and Ping An, or the largest banks in the world sit on the sidelines when a British company was handed AIA, largely thanks to its ‘presence’ across the region, an accident of its imperial history?

The answer is that Ping An lost its appetite for foreign ventures, having had its fingers burnt buying into Fortis just before the financial crisis unravelled. Back when Prudential stepped in earlier in the year, China Life was in discussions to buy AIA as strategic investors but was too slow to act. A few months on, down the road, they seemed to be ready for the challenge of buying a rare Asian ‘string of pearls’ insurance operation.

Different Chinese groups, the largest financial institutions backed by state funds and private equity-fronted private shareholdings, including Hong Kong companies, were looking at AIA again since Prudential dropped out: China Life, with an amalgam of business partners, including its own asset management arm and the Foshan group, the country’s largest private equity firm included, baulked at the asking price. They are believed to have now turned their sights on Prudential’s Asian assets instead. To add to the irony, AIA’s new boss, Mark Tucker, has made little secret of his desire to gobble up some of them too, now the IPO has furnished the new Asian company with a fat war-chest to drive ownership back to the West and become the undisputed heavyweight insurance champion of Asia.

At a time when the axis of financial power is shifting from the developed and deteriorating world towards emerging Asia – but before the battle formations and allegiances, as well as the parameters and features of the new financial landscape have been fully formed, that puts it at the top table of financial players in Asia. And its listing might have prised open the stasis that has seemingly gripped the potentially immense inward and outward investment flow of insurance and banking capital market and merger and acquisition (M&A) activity in the wider China story.

With the distinctions blurring between insurance companies and other parts of the financial services industry, the future path is very much open to all-comers – both Chinese insurers seeking to expand out of the Middle Kingdom as well as foreign firms trying to make some money out of all their efforts in the country where, nearly 10 years after WTO accession, they are left with a less than 5% market share in most products – and that is dwindling!

Evolving Distribution Channels

In a closed-door meeting this summer, executives at one of Canada’s best-known life insurance companies gathered at its headquarters to plot the latest moves in their industry’s secret war.

It’s a war fought with weapons that look harmless on the surface: deluxe trips to sunny destinations, offered to the independent brokers on whom the insurers rely to sell their life policies.

The executives knew they would have to spend at least $8,000 to $12,000 per broker to be competitive. And the trip had to be enticing – something on the order of a Brazilian beach getaway or a luxury trek through Asia.

At a time when low interest rates have squeezed the insurance industry’s profit margins, the company knew that if the brokers weren’t kept happy, they could easily shift their business to a competitor offering better compensation and perks.

Two key parameters had to be kept in mind. First, a few hours during the week-long trip had to be set aside for a seminar, so that the company could deem the excursion an educational conference. And second, the budget had to include a guest for each broker – even though this doubled the cost.

Buttering up each broker’s better half was all part of the strategy. “We say, ‘If you want to come here again as a guest, you better tell your guy to sell our stuff,’” said a senior executive present at the meeting.

Although the battle to win brokers’ affections has become a defining characteristic of Canada’s life insurance industry, it’s kept well out of the sight of the consumers, businesses and corporations who are buying policies – and who, the insurers admit, are paying for the trips, too.

Regulators and the industry examined the issue six years ago, and publicly acknowledged that some practices – including how brokers are compensated – weren’t in alignment with the customers’ best interests. But the brokers pushed back, and little changed.

An investigation by The Globe and Mail has found that attempts to improve transparency in Canada have been thwarted by the industry’s successful efforts to water down proposed reforms. Yet at the same time the industry has kept compensation details under wraps, many of its products have evolved into complex financial instruments that are hard for average consumers to comprehend.

When Canadians purchase life insurance now, their broker typically hands them an industry form letter promising that “any insurance product I recommend will be the one I deem to be best suited to meet your needs, without regard to the compensation practices of any one company.”

But the promise does not reflect the reality of the business for the big underwriters, such as Manulife Financial Corp., Sun Life Financial Inc., Great-West Lifeco Inc., Standard Life Assurance Co. of Canada, and Industrial Alliance Insurance and Financial Services Inc., and the thousands of brokers across the country.

