Agency Leader - No Business Asset

NOT EMPLOYEE
Life insurance agent (Unit Manager and Agency Manager) are representative of life insurer. This is clearly defined in the life insurance agent (and agency) agreement between life insurer and agent (Unit Manager & Agency Manager). Life insurance agents are representative of life insurer (principal).

BUSINESSMAN
Life insurer prefers to classified life insurance agents as businessman. The most common tagline when recriting new agent is, "Businessman - your income is unlimited, flexible time and you are your own Boss". Is life insurance agent a businessman???

OWNER OF HOTEL
I know of an entrepreneur that owns a chain of hotels. As a businessman (owner of hotels) - he have 2 main source of income from hotels. The first main income is from renting hotel rooms to customers. This is business revenue. The second main income is derived from capital appreciation of his hotel buildings and land. Business Assets are much more valuable than Business Revenues.

BUSINESS ASSETS
Buildings and lands purchased over a period of time appreciate significantly in value. A Businessman have the following options on his own business assets
1: Hire CEO (Managers) to manage the chain of hotels
2: Appoint his Children to manage the chain of hotels
3: Sell his chain of hotels

LIFE INSURANCE AGENCY MEMBERS
Life insurance agency members are perceived by life insurers to be "businessman". As a businessman - the first main income are commissions & overridings. Business Assets of the Life insurance agency members would consist of his policyholders, agents, unit managers and agency managers. However, in the event an agency manager  - passed away, suffers total & permanent disability or suffers critical illnesses - he is not able to do the followings:-
1: Hire CEO (Managers) to manage his agency
2: Appoint his Children to manage his agency
3: Sell his agency

CREATING BUSINESS ASSETS IN LIFE INSURANCE AGENCY
Creating Business Assets in Life Insurance Agency is not impossible. Such agency model have long been operating in developed countries like USA and Europe. Even developing countries like India and China offer similar opportunity. Fortunately, there is a growing awareness plus a minority of Malaysian agency members migrating to an alternative agency model that offers them an opportunity to build Business Assets in addition to Business Revenues.

BUSINESS MOTIVATION
Take 2 scenarios. If our Government were to offer Ahmad and Ali a piece of land each. Ahmad is awarded a TOL (Temporary Occupation Land) over 30 years. Ahmad has to return this TOL to the government at the end of the term. Ali is awarded a permanent freehold land.

Ahmad will develop his land based on the presumptions that it is temporary. He will probably invest the minimum ie planting cash crop like water-melon, sugar-cane, banana etc. This is similar to our existing traditional agency model where agency leaders are not able to build up his/her Business Assets thus discouraged him/her from building a long-term permanent business.

Ali will probably invest his resources on a more permanent basis like building, factory etc. Agency Leaders - must evolve to attract talented entrepreneurs to join our business. Offer talented Entrepreneurs the opportunity to develop and own his/her own permanent land - ie Business Assets.

Agent Earn Less Than RM20K A Year

Figures show that 65% of insurance agents earn below RM20,000 per year. “We often think that insurance agents make big money. But their remuneration is below the average wage of a Malaysians which is RM33,000 per year,” said Deputy Finance Minister Datuk Donald Lim Siang Chai, quoting figures from the Life Insurance Association of Malaysia.

Meanwhile, the National Association of Malaysian Life Insurance Fieldforce and Advisers (Namlifa) called on Bank Negara to review outdated cost guidelines regulating life insurance agents.
Sethu said there 83,174 insurance agents in Malaysia.

Its president Sethu Karuppan pointed out commission rates have been capped since 1996. “The Operating Cost Control (OCC) guidelines which were introduced in 1996 for the benefit of policy holders, does not match inflation rates,” he said.

He also called for a review of the replacement of policy (ROP). “When policy holders want to exchange their old policies for new ones, agents will incur a penalty if there are too many requests for ROP. “The reasoning behind this was to prevent bad agents from tricking clients into buying new policies. said Sethu. He said Namlifa wanted the ROP to be reviewed so that agents were not penalised when a client wanted to change to a new policy.

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Most people will avoid this career that does not offer fixed regular income. The existing life insurance agency structure, compensation and distribution philosophy has not changed in tandem with market changes. Higher Commission or ROP will not help improve agent's income.

Agency Members of the life insurance industry must think and act outside the box to improve their income.

A few factors to consider :- 

Market Segmentation
The life insurance penetration for Malaysia is approximately 40%. But Bumiputera (Malay Muslim life insurance penetration is less than 10%). More than 60% of Malaysian are Bumiputera. Statistically, the life insurance penetration for non-Bumiputera is almost 100%.
Bumiputra market - especially young Bumiputera - offers huge potential for life insurance agents.

Product Differentiation
Life insurance agents must now diversifiy to offer life insurance products that meet the needs of Malay Muslim - namely takaful products and young Bumiputra needs. Sales methodology need to be modified to suit Malay Muslim culture and philosophy.

Distribution
We must recruit and develop Malay Muslim Distributor to distribute Takaful products to Malay Muslim market. Our distribution must be designed to compliment Malay Muslim's natural strength in networking and teamworking. In addition, our distribution channel must have the width and breath to penetrate deep inside the Malay heartland.

Compensation
Our Distribution Channel Structure and Compensation need to reward group effort (as compared to individual effort in the current traditional agency structure). In addition, our distribution structure must offer our Malay Distributor the opportunity to build permanent Business Asset (as compared to existing compensation formula focussing exclusively on revenue - commission & overridings).

Business Expansion
Our Malay Muslim entrepreneur have the talent and potential to expand this distribution business aggressively. Distribution system must be transformed - breaking down processes to simple and manageable step-by-step actions. We can then offer Business Franchise to potential entrepreneurs plus expand our business (logistically). 

Old actions will continue to get old results. Life insurance agents must change its business paradigm, structure, compensation and distribution to forge ahead. We can then subsequently attract (not recruit) the best and talented entrepreneurs to join our business / industry. Failing which, we will continue to scrap the bottom of the barrel and recruit rejects.

MicroTakaful

There has been a very clear recognition over the last decade that microinsurance, including microtakaful, is an important tool in supporting sustainable poverty alleviation in the poorer areas of the world. The growth of this sector has resulted in almost 500 million people now having some form of insurance cover today where previously they would not.

Microtakaful essentially has the same technical apparatus as Takaful insurance but it focusing on providing people at the base of the economic pyramid. Islamic microfinance and microtakaful exist to empower people to find a way out of poverty and give them a real hope of being financially self-sufficient.

The Potential for MicroTakaful – Levels of poverty in Muslim communities
On a global level, it should be noted that of the 41 lowest human development countries, 20 have a majority Muslim population and a further nine have a Muslim population over 20%. Of the one billion people living in the low developing countries, 54% are Muslims.

Microtakaful in practice
There are a few pioneering takaful operators that have entered into the low-income microtakaful market. Most notable are those providers in countries where almost all the population is Muslim, poverty is rife and the takaful sector is already established.

Prime Islamic Life of Bangladesh recently launched a group microtakaful product in addition to its existing three individual savings linked products. The product is unique in that it offers double the sum assured on death, contributes towards funeral costs and provides a monthly income to a nominee.

