AXA Sue Customer For Complaining

If a disgruntled customer emails and calls a company repeatedly and uses vulgar and threatening language towards the employees, can a court rule that he is harassing them and order him to stop?

A High Court judge does not think so, saying that laws presently do not provide for civil remedies against “socially and morally indefensible” conduct.

Justice Choo Han Teck pointed this out in dismissing AXA Insurance Singapore’s bid to stop a customer from “harassing, alarming, and distressing” its employees for good, in a judgment that was released yesterday.

Mr Chandran Natesan had purportedly sent 19 emails and made seven phone calls over nine working days to several of his insurer’s employees while making a claim for an accident involving his motorcycle on June 8. The company alleged that he used vulgar and threatening language “on a number of these occasions”.

Arguing that Mr Chandran’s action amounted to a tort of nuisance, AXA on Aug 1 sought to get the court to order him to stop.

Dismissing the application, Justice Choo noted that laws now only make “harassment” a criminal offence — in the Miscellaneous Offences (Public Order and Nuisance) Act — but Parliament has not defined what constitutes “harassment” in civil suits.

To the plaintiff, Mr Chandran was deemed to be harassing its workers, but “from the point of the defendant, he was pressing for his rights as a policy-holder”, the judge pointed out.

“It is up to the legislature to determine whether the law should be used to govern annoyance caused by means of letters, emails, and telephone messages and whether the present public order law ought to be expanded to allow a claim for civil remedies,” he said.

Noting that AXA’s claims against Mr Chandran were not established in court — he did not attend the hearing — Justice Choo asked: “If the defendant in this case did not use abusive language, would (his) conduct still be regarded as harassment? Would a loosely recognised law of harassment be used to oppress others and avoid one’s legal obligations?”

He added: “By allowing litigants to sue when they feel harassed when there is no direct contact nor proof of damage, the court may be creating a blockbuster tort which will have unpredictable consequences, some of which may not be desirable.”

Justice Choo also noted that civil action in harassment and laws relating to privacy — for which there have been recent calls — are “complex and connected and must be considered together”.

Lawyers TODAY spoke to said lawsuits against harassment are rare and agreed that a clear definition on what constitutes harassment was needed.

Said Mr Choo Zheng Xi, a lawyer at Peter Low LLC: “You do not want to end up in a situation where an institutional plaintiff tends to silence an individual complainant who might be particularly persistent in his or her complaints. You do not want a situation in the civil courts where the better-resourced party is able to silence the less well-resourced. So a balance needs to be struck.”

Takaful Ahead

The Islamic insurance, or takaful, industry stands somehow in the shadow of the Islamic banking sector, partly because it doesn’t have such a prevalence even in Muslim countries, and also because its business strategies and product offerings still have a lot to catch up. While there is a clear upward trajectory in the industry as demand for participation-based insurance grows in the wake of the Islamic finance boom, takaful needs to become flexible enough to react to a more sophisticated clientele in a market environment that is getting more competitive by the day.


Currently, Malaysia, Saudi Arabia and the nations of the Gulf Cooperation Council (GCC) are the countries where takaful has the greatest prevalence, while, as of late, its popularity grows in other countries such as Indonesia, Jordan, Pakistan and Nigeria.


Furthermore, big multinationals from the conventional finance sector are showing increased interest in takaful, among them many of the world’s largest insurers such as Allianz, AXA, Prudential, Aviva, Aegas and AIG, which are expanding in the takaful sector through takeovers or by joint ventures or by opening takaful windows in relevant countries.


In the GCC, takaful has grown in high double digits in recent years, according to the Global Takaful Report 2017, released at the World Takaful Conference held in April in Dubai. In detail, takaful growth in the GCC stood at a compounded annual growth rate of 18% from 2012 to 2015, while Southeast Asia reported a negative growth of 4% due to currency depreciation and Africa grew 19% in the same period.