Rather than scouring the market to find the best coverage, and the best price, for the clients sitting across from them, many independent agents and brokers steer all their business to just one or two insurers, according to a number of high-ranking insurance executives interviewed by The Globe. They favour the ones that reimburse them most generously in commissions, bonuses and perks, such as those all-expenses-paid trips to break up the monotony of a long Canadian winter.

The incentives have distorted the sales process for a sophisticated product and broken the bonds of trust that the insurance industry was built on. The problem, these executives say, is becoming more acute: The industry is locked in a kind of compensation race as brokers push for ever-richer incentives and insurers know they must match or better their rivals’ offerings.

Insurance broker representatives don’t agree there is a problem. “I don’t see consumers worried about compensation in the industry,” said Greg Pollock, the head of Advocis, a Canadian association that represents advisers and agents in the financial services industry. “I don’t see that there’s an issue that needs to be addressed.”

Authorities on compensation rules in Ontario told The Globe and Mail they have decided that consumers are better off without the details of trips, commissions and bonuses clouding their decision. And the industry has worked hard to keep it that way.

Spokespeople for major insurers including Manulife, Sun Life, Great-West Lifeco, and Standard Life declined to comment on the issue and referred the questions to the Canadian Life and Health Insurance Association. Frank Swedlove, the association’s president, said in an e-mailed statement that “the issue of conflicts of interest – real or perceived – arising from compensation is one that the life and health insurance industry, and its regulators, take very seriously.”

But several high-ranking executives at Canada’s largest insurance companies talked to The Globe and Mail about the lack of disclosure and the problems it has created. They only did so on condition of anonymity, because they feared that by speaking publicly they could face a backlash from the brokers who sell their products.

“We’ve gone out and said we want to discontinue the incentives, but essentially the brokers won’t give you policies if you did that,” one senior executive said.

“The incentives breed a type of behaviour that’s not good for the industry.”

While the industry’s workings are opaque to consumers, the picture is much clearer to professionals like Jeff Schaafsma, chief risk officer for the city of Surrey, B.C. He is an expert in buying insurance, and must manage file cabinets full of complex policies to cover everything from city employees to construction sites.

“If you come in from the outside and look at the insurance industry, you think, ‘How could this be so unregulated?’ “ Mr. Schaafsma says.

“And you think, why would people accept this – handshake deals, and millions of dollars moving around and not really understanding how it’s moving? The premium goes up, the premium goes down, and nobody knows why.”

Canadians pay about $15-billion in life insurance premiums each year, and another $40-billion in premiums on property and casualty (P&C) policies, primarily for home and car insurance. Last year about 757,200 individual life insurance policies were sold, averaging $271,600 each. New individual policies sold today are almost twice the size they were 10 years ago.

Billions of dollars in commissions flow every year from these sales. Canadian-based life insurers paid $7.2-billion to agents worldwide in 2009, up 26 per cent from $5.7-billion at the end of 2005. A significant proportion of that money was paid to agents in Canada. Foreign-based life companies paid nearly $600-million in commissions in this country, up slightly from $590-million in 2005. Canadian property and casualty insurers shelled out another $3.74-billion in commissions in 2009, which rose 17 per cent since 2005, according to data the companies file with the Office of the Superintendent of Financial Institutions.

Many of the incentives have little, if anything, to do with serving the customer; rather, they’re paid by insurance companies to keep the brokers coming back to them.

“For claiming to be independent and working in the best interests of their clients, brokers keep their cards quite close to their chest in terms of what they’re being paid and by whom,” Mr. Schaafsma said. “It’s the wild west.”

Commissions, bonuses, perks

Until the early 1990s, major life insurers like Manulife and Sun Life sold the majority of their policies through in-house sales agents, dubbed “captives.” But in the past two decades, the industry has evolved dramatically as insurers increasingly looked to outsource sales in order to reduce overhead.

x As much as 70 per cent of all life insurance policies now sold in Canada are handled by independent brokers who are compensated primarily through commissions and perks. The agents often work through intermediaries known as managing general agents, which can contract several hundred brokers at one time, giving them more clout with the insurers. The vast majority of P&C sales also occur through brokers.

A good insurance broker in Canada can earn $100,000 annually, but it is not uncommon for take-home incomes to be significantly higher.