In Sudan, Shiekan Insurance and Reinsurance Co Ltd is working with the Central Bank of Sudan and the United Nations Development Plan (UNDP) to provide low-income farmers with affordable insurance coverage.

Amana Takaful of Sri Lanka has a partnership with Muslim Aid’s microfinance programme to provide affordable coverage for credit life, hospitalisation and medical charges. This is in addition to the companies’ death and disability cover for low-income earners with premiums as low as 0.20 USD per month.

15% Rebate From Takaful Malaysia

 

 

SYARIKAT Takaful Malaysia Bhd has continued to fulfill its unique promise of a “No Claim Rebate” payment with its latest amounting at RM350,990 to Lembaga Tabung Haji.

Takaful Malaysia is the only takaful operator in the country offering such unique benefit, where 15% of the premiums paid to all of the company’s general takaful products are refunded — provided no claims were made within the period of coverage. Takaful Malaysia has been steadily paying out an average of 15% “No Claim Rebate” since the late 1980s.

On average, RM20 million cash rebates are paid every year and have benefitted not only individuals but also more than 5,000 multinational corporations and small and medium enterprises.

Tabung Haji has been a loyal corporate participant with Takaful Malaysia since 1987 and as such, has been enjoying this benefit since the beginning, she added. The cash rebate to Tabung Haji was for three product coverages namely fire and allied perils, group term family and private car fleet.

Takaful - In Pakistan

Takaful Rules, 2012 would make Pakistan the second country after Indonesia to officially allow takaful windows, which enable firms to offer Shariah-compliant and conventional products side by side, provided client money is segregated

 

After a long spell of public silence over the recently introduced rules for Islamic insurance, or Takaful, in Pakistan, one of the five Takaful companies has finally gone public in its criticism of the policy revision that will allow conventional insurance companies to set up parallel windows for Islamic insurance operations.

 

In an interview with The Express Tribune, Pak-Qatar Family and General Takaful Senior Manager Syed Adnan Hasan said that the establishment of Islamic insurance windows by conventional insurance companies will ‘crush’ the business of existing Takaful operators.

All Takaful companies had boycotted the ceremony held in July where the Securities and Exchange Commission of Pakistan (SECP) Chairman Muhammad Ali officially announced the promulgation of the Takaful Rules, 2012.

While Takaful companies refused to speak to the media on this issue, they went to court against the revised rules which, they claimed, would distort the Takaful businesses in Pakistan by letting conventional insurance companies conduct it in a manner “against the principles of Shariah.” Subsequently, on August 2, the Sindh High Court restrained the SECP from implementing the new rules.

“Insurance companies, by using their existing corporate structure and branch network for Takaful windows, will actually crush current Takaful operators,” Hasan said. He added that the prospective new entrants will take undue advantage of the low cost of entry in the wake of the new laws by setting up Takaful windows. “It is like letting somebody join a race just a few steps away from the finishing line.”

The Takaful Rules, 2005, which governed the Islamic insurance sector in Pakistan before the promulgation of the new rules, did not allow conventional insurance companies to sell Takaful products. Currently, there are two family Takaful and three general Takaful companies in Pakistan. As for the conventional insurance sector, seven life insurance and 30 non-life insurance companies are operating in Pakistan.

Takaful operators collected Rs3.3 billion in gross premiums in 2011, which is equal to 2.8% of the gross premiums of Rs119.7 billion that conventional insurance firms received in the same period.
“The growth rate of Takaful is good. However, we still have a long way to go. In a country with the insurance penetration of 0.4% of the gross domestic product (GDP) after 65 years of its birth, a lot still remains to be done. We have little tendency to save,” he said.

Premiums of Takaful companies grew at an average of 91.6% year-on year between 2006 and 2011. In contrast, the average annual growth rate of conventional insurance companies over the same period was a modest 16.5%.

“Conventional insurers must set up full-fledge Takaful entities (as subsidiaries) while satisfying the minimum paid-up capital requirement to be decided by the SECP,” Hasan said. He added that all the other requirements that existing Takaful players had to meet must be satisfied by any new player entering the Takaful segment. “No shortcuts should be allowed.”

In an interview with The Express Tribune last month, State Life Insurance Corporation of Pakistan Chairman Shahid Aziz Siddiqi had indicated that his company – which is the largest player in life insurance in the country with over Rs293 billion in total assets by the end of 2011 – was likely to launch Islamic insurance products by setting up a Takaful window within a year.

“Those who are called ‘giants’ may be so, but in their own industry, which is conventional insurance. Only time will tell who the giant in the Takaful segment is,” Hasan said in an apparent reference to State Life’s plans to enter the Islamic insurance segment.

“Their commitment will simply be with those products/businesses which seem profitable, irrespective of whether they are Shariah-complaint or not,” he said

Takaful - Small In Scale To Indonesia

Zurich Financial Group Ltd (Zurich), Switzerland’s biggest insurer, has not ruled out venturing into the takaful business in Malaysia. However, it is rather unlikely to expect Bank Negara Malaysia to issue new takaful licence after giving out new licences to four new players in 2009.  There maybe opportunities when the takaful industry adopts the Risk Based Capital framework in 2014. By then, takaful operators that do not meet the minimum capital requirement would either have to inject more capital or consolidate.

Malaysia’s contribution to the global takaful industry is expected to increase to US$2.4 billion (RM7.4 billion) this year from US$1.4 billion (RM4.3 billion) in 2011, according to Ernst and Young. Takaful business in Malaysia is still small in terms of scales compared with Indonesia.

Malaysia’s contribution to the global takaful industry is expected to increase to US$2.4 billion this year from US$1.4 billion in 2011. Although Malaysia’s takaful market is growing at 20-25 per cent annually, it still has plenty of room to grow as the penetration rate is still low, at about 11 per cent.

I Think, I Want & I Get

Get 20 people in a room to write out their five goals in life, and you can be guaranteed somewhere on each and every list would be health, wealth and happiness. A few might add a slim figure, a date with Jennifer Lopez and a lifetime’s supply of money most of us crave personal success and security. All it takes is the right mindset and these goals are achievable.

Let’s think about what we mean by the term ‘right mindset’ for a moment. By this I suppose we mean the right way of thinking, i.e. positive thinking. But don’t you just hate it when people blab on about positive thinking this, positive thinking that, like all you have to do is whistle a happy tune, imagine you’re 10kgs lighter and…..think positively !

If it was that easy we’d all walk around with perpetual smiles on our face, wondering how we’re going to spend that two million dollars in our Swiss bank account (and that’s US dollar by the way, not Malaysian ringgit) now that we’ve just been promoted to managing director of Apple.

Positive thinking ain’t easy! Especially when the husband wants a divorce, you just bought shares in Swissair and your nice little house has just been repossessed. And even if you aren’t that misfortunate it’s still a tall order to think positively.

There are too many barriers, distractions, woes and worries. So how do we get thinking positively?
The trick is to manipulate the mind. The mind must be conquered because it is the mind that dominates all aspects of your life. It is the mind that convinces you of what you can and can’t do.