Altogether, the global takaful industry was estimated at 14.9bn worth of gross written premiums by the end of 2015, according to the report, which points out that average annual growth is now in the range of between 13% to 14%, which should result in gross written premiums of close to 20bn by the end of 2017.


General takaful, which provides protection to participants against losses arising from perils such as accident, fire, flood, liability and burglary, makes about 83% of the global market share of takaful, while family takaful, which is designed to cover health and mortgage-related risks, occupies the remaining 17%. As per global market share, the CC remains the dominant region for takaful with a global market share of 77%, followed by Southeast Asia at 15%, while Africa and the Levant region, countries such as Pakistan or Bangladesh, as well as a few takaful operators in Western countries, together occupy the remaining market share.


Assets under management of takaful companies, which are allocated to Shariah-compliant investments only, were around 35bn at the end of 2015, and they are expected to grow to over 50bn by 2020, the report says.


There are, as mentioned, also a number of challenges for the takaful market in general. Those are tighter regulations across all jurisdictions, particularly in the GCC and Malaysia, as regulators increase their focus on consumer protection and the implementation of risk-based capital, the report says. 

Takaful companies also are pressured to increase profitability of their operations amid increasing competition in the market space. Currently, many takaful operators are burning capital by failing to implement processes for cost efficiency and productivity and improve operational, sales and marketing strategies by embracing new technologies and tap into new markets to 
increase revenue.

Two other fields where challenges have been identified are product variety and skills development. As for products, takaful offerings are still relatively limited. The existing portfolio of general and family takaful needs to be extended towards investment-linked takaful, retirement takaful, travel takaful, community takaful, legal takaful, products for certain client target groups such as high-net worth individuals and products for special risk groups, such as sportspersons or heavy workers, as well as new variants for corporate insurances for executives, start-ups, entrepreneurs and small and medium enterprises.

Stingy Life Insurers

A number of insurers were stingy in their corporate social responsibility (CSR) donations in the first quarter despite enjoying handsome profits, according to their financial statements Thursday.

Among them, PCA Life, AIA Life, Tong Yang Life, BNP Paribas Cardif Life and AXA General Insurance are facing calls to improve their CSR awareness.

PCA Life did not donate anything in the first quarter though its net profit grew to 2.34 billion won ($2.08 million), up from 1.9 billion a year earlier.

BNP Paribas Cardif Life made a 130,000 won ($116) donation through a charity bazaar, which accounted for 0.002 percent of its 8.4 billion won net profit in the quarter. The company netted a 3.2 billion won loss a year ago.

Larger insurers were not so different. AIA Life made a 5.78 million won donation in the first quarter, or 0.007 percent of its 80.37 billion won net profit. Tong Yang Life donated 8 million won, also 0.007 percent of 115.88 billion won net profit.

AXA General Insurance made a 5 million won donation, or 0.03 percent of its 16.56 billion won net profit. Leading insurers such as Samsung Life and Samsung Fire made donations of 0.1 percent and 0.43 percent, respectively, of their net profits. 

Insurers argue that they typically make big donations in the final months of the year. Still, critics point out that they are too tight-fisted.
"They don't have an obligation to contribute a part of their profits to society, but the donations they make are very disappointing," said Cho Nam-hee, head of local civic group Financial Consumer Agency.

"More stunning is the fact that foreign insurers whose head offices are in advanced nations are reluctant to donate. They seem to just care about making profits here, which I think is tantamount to ignoring Korea and the Korean people. I hope they change their policies from now on."
He pointed out that people need to know exactly which companies donate and which don't.

"The regulators and the media will put forth more efforts to let consumers know the amount of donations to put more pressure on insurance companies," he said.

"For example, the financial regulator may make a dedicated website, which shows the social responsibility programs of financial companies, especially insurance firms."

Some insurance companies tried to be responsible corporate citizens. 

Lina Life Korea made a 7.59 billion won donation in the first quarter -- 11.73 percent of its 64.68 billion won net profit. The ratios for Hanwha General Insurance, Mirae Asset Life, Prudential Life and AIG were 4.15 percent, 3.79 percent, 1.97 percent and 1.97 percent, respectively.