Insurance companies use three kinds of incentives to entice agents and brokers to direct business to them. There are upfront commissions when the sale is made; back-end commissions, usually called bonuses or “contingent” commissions, which are often based on the volume of business a broker does with that insurer; and perks.

The latter two are structured with one purpose in mind: to promote loyalty and encourage brokers to bring as many customers to that insurer as possible. The more the broker consolidates his clients’ business with a particular insurer, the more lucrative the deal gets.

In life insurance, the upfront commissions have traditionally been high compared with other industries, because the product has always been a tough sell compared with other consumer purchases.

If a customer buys a universal life insurance policy that requires him to pay $1,000 in premiums the first year, the agent is likely to earn a commission of about $600 up front and a further $1,200 in a bonus at the end of the year, provided certain sales levels are met. That doesn’t include incentives such as trips, nor commissions for keeping the policy in force in future years.

Brokers also can get paid extra for bringing in an insurer’s favourite kind of customers – the kind who stay, or who don’t make claims. For example, a broker who sells five group life insurance accounts for Standard Life paying total annual premiums of $3-million could earn a bonus of $30,000 if none of the clients take their business elsewhere. P&C insurers sometimes offer bonus payments for signing policies with “good customers” who file fewer claims.

The principle that a broker’s first responsibility is to the client is contained in industry codes of conduct.

Don Bailey, who stepped down last month as the head of Canadian operations for Willis Group, one of North America’s largest insurance brokers for corporate and business clients, says the industry and regulators need to tackle the transparency problem.

“What you see is agencies and brokers knowing what their targets are, and knowing that if I can shift this much premium volume to another carrier before the end of the month, or before the end of the quarter, then I can trigger a cheque,” Mr. Bailey said. “These [sums] are not incidental. They are significant amounts of money.

“If I’m the buyer, that should put in doubt why somebody is recommending one carrier over another. Is it because they truly believe that carrier is better? Or is it because they have a big cheque coming?”

‘White sandy beaches’

Free trips are used by the insurance companies to tell brokers about their products, but they are also tools for instilling loyalty, ensuring that brokers are not tempted to direct business to rival firms, especially in the life insurance industry. The insurance companies detailed this strategy to The Globe and Mail.

Like consumers who sign up for loyalty programs or use premium credit cards, life agents accumulate points as they sell policies for a particular firm.

“I know some agents who say, ‘Okay, I’m going to do business with [another] company this year because they’ve got this convention somewhere, or it’s too difficult to meet your criteria to go to your convention,’.” said Bruno Michaud, senior vice-president of administration and sales at Industrial Alliance. “At the end of the day, we see a convention for advisers as an award for the advisers for doing business with us. And it’s a good occasion to develop a stronger sense of belonging to the company.”

In the standard disclosure letter given to consumers at the time of purchasing a life insurance policy, there is a line stating: “From time to time, some companies may offer other types of compensation such as travel incentives or education opportunities.”

But well out of the consumer’s sight, internal industry documents obtained by The Globe and Mail detailing these perks are fashioned conspicuously like vacation brochures for luxury golf outings, cruises and sightseeing trips. Industrial Alliance’s pamphlet shows photographs of crashing waves and exotic flowers, and invites brokers to “enjoy sunny skies while relaxing on sweeping white sandy beaches… Soak up the rays in a world-class resort.” RBC Insurance’s ‘California Dreamin’ conference was held at a resort near San Diego.

Two of Canada’s biggest life insurers found out the hard way that perks distort the market. Senior executives at both firms told The Globe and Mail they raised the price of a universal life policy, only to watch sales of their other products – including the ones whose prices hadn’t changed – take a hit. The price increase made the product harder to sell. Brokers told one of the companies that the price change meant it just wasn’t worth their time to stay up to date on the insurer’s other products.

The competitive pressure to provide incentives comes at a time when more Canadians need impartial advice on their insurance options. For example, Ontario has just decreased the amount of medical benefit coverage that insurers must offer drivers, but consumers can now choose to buy additional coverage. That leaves drivers in the province having to make important decisions on their policies this year. When it comes to life insurance, competition for the coveted baby boomer market has prompted life companies to release a wider array of products, adding more complexity to an industry that is already difficult for many consumers to navigate without the help of an expert.

Yet the brokers have convinced regulators that the inability of Canadian consumers to grasp complicated financial matters is exactly why they shouldn’t have to provide detailed disclosure of compensation, according to discussions with insurers, regulators and brokers.