Change begins in the mind – not through advertising, not through nagging, not through peer pressure, not through physical exercise but in the mind.

To understand how change can come about we need to understand how the mind works – both consciously and subconsciously. The conscious mind is your communication centre. It thinks, calculates, plans and directs all the actions of your body and everything you do that you are consciously aware of - what you say, what you choose to eat, whether you support Manchester United or Classic Wanderers (who?) and yes, the decision to read this article is controlled by your conscious mind. These are actions that you are consciously controlling.

The subconscious mind on the other hand doesn’t think, plan or calculate. It just takes in everything we learn and experience in our lifetime. It soaks up information and experiences like a wet sponge.
It stores and recalls every piece of information put into it. It doesn’t make choices; it accepts everything – it doesn’t sift through what’s good and what’s bad. It doesn’t make judgments or decisions. It doesn’t work in a rational or logical way. It does, however, begins forming beliefs based on what we have learnt and experienced – and these beliefs determine how we react to everything in our life.

Responsiveness to ideasThe conscious mind takes up approximately 10% of your total mind, while the subconscious mind makes up the other 90%. What this means is that when you make a decision (a task that is done by the conscious mind) to make changes in your life, that decision is being made by only 10% of the total mind.

The subconscious mind is unaware that a new behaviour is being introduced and lacks the capacity to support it. In some cases, the subconscious mind may not have access to the information that would support the new behaviour. For instance, all smokers were once non-smokers. However, just like a computer may retrieve only certain files or may find some files outdated, the subconscious mind may have access to the information that promotes smoking behaviours and may find the non-smoking behaviors “out-of-date.” Our mindset is formed.

The bottom line is that if we are unhappy with something in our lives, we must do something that will change the beliefs in our subconscious mind. Hypnosis is probably the most effective way of reprogramming your subconscious mind.

I’m simply talking about an increased responsiveness to ideas and suggestions. In fact hypnosis is a natural state for all humans. You’ve been in a trance state many times. You have entered hypnosis whilst day-dreaming, whilst driving (especially true of some Malaysian drivers!) or when watching TV. We’ve all said ‘sorry, I was not focusing on what you said’ – and indeed you were. Your conscious mind was temporarily shut down.

There are many misconceptions about hypnosis, all of them wrong. Contrary to what you may have heard it is absolutely safe, you do remain in complete control, you will never be persuaded to do anything against your will, you can still hear and feel the world around you – and you can come out of it at any time you want to.

You’re not in a coma, you don’t become paralyzed – you are simply in a state of hyper-relaxation and suggestibility.

So how can it help and who does it? Hypnosis has the power to speak directly to your subconscious mind. Through suggestions new and positive data and information can be planted into your subconscious mind.

With time hypnosis overrides negative beliefs stored up over the years. It can change the way you feel about yourself, transform your habits and behaviour, reduce stress, control pain, eliminate fear and convince you of the need to lose weight. This way, as your conscious mind chooses to make the change, your subconscious mind will now be supporting it and so the change becomes more achievable.

A form of therapyAnd just who is going to make these suggestions? The answer is you, either with a little help from a hypnotherapist or on your own through self – hypnosis.

Every day, without realizing it, you give yourself suggestions. Some may be negative ones. “Oh, what’s the point I’ll never pass the test“ As easily as our mind believes the negative suggestions, it will also fall for the positive ones. “I just love going to the gym“

Induce a relaxed enough state and you can convince yourself of almost anything. The hypnotherapist can help induce this relaxed state either in therapy or by teaching you self-hypnosis.

He or she can also help you get to the root cause of the problem. Once under hypnosis the root cause can be eliminated and behaviour changed through guided imagery, positive mental images and direct suggestions.

Here’s one – picture a slim, healthy, non-smoking, confidence oozing, spider loving you. Now I suggest you hunt out Julian Leicester the hypnotherapist.

Hypnosis is an effective form of therapy. It does not use drugs or pills and is direct and swift and therefore cost effective.

It has been widely practiced in the US and Europe for many years and today is a highly sought after therapy by many Malaysians.

Julian is a London trained subconscious specialist with Hypno-Station. He is Malaysia’s most renowned clinical hypnotherapist, media personality, columnist, event host and book author.

6 Mistakes When Buying Life Insurance

One of the most important financial-planning moves you can make is to purchase life insurance. Life insurance is about providing for your family after you're gone. It's about peace of mind and making sure your family is cared for.

1. Don't lie on your application.

One of the worst things you can do is lie on your life insurance application. It may be tempting to fudge your answers to get a better rate -- maybe "forget" to mention a medical condition. According to LIFE, one of the biggest lies is about tobacco use. Many people know that tobacco is bad for their health -- and their life insurance rates -- so they lie about their use.

Other lies involve drug use, depression, income (to qualify for higher coverage amounts) and traffic violations. A life insurance company will probably ask for documentation to back up your medical history, so you could be easily found out -- and denied coverage.

A lie can be the basis for a life insurance company to deny your claim. You could be putting your family's security at risk by lying on your life insurance application.

 

2. Don't wait to buy until you're older.

Older is not wiser in the life insurance market. Life insurance rates are based partially on age. Let's face it: The older you are, the closer you are to death.

Each birthday you pass triggers a higher rate. Your best strategy is to apply for insurance while you are young and healthy and qualify for the best rates.

One of the biggest risks of waiting to buy life insurance is assuming your health will stay the same. Tomorrow's health is guaranteed to no one. Just because you're healthy and can qualify for affordable life insurance today doesn't mean you can qualify for affordable life insurance tomorrow ... or even qualify for life insurance at all.

3. Don't visit your doctor right before the insurance medical exam.

As tempting as it is to purchase life insurance that doesn't require a medical exam, those policies might not offer the coverage you need at a price you can afford. Shop around to see what's available; chances are, you will need a medical exam to get the best deal.

But it might not be in your best interest to see a doctor right before your medical exam from the insurance company. Realize this: If a problem crops up at the appointment, the life insurance company will learn about it when it reviews your medical records. No, you shouldn't avoid your regular checkups or treatment. But scheduling an extra checkup with your doctor just before you apply for life insurance could be counterproductive.

And be wary about putting off your insurance until you lose a little weight. Too often, you have lofty goals to lose 10 or 15 pounds, only to discover that time continues to slip by and your family still isn't protected. The best time to get life insurance, if you don't have it, is now. You might pay higher rates initially, but it is possible to ask for a rate reclassification later. After you kick the smoking habit or lose 15 pounds to put you in a different class, you can ask your insurance company to re-evaluate your situation and lower your premiums.

4. Don't purchase too little insurance.

One of the biggest ways to mess up your life insurance purchase is to get too little. Don't be one of the 50 million people who don't have adequate life insurance. That's a surefire way to ensure your family struggles after your death.

Rather than follow a rule of thumb like "buy eight times your salary," look at your individual situation. Consider your debts, as well as the income that your family is likely to lose from your passing. You want coverage that will pay off all your debt as well as provide income for your family. On top of that, don't forget about the other work-based benefits you receive. Health insurance, retirement account contributions and child care are all perks that your employer may be subsidizing -- and that disappears once you are gone.