Mandatory 30% Local Equity - Malaysia Life

Malaysia’s central bank has asked foreign insurers to raise the proportion of local shareholders in their firms to at least 30%, under an initiative to lift domestic participation in the industry, people familiar with the matter said on Friday.

Foreign ownership of Malaysian insurers was set in 2009 at 70% – or more, if the buyer could help consolidate and rationalize the industry. But some foreign insurers operating in the country could still be wholly owned by their overseas parent.

Bank Negara Malaysia last week sent letters to such wholly owned insurers requesting their foreign parents to reduce their stakes in line with regulation for domestically incorporated insurers, two people said. Recipients included the Malaysian units of Japan’s Tokio Marine Holdings Inc and Hong Kong’s AIA Group Ltd, one of the people said.

The deadline to comply is June 2018, said one of the people, without elaborating on the consequences of non-compliance.

The people declined to be identified as they were not authorized to speak publicly on the matter. Bank Negara Malaysia and the local units of AIA and Tokio Marine did not respond to requests for comment.The expected stake sales are a concern considering the size and timing, one of the people said. Malaysia has only a small number of large local funds and so insurers may have to compete for the same pool of institutional investors, the person said.

“These companies are very large,” the person said. How many Malaysian shareholders are there that will have the appetite and wallet to pick up this sort of stake, and invest this sort of money in that time frame?”

Moreover, regulation restricts firms to buying into no more than one insurer.

“Most of this 100% shareholding is a result of legacy ownership, rather than the foreign shareholders getting special leeway from the central bank,” said Brian Chia, Wong & Partners head of corporate, commercial and securities practice group.

RAM Rating Services Bhd said there were 11 Malaysia-incorporated insurers wholly owned by foreign firms. It said it was too early to deduce whether enforcing the foreign ownership cap would enhance or impede the industry.

“Local ownership is good in that wealth creation from premiums is retained within the country,” the credit-rating firm said. But foreign players can bring innovation and expertise to the local industry.”

More Life Liberalization & Merger

Further consolidation may be in the cards for the Malaysian insurance industry in the years to come as measures to strengthen local insurers and make them more efficient as well as resilient are implemented.

Fitch Ratings said in a report that the country’s insurers had continued to develop positively especially within the context of Asean’s growing economic integration. “Despite the benign global economic outlook, the country’s low insurance penetration, stable domestic consumption and sustained government infrastructure spending will continue to support premium growth, particularly in commercial lines,” it said.

But the rating agency, which has a “neutral” view of the local insurance industry, pointed out that several initiatives will have a profound impact on the industry’s landscape. In particular, it said composite insurers, required to split their life and non-life operations by 2018, could face some challenges to maintain their capitalization.

It believes that these affected insurers may seek external capital or engage in mergers and acquisitions to meet regulatory requirements, especially if their operations lack scale. Fitch also said the second phase of the motor tariff deregulation that starts from July will likely spur further rationalization in the motor segment.

It added that further consumer-focused measures from the life insurance and family takaful framework such as the removal of commission limits, compulsory direct channel distribution, and improved product disclosure in sales documents, will increase the life insurance industry’s professionalism and transparency, while providing insurers with the flexibility to innovate and tailor their cost structures to their respective business and competitive strategies.“Insurers’ margins may compress in the short term as competition intensifies, although we expect the market to remain relatively stable, supported by the profitable fire class, and the pricing and governance requirements that Bank Negara has put in place as part of the transition to safeguard consumers,” it noted.

It said capitalisation remains a key strength of the industry as insurers have consolidated 

risk-based capital ratio of 248.5% last year, well above the regulatory minimum of 130%, supported by ongoing surplus growth, sound underwriting practices and robust regulatory frameworks.