Brokers push back

Critiques of the current compensation system are seldom heard. Consumers Association of Canada says that, owing to limited resources, it is not looking into the matter. The issue is invisible in the political arena.

Proponents of the industry’s compensation structure nevertheless say criticism of perks and commissions is overblown. In their view, contrary to what the public might believe, a broker’s main job is to prod people to buy life insurance and to plan for their financial futures – not to shop around. “If they spend all their time trying to find the absolute lowest price, chances are they’re not spending their time on what they’re truly being paid to do,” says the top executive at one insurer. “Which is help bring the person to action on something they wouldn’t have done on their own.”

Mr. Schaafsma of the City of Surrey and his fellow risk managers are a rare voice of dissent. He says that upfront commissions are acceptable, if they are disclosed. However, the hidden perks and back-end commissions are a problem.

“You get a trip to Hawaii – that’s a benefit that isn’t going to the consumer, it has to flow into the price,” he says.

Earlier this year, his professional association, the Risk and Insurance Management Society, issued a paper calling for better disclosure.

The paper, however, has had no tangible impact on igniting a debate that insurance brokers would prefer to avoid – and one that they skillfully extinguished earlier this decade.

The Canadian Council of Insurance Regulators, the umbrella group for provincial regulators, began to probe how insurance is sold in late 2004. The move came after a crackdown was announced in the United States to deal with allegations that a small number of U.S. brokers had rigged the sale of P&C policies to boost their commissions.

The committee found that while some brokers may argue that bonuses and perks do not influence their advice to clients, they may “appear … to result in a potential conflict of interest.”

The committee made three proposals. It recommended new legislation or regulation to clarify that the client’s interest was to be placed first. It proposed to limit “performance-linked benefits” to insurance brokers, including contingent commissions that are hidden from the consumer. Finally, the committee said there should be greater disclosure of ownership and other financial ties between a broker and an insurer, including the common practice of insurers lending money to brokers to expand their businesses.

The ensuing backlash revealed a broker community unequivocally opposed to these ideas. One of many groups to argue against the changes was the Insurance Brokers Association of B.C. Citing a lack of consumer complaints on the matter, the group implied there was no difference between selling insurance policies and furniture or cars. “Name any industry and you’ll find mechanisms in place for motivating the sales force,” the association wrote in its response to the committee.

Advocis, the Financial Advisors Association of Canada, warned that new restrictions would bind the industry in red tape.

If brokers had to explain complex commissions, such as contingent payments, it would be unduly confusing for the consumer, the group warned. And altering the overall incentive structure could disrupt the workings of a multibillion-dollar industry.

The pushback from the broker community worked. By the time of its final report in 2008, the committee’s three key recommendations had been watered down. It no longer backed the idea that “clients first” should be enshrined in regulations, or that limits should be placed on commissions or perks. But the industry would have to start disclosing to the consumer any possible conflicts of interest.

Advocis endorsed the proposals, saying the industry was in fact already adhering to them. And on Dec. 8, 2008, the council of insurance regulators declared the debate over, and thanked the committee for “a job well done.”

Brokers are expected to make customers aware of actual or perceived conflicts of interest, but this disclosure takes many forms.

“As you likely already know, agents and brokers in the life insurance business in Canada are compensated by commissions, bonuses and other inducements from the companies we do business with,” says a letter that one broker group makes available to clients. Customers are asked to sign the letter, which describes “incentive-based compensation” as an “industry-wide practice,” but makes no mention of specific figures.

This is enough disclosure, says Greg Pollock, the head of Advocis. “For the most part, we believe that the current structure of compensation in this country works well.”

When it comes to auto and home insurance, the Insurance Brokers Association of Canada, which speaks for 33,000 property and casualty brokers, said its code of conduct requires brokers to disclose compensation – if a consumer asks. “The broker is required to divulge the method by which he is being compensated,” said Steve Masnyk, a spokesman for the Insurance Brokers Association of Canada.

For instance, the broker might disclose that he or she will be paid a commission of between 10 and 15 per cent of premiums. Insurers also make general disclosure statements about compensation, usually on their websites, but details are limited.