Be sure to sit down and really hash out what expenses your family is likely to pay over the next 15 to 20 years, according to the ages of your dependents and the obligations your family has. Buy enough insurance to see them through.

5. Don't plan an exotic vacation.

Avoid planning vacations to exotic lands until well after your policy goes into effect. Some insurance companies want to know your travel plans. If you want to go on a whitewater adventure in South America, or a safari to a country known for its diseases, you could run into trouble. And life insurance companies are especially wary of those who plan to live for long periods of time in countries experiencing political unrest or other dangers.

Make those kinds of travel plans further down the road. You don't want to plan exciting travel until at least two years after you have secured your life insurance policy. During the application process, your entire outlook should be to reduce your risk of danger as much as you can -- without lying, of course.

6. Don't have a casual smoke.

Thinking of lighting up a cigarette while out hanging with friends? Think twice if you have a life insurance medical exam on the horizon. We already know that smoking increases your health risks, and smoking also increases your life insurance premiums -- a lot.

Smokers, even in good health, can expect to pay two, three or sometimes four times the amount that nonsmokers pay for life insurance. I once had a client who was applying for life insurance as a nonsmoker, but the medical exam showed nicotine. 

The cause? A few days prior while enjoying a night on the town, the client had shared a smoke with some friends. That one smoke proved to be costly.

In the end, your life insurance policy is what stands between your family and financial ruin, should something happen to you. Get educated about life insurance, and purchase a policy as soon as you can.

Life Safety Net

Fallout from the long economic downturn has made it more important than ever for families to insulate themselves against financial shock. And yet, ownership of individual life insurance stands at a 50-year low. That represents a big risk to financial security in a lot of American households.

 

For many families, lack of coverage isn't necessarily a money issue. It comes down to information - or, more precisely, a dearth of it. There are fewer agents selling life insurance than there were a generation ago, and they have many more financial products to market, from retirement savings vehicles to mutual funds. So as the pool of advisers shrinks, the time these financial professionals spend talking about life insurance matters has gotten squeezed, too. This has created a knowledge gap for potential policyholders.

 

Imagine for a moment you were shopping for a car but thought the cost was several times the real sticker price. You'd probably look for the smallest, most entry-level vehicle you could find, if you weren't dissuaded from buying altogether. That's exactly what occurs with life insurance - 55 percent of people surveyed in 2010 said they didn't think they could afford coverage, yet they were overestimating policy costs by a multiple of three or four.

 

Another hurdle is knowing how much coverage is enough, and most people don't have a good handle on their needs. Using the car analogy again, you don't buy a sub-compact car if you're planning on doing a lot of off-roading. Similarly, a young family with many children will have different insurance needs than an empty-nester couple nearing retirement.

 

There are rough rules-of-thumb for estimating coverage, but it's better to keep things simple. What debts would your loved ones face if you died tomorrow? And what income would your family need to get by, over what period of time?

 

Remember, insurance needs are not necessarily constant. Life insurance protection may not be required after retirement if a person has saved and invested well. Until then, however, some life insurance coverage is a lot better than none.

Life Insurance Projection - Nightmares

Fourteen of 31 respondents to Milliman's fifth annual comprehensive study of universal life and indexed universal Life issues reported they re-priced their UL with secondary guarantee in the last 12 months.

 

The study notes that nearly all the respondents reported that premium rates on the new basis versus the old basis increased.

 

Modifications to secondary guarantee products are anticipated by 15 participants in the next 12 months. Such re-pricing and modifications, the study says, may be driven by the fact that only nine of the survey respondents met their profit goals in 2010 and through the first nine months of 2011.

 

This percentage is the same as that reported for 2009 in the prior Milliman survey. The primary reason cited for failure to meet profit goals continued to be interest earnings.

 

Since 2009, the ULSG market share gradually increased, as the cash accumulation UL share gradually decreased and the current assumption UL share remained flat.

 

The product mix since 2009 changed significantly for many of the survey participants, but many of the changes were offsetting when considered as part of overall survey results. Ten participants reported movement away from ULSG products, with four of the 10 discontinuing sales of ULSG. Seven participants reported movement to ULSG products, with four of the seven discontinuing other UL products.

 

The study found that total indexed UL sales and total accumulation IUL sales were higher in the first three quarters of 2011 than in all of 2010. The level of sales reported for both periods was higher than sales reported for the two preceding calendar years by survey participants.

Warning: Weak Interest Rates

Some of Canada's biggest insurance companies are turning their focus to Asia and the lucrative wealth management business as they work to offset losses in their traditional markets due to persistently low interest rates.

Manulife Financial Corp. (TSX:MFC) and rival Sun Life Financial (TSX:SLF) reported second-quarter earnings that were battered by the impact of volatile equity markets and weak interest rates on their investments.

Each forecasted low interest rates could cost them hundreds of millions of dollars in the next few years if rates they stay where they are.

And each noted they would focus on expanding footprints in Asia and growing asset management businesses in attempts to reposition themselves in the low-interest rate economy.

Manulife, which reported a $300-million loss in its second quarter on Thursday, said it expects to book additional charges of $400 million in 2013 if interest rates stay at current low levels.

The Canadian insurance giants have blamed challenging equity markets and interest rates, which have been hitting insurers who invest much of the money they make from policyholders.
Falling stocks and bond yields — battered by fears of a slowing global economy — reduce projected future returns on investment portfolios, which are used to guarantee future policy payouts.

Meanwhile, wealth management has been an increasingly attractive niche for financial services firms as baby boomers age and younger generations see employee-sponsored pension plans erode — phenomena that have led individuals to focus on retirement savings plans and investment portfolios.

And Asian markets, with expanding middle classes, are seeing steady increases in demand for insurance policies and investment plans.

Fixed Income For Life Insurance Agents

Taking cue from its Japanese partner Nippon Life's strategy, India's Reliance Life is introducing fixed salary for insurance advisors to reduce attrition and to further improve customer services. The Anil Ambani-led Reliance group firm is launching the salary-based insurance agent drive in semi-urban and rural areas.

"Yes, we are in the process to introduce a fixed income system for insurance agents under our new format called career agent. The basic impulse is to provide a minimum fixed salary to agents in order to infuse a sense of security and professional commitment," Reliance Life Insurance President.

 

The company plans to hire 5,500 career agents across 200 branches by the end this financial year.
"We have already started recruiting career sales agents and deputing them in around 100 branches pan-India. We will give a fixed stipend to insurance agents for the first six months during their training tenure and help them pass the licensing examination, before they become part of the company," Ghosh said.

Nippon Life Insurance, 26 per cent partner in the company, has all its insurance agents on its pay-roll. This fixed salary mechanism has helped the Japanese firm retain the talent pool and provide dedicated services to customers.

In India, insurance agents work on commission basis and have uncertain income level. Hence, the industry is facing a very high attrition rate.

"We are trying to plug those gaps through our new programme and provide training to young people with career paths. We will recruit new people on the back of fixed salary-cum-variable incentives to enable them connected with the company for a longer period of time," Ghosh said.

Prudential : 180,000 Agents In Indonesia

Prudential Life Insurance experienced strong growth in the first half of 2012, with total income rising by 41.5 percent to Rp 9 trillion ($945 million), compared with the same period last year.

The company, which has more than 1.5 million policy holders, said the success was supported by Rp 4.9 trillion in premium income from new business — a 43.7 percent increase from 2011.

Shariah business was also up 25.7 percent to a total premium inflow of Rp 496 billion.

“We have maintained our business momentum and delivered consistent growth over the first half of 2012,” said William Kuan, Prudential Life Insurance chief executive. “This is a testament to the support and trust of our customers and the hard work of our sales force and staff who have helped more and more Indonesians acquire life insurance protection.”

The company paid out Rp 2.8 trillion in claims and benefits in the first half of the year, it said.

“We will continue giving back to the public through various efforts, whether through charitable activities, investing back into the economy, recruitment and supporting the welfare of more than 180,000 sales force and 1,500 staff,” Kuan said.

Prudential Indonesia is the biggest contributor to the Prudential Group’s Asian business, contributing 23 percent of the total Asian new business by annualized premium equivalent, as of June 30.

Allianz & OSK Trustees - Clever Teamworking

Allianz Malaysia Bhd and OSK Trustees Bhd have teamed up to provide more comprehensive services for clients, especially private trusts to protect their wealth
.
"While we provide a value-added service to our customers, OSK Trustees Bhd will also be able to reach out to a larger spectrum of clients," Allianz Life Insurance chief executive officer Jen Reisch said on Wednesday.

OSK Trustees director Woo Lai Mei said less than 10% of Malaysians had set up private trusts to protect their wealth.

It was reported that RM42bil of assets that were tied up as no wills were written to enable smooth succession.

She said OSK Trustees would provide training for Allianz's insurance agents to make clients more aware of this growing need.

MTUC Wants More

The Malaysian Trades Union Congress (MTUC) has called on the Employees Provident Fund (EPF) board to immediately restore the old formula for the payment of death and incapacitation benefits to the 6.28 million active members.

Under that formula, members were entitled to a one-off payment of between RM1,000 and RM30,000 from the EPF’s Death and Incapacitation Benefit Fund, said MTUC vice-president A Balasubramaniam.

Currently, however, they were only paid RM5,000 for incapacitation and a flat rate of RM2,500 for death from the fund, he told Bernama here today.

He pointed out that the payment was inadequate, given that Malaysia did not have any unemployment benefits system or a national insurance scheme for private sector workers.

It also did not have a national health policy to support the unemployed and their families when the main breadwinner suddenly died or was incapacitated, he said.

Balasubramaniam said, according to MTUC’s studies, those members most prone to accidents and sickness were menial and outdoor workers.

He added that since the cost of living had gone up, it was only appropriate that the fund be restored to the old quantum of payment.

Life Insurance Ownership

Sale of its Asia insurance operations will test the resolve of regulators in countries such as Malaysia and Thailand where foreign insurers are barred from owning 100 percent of domestic life insurance companies.

Foreign insurers eager to tap Asia's rapid premium growth often face regulatory hurdles due to ownership restrictions. Here is a snap shot of foreign ownership limits in Asia. Australia, Hong Kong, Japan, South Korea, Singapore and Taiwan are among the Asian markets that offer 100 percent foreign ownership in the life insurance industry

INDIA
India allows insurance companies to own a maximum 26 percent stake in insurance joint ventures. Domestic and foreign insurers, which have invested billions of dollars in India over the last decade, have been lobbying the government for years to raise the limit to 49 percent from 26 percent.
The Indian insurance sector was thrown open to private players in 2000, facilitating the entry of global majors including ING and British insurer Prudential (PRU.L), as well as local companies.
Life insurance penetration in India is about 4.4 percent of the country's gross domestic product in terms of total premiums underwritten each year. That compares with 8 percent in Japan and 9.5 percent in Britain.

CHINA
Foreign stakes in Chinese life insurance ventures are capped at 50 percent, which curbs overseas investors' ambition to expand in China. Foreign insurers also suffer from lengthy regulatory approval procedures when they apply for new branch licences. Last year, foreign life and non-life insurers had market shares in China of just 4 percent and 1 percent, respectively. Due to the challenges, some overseas firms have reduced their presence. Canada's Sun Life (SLF.TO), which two years ago halved its stake in a 50-50 joint venture formed with China Everbright Group a decade ago to qualify as a domestic company, is one example.

MALAYSIA
In 2009, Malaysian regulator Bank Negara issued new guidelines limiting foreign ownership in the insurance sector to 70 percent. However, Bank Negara has said it is open to allowing foreigners to own larger stakes on a case-by-case basis for companies who can facilitate industry consolidation.

THAILAND
Foreign ownership is limited to 49 percent. The finance ministry can allow a foreign company to raise its holding above that limit, but requests are reviewed on a case-by-case basis and exemptions are rare. Recently, Japan's Tokio Marine Holdings was permitted to increase its holding in a Thai affiliate, Tokio Marine Sri Muang Insurance, after the Thai firm was forced to raise funds to cover insurance claims because of last year's floods.

INDONESIA
Indonesia is clamping down on foreign ownership in its banking sector, but so far has left the rules governing its insurance sector untouched. Foreign owners are allowed an 80 percent stake in Indonesian insurers. Insurance penetration is low, with some estimates putting it at less than 1 percent of GDP. As a result, Indonesia has attracted the attention of foreign insurance executives around the world. Panin Financial's life insurance unit, the life insurance unit of state-owned lender BNI, and general insurance firm Asuransi Jaya Proteksi are all looking to sell stakes to foreign investors.

Mandarin Orange is Smarter Than Washinton Apple

In China’s booming smartphone market, which is set this year to overtake the United States as the world’s largest, a host of little-known local firms are primed with cheap phones to squeeze market share from US giant Apple Inc’s iPhone.

In the latest local challenge to the iPhone, Xiaomi Technology today launched the successor to its popular MiOne (MI) smartphone. The MI2 has specifications that exceed those of the iPhone 4S and sells for less than half the price.

Smartphones from Xiaomi – founded only two years ago but already worth more than Blackberry maker Research in Motion, according to private market valuations – have proved so popular they sell out in minutes after going on sale online.

The company, founded by CEO Lei Jun, said last month its first-half revenue was close to US$1 billion (RM3.13 billion) as it sold more than 3 million phones.

Mirroring Apple’s annual worldwide developers conference (WWDC), where devotees would pay to listen to Steve Jobs showcasing new products, the informally-clad Lei charged Xiaomi fans 199 yuan (RM97.96) to attend the Beijing launch, with the proceeds going to charity. Over 1,000 people flocked to the event.

While iPhone sales will increase in China, Apple’s market share may stagnate or even dip as the market’s changing demographics mean the iPhone flourishes in just a handful of wealthy Chinese cities, analysts said.

YES - Cheaper Car

PKR’s aim of promising to make cars cheaper if the Pakatan Rakyat opposition pact takes over power in the upcoming general election has taken to the road, with the launch of a nationwide campaign to promote the issue.