The Registered Insurance Brokers of Ontario, the self-regulatory body for property and casualty brokers in Canada’s largest province, also requires members to hand out a disclosure form that discusses compensation without divulging numbers.

But RIBO still uncovers cases in which agents do not have copies of the disclosure statement they are supposed to provide, through audits it conducts every three to five years. Tim Goff, manager of complaints and investigations at RIBO, says there is “95 to 99 per cent” compliance among brokers on this form.

The Insurance Council of British Columbia, meanwhile, has encountered cases where a broker has told a consumer incorrect information after the consumer asked for details of their compensation.

Mr. Bailey, the former head of an insurance broker, suggests the current system is not enough.

“[Brokers] should declare to the buyer: ‘Just so you know, I represent the insurance company and not you. And I’m making significantly more money than you think I am,’ “ Mr. Bailey said. “Just disclosing the conflicts, in our mind, does nothing.”

The 2008 detente with regulators signalled the campaign to head off reform succeeded. The industry diluted the suggested fixes down to a small number of voluntary measures.

“If you look at the system, the compensation, the way it all works, you’d be protecting it too,” said a senior executive at a major insurer. “You don’t want people asking questions, you don’t want to disclose it, you don’t want them to know you’re going on a trip – because it’s pretty good.”

Toxic Boss

We've all heard stories about the nightmare of working for a toxic boss. Some of us have even had the unique displeasure of doing so ourselves.

Red flags to such behavior often appear as early as the interview process. We've compiled 10 warning signs of a toxic boss. Watch for them in the interview and you might be able to avoid a negative work environment -- or at least know what you're in for:

Disrespectful Behavior: "Don't overlook unprofessional behavior, such as emails that aren't returned or disregard for stop and start times for the interview without apology," says Anna Maravelas, president of TheraRising.com and author of How to Reduce Workplace Conflict and Stress. "These mini-moments are microcosms of your potential supervisor's style."

Visual Cues: "If your boss scans you from head to waist versus waist to head as they extend their hand in greeting you, they are intuitively sending a message that you are smaller than they are," explains Zannah Hackett, author of The Ancient Wisdom of Matchmaking. Though subtle, it's the nonverbal equivalent of a belittling comment. "This is not a good sign that your talents are going to flourish in this environment."

Defensive Body Language: "An insecure boss will find you threatening if you are good at your job and will use the power of the position to make your life miserable," says Pamela Lenehan, president of Ridge Hill Consulting and author of What You Don't Know and Your Boss Won't Tell You. Watch for constant shifting, avoiding eye contact or rifling through papers as you talk, she notes.

Bad Attitude: If your interviewer exhibits a general lack of enthusiasm or interest in the company, watch out, warns Donna Flagg, a principal with human resources and management consulting firm The Krysalis Group. It could be a bad day, or it could be a bad boss. "Ask for company turnover [data] and turnover [data] for that individual manager," she suggests.

Excessive Nervousness: Don't ignore extreme behavior, cautions one worker. "My boss used to eat sugar packets and raisins, and she downed them with large cups of black espresso," she recalls. "And she spoke in triplets: ‘hi, hi, hi,' ‘good, good, good,' ‘when, when, when.' Her stress level telegraphed to everyone in the department."

Distrust of Others: A toxic boss "openly displays a lack of trust in people, especially for those on the team in which he or she is supposed to lead," notes Gregg Stocker, author of Avoiding the Corporate Death Spiral: Recognizing & Eliminating the Signs of Decline. Ask what the company's problems are and what their causes might be. "If the answers to these questions consist of blaming others in the organization, especially those on his or her team, the person lacks trust in others."

Fear Used as a Motivator: Ask the prospective boss about others on the team with whom you will be working -- specifically, how well they work together, stay focused and meet objectives, Stocker advises. Be wary if the response identifies a lack of respect for people. When managers disrespect and distrust others' motivations, they resort to extrinsic means with which to motivate, such as threats, public humiliation and comments about layoffs.

Word Choice: "Your ears are your best hunch barometer," Hackett says. "Our choice of words sets up a dynamic that can raise or lower the energy in a room. If they begin every sentence with a negative message and then try to diffuse it somewhat, it is likely that negativity prevails in their life and carries over into work."