According to reports, the party kicked off its Turunkan Harga Kereta (Lower Car Prices) campaign yesterday, which will see 50,000 vehicle stickers and flyers explaining PKR’s proposal being distributed at tollbooths throughout the country this coming weekend.

The timing coincides with the expected surge in traffic during the coming week. “The campaign will take advantage of the ‘balik kampung’ holidays in conjunction with Hari Raya Aidilfitri, so information about Keadilan’s proposal to reduce car prices by gradual abolishment of excise duties will reach the whole country,” PKR’s communications director Nik Nazmi Nik Ahmad told reporters.

The logo for the campaign – which has its own Facebook page – does not represent any political element so all Malaysians, regardless of political belief and background, can unite and agree on the matter, he added.

PKR has promised to make cars a cheaper proposition for the rakyat by reducing the triple-tax burden – excise and import duties as well as sales tax – imposed on cars in the country. While slashing excise duties would cut government income by around RM8 billion, the party said that revenue could be earned through other means without having to impose additional financial burden on taxpayers, it was earlier reported.

It said that should it come into power, the party would offer a complete revamp of the National Automotive Policy (NAP) so that car prices will be made competitive and actual costs reflected, with the aim of improving the disposable income of Malaysians and reducing household debts.

SWOT Analysis

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By definition, Strengths (S) and Weaknesses (W) are considered to be internal factors over which you have some measure of control. Also, by definition, Opportunities (O) and Threats (T) are considered to be external factors over which you have essentially no control.

SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. Its key purpose is to identify the strategies that will create a firm specific business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates. In other words, it is the foundation for evaluating the internal potential and limitations and the probable/likely opportunities and threats from the external environment. It views all positive and negative factors inside and outside the firm that affect the success. A consistent study of the environment in which the firm operates helps in forecasting/predicting the changing trends and also helps in including them in the decision-making process of the organization.

An overview of the four factors (Strengths, Weaknesses, Opportunities and Threats) is given below-

1. Strengths- Strengths are the qualities that enable us to accomplish the organization’s mission. These are the basis on which continued success can be made and continued/sustained. Strengths can be either tangible or intangible. These are what you are well-versed in or what you have expertise in, the traits and qualities your employees possess (individually and as a team) and the distinct features that give your organization its consistency. Strengths are the beneficial aspects of the organization or the capabilities of an organization, which includes human competencies, process capabilities, financial resources, products and services, customer goodwill and brand loyalty. Examples of organizational strengths are huge financial resources, broad product line, no debt, committed employees, etc.
   
   
2. Weaknesses- Weaknesses are the qualities that prevent us from accomplishing our mission and achieving our full potential. These weaknesses deteriorate influences on the organizational success and growth. Weaknesses are the factors which do not meet the standards we feel they should meet. Weaknesses in an organization may be depreciating machinery, insufficient research and development facilities, narrow product range, poor decision-making, etc. Weaknesses are controllable. They must be minimized and eliminated. For instance - to overcome obsolete machinery, new machinery can be purchased. Other examples of organizational weaknesses are huge debts, high employee turnover, complex decision making process, narrow product range, large wastage of raw materials, etc.
   
   
3. Opportunities- Opportunities are presented by the environment within which our organization operates. These arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable. Organizations can gain competitive advantage by making use of opportunities. Organization should be careful and recognize the opportunities and grasp them whenever they arise. Selecting the targets that will best serve the clients while getting desired results is a difficult task. Opportunities may arise from market, competition, industry/government and technology. Increasing demand for telecommunications accompanied by deregulation is a great opportunity for new firms to enter telecom sector and compete with existing firms for revenue.
   
   
4. Threats- Threats arise when conditions in external environment jeopardize the reliability and profitability of the organization’s business. They compound the vulnerability when they relate to the weaknesses. Threats are uncontrollable. When a threat comes, the stability and survival can be at stake. Examples of threats are - unrest among employees; ever changing technology; increasing competition leading to excess capacity, price wars and reducing industry profits; etc.

Advantages of SWOT Analysis

SWOT Analysis is instrumental in strategy formulation and selection. It is a strong tool, but it involves a great subjective element. It is best when used as a guide, and not as a prescription. Successful businesses build on their strengths, correct their weakness and protect against internal weaknesses and external threats. They also keep a watch on their overall business environment and recognize and exploit new opportunities faster than its competitors.
SWOT Analysis helps in strategic planning in following manner-

1. It is a source of information for strategic planning.
2. Builds organization’s strengths.
3. Reverse its weaknesses.
4. Maximize its response to opportunities.
5. Overcome organization’s threats.
6. It helps in identifying core competencies of the firm.
7. It helps in setting of objectives for strategic planning.
8. It helps in knowing past, present and future so that by using past and current data, future plans can be chalked out.

SWOT Analysis provide information that helps in synchronizing the firm’s resources and capabilities with the competitive environment in which the firm operates.

SWOT ANALYSIS FRAMEWORK Limitations of SWOT Analysis SWOT Analysis is not free from its limitations. It may cause organizations to view circumstances as very simple because of which the organizations might overlook certain key strategic contact which may occur. Moreover, categorizing aspects as strengths, weaknesses, opportunities and threats might be very subjective as there is great degree of uncertainty in market. SWOT Analysis does stress upon the significance of these four aspects, but it does not tell how an organization can identify these aspects for itself. There are certain limitations of SWOT Analysis which are not in control of management. These include- Price increase; Inputs/raw materials; Government legislation; Economic environment; Searching a new market for the product which is not having overseas market due to import restrictions; etc. Internal limitations may include- Insufficient research and development facilities; Faulty products due to poor quality control; Poor industrial relations; Lack of skilled and efficient labour; etc

Strategy Defined

The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army) and “ago” (meaning leading/moving). Strategy is an action that managers take to attain one or more of the organization’s goals. Strategy can also be defined as “A general direction set for the company and its various components to achieve a desired state in the future. Strategy results from the detailed strategic planning process”. A strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within the organizational environment so as to meet the present objectives. While planning a strategy it is essential to consider that decisions are not taken in a vaccum and that any act taken by a firm is likely to be met by a reaction from those affected, competitors, customers, employees or suppliers. Strategy can also be defined as knowledge of the goals, the uncertainty of events

and the need to take into consideration the likely or actual behavior of others. Strategy is the blueprint of decisions in an organization that shows its objectives and goals, reduces the key policies, and plans for achieving these goals, and defines the business the company is to carry on, the type of economic and human organization it wants to be, and the contribution it plans to make to its shareholders, customers and society at large.

Features of Strategy

1. Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment.
2. Strategy deals with long term developments rather than routine operations, i.e. it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future.
3. Strategy is created to take into account the probable behavior of customers and competitors. Strategies dealing with employees will predict the employee behavior.

Strategy is a well defined roadmap of an organization. It defines the overall mission, vision and direction of an organization. The objective of a strategy is to maximize an organization’s strengths and to minimize the strengths of the competitors.

Strategy, in short, bridges the gap between “where we are” and “where we want to be”.

Strategic Leadership

Strategic leadership refers to a manger’s potential to express a strategic vision for the organization, or a part of the organization, and to motivate and persuade others to acquire that vision.

Strategic leadership can also be defined as utilizing strategy in the management of employees. It is the potential to influence organizational members and to execute organizational change. Strategic leaders create organizational structure, allocate resources and express strategic vision. Strategic leaders work in an ambiguous environment on very difficult issues that influence and are influenced by occasions and organizations external to their own.

The main objective of strategic leadership is strategic productivity. Another aim of strategic leadership is to develop an environment in which employees forecast the organization’s needs in context of their own job. Strategic leaders encourage the employees in an organization to follow their own ideas. Strategic leaders make greater use of reward and incentive system for encouraging productive and quality employees to show much better performance for their organization. Functional strategic leadership is about inventiveness, perception, and planning to assist an individual in realizing his objectives and goals.

Strategic leadership requires the potential to foresee and comprehend the work environment. It requires objectivity and potential to look at the broader picture.

A few main traits / characteristics / features / qualities of effective strategic leaders that do lead to superior performance are as follows:

	Loyalty- Powerful and effective leaders demonstrate their loyalty to their vision by their words and actions.
	Keeping them updated- Efficient and effective leaders keep themselves updated about what is happening within their organization. They have various formal and informal sources of information in the organization.
	Judicious use of power- Strategic leaders makes a very wise use of their power. They must play the power game skillfully and try to develop consent for their ideas rather than forcing their ideas upon others. They must push their ideas gradually.
	Have wider perspective/outlook- Strategic leaders just don’t have skills in their narrow specialty but they have a little knowledge about a lot of things.
	Motivation- Strategic leaders must have a zeal for work that goes beyond money and power and also they should have an inclination to achieve goals with energy and determination.
	Compassion- Strategic leaders must understand the views and feelings of their subordinates, and make decisions after considering them.
	Self-control- Strategic leaders must have the potential to control distracting/disturbing moods and desires, i.e., they must think before acting.
	Social skills- Strategic leaders must be friendly and social.
	Self-awareness- Strategic leaders must have the potential to understand their own moods and emotions, as well as their impact on others.
	Readiness to delegate and authorize- Effective leaders are proficient at delegation. They are well aware of the fact that delegation will avoid overloading of responsibilities on the leaders. They also recognize the fact that authorizing the subordinates to make decisions will motivate them a lot.
	Articulacy- Strong leaders are articulate enough to communicate the vision(vision of where the organization should head) to the organizational members in terms that boost those members.
	Constancy/ Reliability- Strategic leaders constantly convey their vision until it becomes a component of organizational culture.

To conclude, Strategic leaders can create vision, express vision, passionately possess vision and persistently drive it to accomplishment

HSBC Insurance Walked Off Vietnam

HSBC Holdings has put its Vietnam insurance business (18 percent stake in government-controlled Baoviet Holdings) on the block, in a deal that could fetch about $400 million for Europe's biggest bank as it pushes to exit non-core operations globally.

The stake has a market value of $250 million, but HSBC is expecting a hefty premium due to Baoviet's market position and the potential to raise the ownership level at a later stage. Unlisted Sumitomo Life is among Japan's four biggest life insurance companies.

HSBC has been pulling back from unprofitable markets and businesses as part of a three-year recovery plan. It has already sold 28 businesses, taken 15,000 staff off its payroll, and released about $55 billion in risk-weighted assets under the plan.

The planned exit from Vietnam comes four months after it sold its global general insurance business to AXA SA and Australia's QBE Insurance Group Ltd for $914 million.

Across Asia, HSBC owns and operates insurance businesses in India, Taiwan, Malaysia, South Korea, China, Singapore and Hong Kong, of which, Hong Kong is its biggest. It also owns a 16 percent stake in China's Ping An Insurance, valued at about $11 billion.

VIETNAM BUY
HSBC paid a total of $360 million to buy the 18 percent stake, which was acquired in two tranches in 2007 and 2009. Under the deal struck in 2007, HSBC committed to hold its shares for a minimum period of five years during which it had the option to increase the stake to 25 percent.

Hanoi headquartered Baoviet had more than 5,200 employees, 30,000-plus consultants and more than 130 branches, according to a fact sheet dated March 2011.

Vietnam's rapidly growing economy is attracting foreign insurers. In May, Canada's Sun Life Financial Inc formed a joint venture with Vietnam's PVI Holdings, allowing the Canadian insurer to sell insurance products.

Vietnam has 29 non-life insurers and 14 life insurers, according to an April report from insurance ratings agency A.M. Best. Total insurance revenue rose 21.6 percent to 37.5 trillion dong ($1.8 billion) in 2011, according to the report, which cited statistics from the Association of Vietnamese Insurers.

A combination of low insurance penetration -- in both the life and non-life insurance markets in Vietnam penetration is less than 1 percent, according to the A.M. Best report -- and a growing middle class could make it attractive to insurance companies forced to look outside of their home markets for growth.

Vietnam's real GDP grew by 5.9 percent in 2011, according to the International Monetary Fund. Its growth is forecast to ease a bit this year and then speed up again in 2013.

However, high inflation could hurt consumer spending and make it difficult for insurers to sell policies. Inflation in Vietnam, the highest in Asia last year, peaked at 23 percent in August, and the rate for all of 2011 was 18.58 percent, though it has moderated recently.

Manulife Asian Offensive

Even as Europe and the United States continue to teeter on the edge of fiscal chaos, Asia remains a beacon of hope for many companies looking for areas to expand and pick up the slack. Manulife is one of those companies that have put the specter of 2008’s financial crisis behind them. 2011’s performance saw a swing of $1.8 billion in new income over 2010, turning a tiny profit while it turns its attention more directly towards the markets that have the greatest opportunity for growth.

The region is experiencing unprecedented growth, with a fast growing middles class looking for more of the creature comforts that come with improving fortunes. As more and more people seek the trappings of a better life, they also seek ways to protect and preserve what they have. As such, insurance is a leading indicator of middle class income growth as people emerge from a subsistence-based lifestyle, moving from living day to day and focusing more on planning for the future and protecting their families and property.

Rebalancing the Portfolio
Shrinking wealth management sales in Canada (down 5% YoY) and the U.S. (down 12% YoY) in Q1 of 2012 only further highlight the potential in Asia (up 7% YoY). On the insurance side of the business, Asia saw 31% YoY growth to $365 million and a 79% increase in Canada, while the U.S. languished, losing 1%. This drove a 35% increase overall in their insurance business in 1Q 2012. They manage $512 billion in assets, up 3.5% over Q4 2011.

Manulife has operated in Asia for over 115 years but is now ramping up operations in the region to take advantage of the growing market. The company estimates that within five years the world’s middle class will reach the 1 billion mark, with Asia accounting for roughly 85% of that. Manulife reported record revenues from the region in Q1 2012. Asia now represents the highest percentage of their insurance sales which have doubled from ~5% of total revenue to more than 10% since Q1 2011.

To service this growing market Manulife has plans to aggressively grow the number of agents in the region over the next five years to 100,000, nearly double what it has at the moment. The company recently became the first foreign insurance provider to operate in Cambodia, opening its main office in Phnom Penh with about 40 staff, which it plans to grow to over 1,000 by 2015.