Extreme Friendliness: "It may sound odd, but what should have tipped me off was how nice she was," one administrative assistant says of her toxic boss. "I compare it to children being lured into dangerous situations with candy. How many kids don't want candy? And how many adults don't want to work for a boss who is nice? It was a trap I could've easily avoided had I caught on earlier."

Self-Absorption: "If his ideas seem to be more important than finding out about your ideas, or if you provide an answer and the interviewer tells you you're wrong or interrupts with his own answer to the question, it may be an indication that he will be difficult to work with," notes one technical support staffer.

Walking Your Talk

If you work in an organization, you’ve heard this complaint repeatedly. Leaders and managers say they want change and continuous improvement but their actions do not match their words. The leaders’ exhortations to employees ring false when their subsequent actions contradict their words.

A CEO once asked me, “Why do they do what I do and not what I tell them to do?” Another asked, “Do I really have to change, too?” These are scary questions coming from leaders.

The power of an organization’s leaders in creating the organization’s values, environment, culture and actions is immeasurable. Want to know how to “walk the talk” to enable organization change and improvement? Want to take the power away from the oft-repeated employee complaint that managers don’t walk their talk? Start here to learn how to walk your talk. Or, use these ideas to help your organization’s leaders and managers walk theirs. It’s the shortest journey to empower change and the work environment they desire.

The most important tip comes first. If you do this first action well, the rest will follow more naturally. If the ideas you are promoting are congruent with your core beliefs and values, these actions will come easily, too. So, start with a deep understanding of “why” you want to see the change or improvement. Make certain it is congruent with what you deeply believe. Then, understand and follow these guidelines.

•Model the behavior you want to see from others. There is nothing more powerful for employees than observing the “big bosses” do the actions or behaviors they are requesting from others. As Mahatma Gandhi said, “Become the change you wish to see in the world." And, it will happen.

•If you make a rule or design a process, follow it, until you decide to change it. Why would employees follow the rules if the rule makers don’t?

•Act as if you are part of the team, not always the head of it. Dig in and do actual work, too. People will appreciate that you are personally knowledgeable about the effort needed to get the work done. They will trust your leadership because you have undergone their experience.

•Help people achieve the goals that are important to them, as well as the goals that are important to you. Make sure there is something for each of you that will result from the effort and work.

•Do what you say you're going to do. Don’t make rash promises that you can’t keep. People want to trust you and your leadership.

•Build commitment to your organization’s big goal. (You do have a big, overarching goal, don’t you? Other than to make money, why does your organization exist?)

•Use every possible communication tool to build commitment and support for the big goal, your organization’s values and the culture you want to create. This includes what you discuss at meetings, in your corporate blog, on your Intranet, and so forth.

•Hold strategic conversations with people so people are clear about expectations and direction. Gerard Kleisterlee, Philips' president, is holding strategic conversations with as many groups as he can. "In order to build internal confidence, stimulate cross-boundary cooperation, and spark new-product speed to market, Kleisterlee is sponsoring what he calls ‘strategic conversations’: dialogues that center around a focused set of themes that Kleisterlee believes will define Philips' future."

•Ask senior managers to police themselves. They must provide feedback to each other when they fail to walk their talk. It is not up to the second level managers and other employees to point out inconsistencies. (Confronting a manager takes courage, facts and a broad understanding of the organization.) Senior managers must be accountable to each other for their own behavior.

In 1513, Machiavelli wrote, “There is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new system. For the initiator has the enmity of all who would profit by the preservation of the old system and merely lukewarm defenders in those who would gain by the new one.”

Given these thoughts from Machiavelli - true for centuries – provide leadership and sponsorship through walking your talk. Incorporate these tips and behaviors to ensure the success of your organization. Walk your talk.

The Good Samaritan

Parable told by Christ in the Book of Luke : A traveller is beaten and left for dead alongside a road
Passers-by ignore him, but a Samaritan - who would have been regarded by Jews at the time as an enemy - stops to help.


One act of kindness that befell Leeds writer Bernard Hare in 1982 changed him profoundly. Then a student living just north of London, he tells the story to inspire troubled young people to help deal with their disrupted lives.

The police called at my student hovel early evening, but I didn't answer as I thought they'd come to evict me. I hadn't paid my rent in months. But then I got to thinking: my mum hadn't been too good and what if it was something about her?