Manulife’s Senior Vice President in Cambodia David Wong expressed that the company is committed to the region, saying that Manulife “sees the potential of Cambodia, with a population of about 15 million and an emerging middle class, as a growth area in the ASEAN countries. The commencement of operations in Phnom Penh reflects Manulife's commitment as a strong, reliable company to the ASEAN region in general and Cambodia in particular."

Manulife is already operating in Indonesia and Vietnam, both major, relatively untapped markets, with a combined population nearly the size of the U.S. between them. In addition to sales operations, the company has initiated a campaign to educate the market on the benefits of having insurance coverage and protecting their family and assets.

War of Attrition
As the financial situation in the west deteriorates, those that survive are in a great position to pick up distressed assets on the cheap. Manulife is one of the last bidders standing in the quest to acquire ING’s Asian business, which is under orders from the E.U. to divest themselves of their insurance business in the next year to qualify for their bailout. This is a potential $7 billion deal at this point.

American insurers Metlife  and Prudential, who are Manulife’s biggest competitors in Asia, have recused themselves as bidders in the deal, leaving only Korea Life Insurance and KB Financial group as the other second round bidders.

They are also bidding against Prudential for Aviva’s stake in their Malaysian insurance joint venture with CIMB group (CIMB:MK). While a much smaller deal, ones like this will continues to dot the landscape as asset deflation separates those with unencumbered balance sheets from those without.

.For now, it looks like Manulife is well-positioned all across Asia to pick up the pieces.

ING is Packing But Prudential Is Visiting

Prudential, Britain's biggest insurer, wants to expand its foothold in emerging southeast Asian economies after the region drove a better than expected 13 percent increase in its half-year profit. The 160-year old insurer, which relies on fast-growing Asia for 45 percent of its sales, plans to enter Cambodia and is also considering a move into Myanmar, Chief Executive Tidjane Thiam.

Thiam said less developed Asian economies where take-up of insurance is low had the potential to drive "double growth" as rising economic expansion encouraged more people to insure themselves as well as others to take on more cover.

Profits at Prudential's Asian division, which spans 13 markets including Hong Kong, Indonesia and Malaysia, rose 20 percent in the first six months of the year, fuelling a 13 percent increase in group operating profit to 1.16 billion pounds ($1.81 billion).

Meanwhile Prudential, which warned in February it might quit Britain to avoid the European Union's proposed new Solvency II capital rules for insurers, said it was still weighing up a potential move in case the new regime proves too onerous.

Prudential is concerned the new regulations could force it to raise capital requirements at its Jackson National Life business in the United States, making it uncompetitive against local rivals. There has long been speculation Prudential could move to Hong Kong, irrespective of Solvency II,  in recognition of its growing focus on Asia.

Thiam said the company was on track to achieve its target of doubling its 2009 operating profit in Asia by 2013. That would allow the Asian business to fund itself securely, giving Prudential the option of breaking itself up, analysts have said.

Critical Illnesses

Is the treatment for angioplasty covered?
Our standard list of CI definitions has about 39 conditions of which companies are allowed to choose a maximum of 36 conditions. Quite a few of the life insurers do include angioplasty in their list of 36 CI though not all do. Angioplasty is covered up to 10% of the sum assured or to a maximum of RM25,000 — the reason being that the benefit amount must be in relation to the severity of the CI condition suffered.

Generally, treatment with one or two stents the total cost incurred would be within RM25,000. If 100% sum assured is paid, and subsequently the insured has a serious CI (e.g. failure of angioplasty and he then needs bypass surgery), the insured would have no benefit amount left to fall back on.

Also a CI plan should not be a replacement of a medical plan, in that the CI plans are meant only to provide top-up benefit for medical cost incurred. The CI plan should also enable an insured to meet other expenses incurred as a result of the CI e.g. loss of income due to temporary inability to return to work.

Thus in the case for angioplasty, an insured is likely able to resume work much faster as opposed to for example a case of a stroke, where the insured may be unable to return to his previous job due to residual paralysis.

Are there any plans to review the current definitions to reflect the progress and development of medical science, especially in the areas of heart attack and surgery?

LIAM has just reviewed the definitions for the standard CI e.g. for heart attack to ensure the severity of heart attack is in line with what the product was intended to cover and it was priced for.

Insurance companies are definitely keeping up with the advancements in medicine, realising now that it is essential to start to cover for earlier stages of critical diseases to allow hopefully for early intervention and to reduce risk of illness progression.

Thus quite a few companies have launched early stage CI products. These definitions have not been standardised by LIAM and companies choose which conditions they want to cover (usually based on consumer need and affordability).

For instance, under early CI a company offers cover on diagnosis of single vessel and double vessel coronary artery disease. However, the percentage of Sum Assured paid will be limited as per contract. Also early stage CI products often cover for corrective procedures via intra-arterial/key hole surgery as opposed to open surgery.

Does a CI plan cover all types of treatment?

The severity of each illness and treatment is stated in the definitions. Life insurance companies want to make the CI plan affordable to the public and in the event of a critical sickness, you have your policy to take care of.

On the other hand, if the insured purchase insurance coverage and requests that all the critical diseases be taken care of irrespective of the damage and method of treatment, the premium of such cover will be substantial.

Not many are willing to subscribe to such a tailor-made policy although companies do have them when requested. It is important to note that insurers’ claims decisions are made by referencing objective evidence and they are based on the conditions stated in the contract.

Insurers also highlight the exclusion clauses to provide freedom of choice to potential customers at the point of purchase.

Not Dreaming Big Enough

Here are Six Reasons That You Are Not Dreaming Big Enough…

Don’t Have a Clear Dream – Do you know what your dream really is? You say you want to be a successful. What does that mean? You say you want to be a writer. Of what? You say you want a new career. Doing what? You must be clear in your dreams. Whether it is to be a best-selling author or an expert in your field. Be specific about what you want to accomplish.

Don’t Know Your Own Limits – Many people aim too low in their dreams because they underestimate their own abilities. The truth is, you don’t know your personal limits until you test them. I promise you that you are stronger than you think. Push yourself and stretch your dreams.

Don’t Have the Discipline – Too many people flit from one thought to another. One day they dream of owning their own business, the next they want to be an actor. They have settled with the job they have because they don’t have the discipline to follow through on any one thing. Choose your dream and be resolute in your pursuit.

Lack of Expertise/Skills – People let their dreams slip and use the excuse, “I don’t know how to do that.” Well, get out there and LEARN. Pay your dues, put in the hard work, and stick with it. (Refer back to #3). No one starts as an expert or master in their field.

There Are Obstacles in Your Way - There are always going to be things in your way of your dreams. (Otherwise, they wouldn’t be dreams.) Sometimes, they are small things, other times they are brick walls. That shouldn’t stop you. Obstacles are there to make you prove how badly you want your dreams.

You Are Scared of Failure – When you are scared of being unsuccessful, you set your sights too low. If I pursue that dream, I might fail. It’s easier to say where I am. When was the last time you allowed yourself to fail.