We had no phone in the hovel and mobiles hadn't been invented yet, so I had to nip down the phone box. I rang home to Leeds to find my mother was in hospital and not expected to survive the night. "Get home, son," my dad said.

I got to the railway station to find I'd missed the last train. A train was going as far as Peterborough, but I would miss the connecting Leeds train by twenty minutes. I bought a ticket home and got on anyway. I was a struggling student and didn't have the money for a taxi the whole way, but I had a screwdriver in my pocket and my bunch of skeleton keys.

I was so desperate to get home that I planned to nick a car in Peterborough, hitch hike, steal some money, something, anything. I just knew from my dad's tone of voice that my mother was going to die that night and I intended to get home if it killed me.

"Tickets, please," I heard, as I stared blankly out of the window at the passing darkness. I fumbled for my ticket and gave it to the guard when he approached. He stamped it, but then just stood there looking at me. I'd been crying, had red eyes and must have looked a fright.

"You okay?" he asked.

"Course I'm okay," I said. "Why wouldn't I be? And what's it got to do with you in any case?"

"You look awful," he said. "Is there anything I can do?"

"You could get lost and mind your own business," I said. "That'd be a big help." I wasn't in the mood for talking.

He was only a little bloke and he must have read the danger signals in my body language and tone of voice, but he sat down opposite me anyway and continued to engage me.

"If there's a problem, I'm here to help. That's what I'm paid for."

I was a big bloke in my prime, so I thought for a second about physically sending him on his way, but somehow it didn't seem appropriate. He wasn't really doing much wrong. I was going through all the stages of grief at once: denial, anger, guilt, withdrawal, everything but acceptance. I was a bubbling cauldron of emotion and he had placed himself in my line of fire.

The only other thing I could think of to get rid of him was to tell him my story.

"Look, my mum's in hospital, dying, she won't survive the night, I'm going to miss the connection to Leeds at Peterborough, I'm not sure how I'm going to get home.

"It's tonight or never, I won't get another chance, I'm a bit upset, I don't really feel like talking, I'd be grateful if you'd leave me alone. Okay?"

"Okay," he said, finally getting up. "Sorry to hear that, son. I'll leave you alone then. Hope you make it home in time." Then he wandered off down the carriage back the way he came.

I continued to look out of the window at the dark. Ten minutes later, he was back at the side of my table. Oh no, I thought, here we go again. This time I really am going to rag him down the train. He touched my arm. "Listen, when we get to Peterborough, shoot straight over to Platform One as quick as you like. The Leeds train'll be there."

I looked at him dumbfounded. It wasn't really registering. "Come again," I said, stupidly. "What do you mean? Is it late, or something?"

"No, it isn't late," he said, defensively, as if he really cared whether trains were late or not. "No, I've just radioed Peterborough. They're going to hold the train up for you. As soon as you get on, it goes.

"Everyone will be complaining about how late it is, but let's not worry about that on this occasion. You'll get home and that's the main thing. Good luck and God bless."

Then he was off down the train again. "Tickets, please. Any more tickets now?"

I suddenly realised what a top-class, fully-fledged doilem I was and chased him down the train. I wanted to give him all the money from my wallet, my driver's licence, my keys, but I knew he would be offended. I caught him up and grabbed his arm. "Oh, er, I just wanted to…" I was suddenly speechless. "I, erm…"

"It's okay," he said. "Not a problem." He had a warm smile on his face and true compassion in his eyes. He was a good man for its own sake and required nothing in return.

"I wish I had some way to thank you," I said. "I appreciate what you've done."

"Not a problem," he said again. "If you feel the need to thank me, the next time you see someone in trouble, you help them out. That will pay me back amply.

"Tell them to pay you back the same way and soon the world will be a better place."

I was at my mother's side when she died in the early hours of the morning. Even now, I can't think of her without remembering the Good Conductor on that late-night train
to Peterborough and, to this day, I won't hear a bad word said about British Rail.

My meeting with the Good Conductor changed me from a selfish, potentially violent hedonist into a decent human being, but it took time.

"I've paid him back a thousand times since then," I tell the young people I work with, "and I'll keep on doing so till the day I die. You don't owe me nothing. Nothing at all."

"And if you think you do, I'd give you the same advice the Good Conductor gave me. Pass it down the line."