Fitch sees Lloyd’s entry as a positive due to the company’s expertise in specialized risks benefiting ceding companies and other local reinsurers by reducing volatility in underwriting profits. “Local players may also explore collaborative efforts and engage in mutual knowledge sharing with market participants, thereby improving overall insurance penetration, and reduce existing protection gaps,” it said.

OCBC Al-Amin Takaful

OCBC Al-Amin Bank Bhd is strengthening its footing in the bancatakaful business through its maiden distribution of a regular contribution term takaful plan, the Great Eastern Takaful Bhd One Plan-i.

Distributed exclusively by OCBC Al-Amin, it is distinctive for its high coverage at an affordable contribution. OCBC Al-Amin Chief Executive Officer Syed Abdull Aziz Syed Kechik, said the offering was timely in light of the bank's quest to expand its product shelf to include family takaful, especially considering the growing awareness of life and medical insurance/takaful as a critical element of the business.

According to Ernst and Young and the Malaysia Takaful Association, the current market penetration rate of Malaysia's family takaful sector stands at only 14.5 per cent, compared to that of life insurance at 41.2 per cent.

"Clearly, there is potential for takaful to grow, especially in the emerging affluent segment. In future, we will continue to roll out more such products, with unique propositions that meet our customers' needs," Syed Abdull Aziz said in a statement today.

Meanwhile, Great Eastern Takaful Chief Executive Officer Zafri Ab Halim said One Plan-i provides a significant 10 per cent increase in coverage every five years, an increment of up to three times, and without any increase in contribution. 

SCAM - Its Too Good To Be True

If something involving money sounds too good to be true, it probably is, said Securities Industry Dispute Resolution Centre (Sidrec) chief executive officer Sujatha Sekhar Naik.

“If it seems unbelievable, and too good a deal, it probably is. Very often those who lose their money to money scams would have had alarm bells going off in their head, but they chose to ignore it — until it is too late and the money is gone. It may be because of desperation due to mounting bills or debt or plain greed,” she said.

In light of recent reports on how the public placed their trust in shady companies and lost their hard-earned money, Sujatha said although such stories are common, it still does not stop people from falling prey to such scams.

“These scammers will first build trust. There will be community leaders like teachers who are part of the organisation and will testify that they have been making money. And yes, for the first year or 18 months there will be profits. But as soon as someone stops paying or someone takes out more, the scheme will collapse.”

“People must take ownership of their investments. A credible investment organisation or scheme will be registered under financial regulatory bodies like Bank Negara Malaysia or the Securities Commission Malaysia (SC). The information is available online, but if you do not have access to it, you can always call them up to find out if it is a legitimate fund before investing,” she said.

“It is your money, so take ownership of it. You should always be cautious and careful before trusting someone with your money. If you have invested in a licensed organisation, you are protected by law.”

“Any account opened or established must be under your own name. And you must have full control of the accounts. Any instructions to your broker or agent must be in black and white, via either WhatsApp or email. But make sure there is hard evidence on what you have said. Send the message out even if you have spoken over the phone,” Sujatha emphasised.

While Malaysians have grown to be more financially savvy and seek to invest their money for a myriad of reasons, from education for their children to retirement, Sujatha said one should know about the product they have chosen and the risks it carries.

“Do not let the complicated description put you off. Always learn the risks of the product before investing and also about the market conditions that influence your investment.”

Sidrec is an independent corporate body established for the settlement of monetary disputes between investors and Sidrec members who are capital markets services licence holders or are registered by SC.

“We provide free services to resolve any dispute for claims not exceeding RM250,000 that arises with our members which include banks, brokers, fund management companies, unit trust management companies, and private retirement scheme providers and distributors and members of the public,” she said.

Malaysia Liberalize Motor Insurance

Beginning July 1, a new policy on motor insurance coverage comes into effect, giving Malaysians more choices as Bank Negara Malaysia (BNM) introduces flexible pricing for comprehensive and third-party fire and theft insurance products.

The phased liberalization announced by BNM in June last year is a game changer for the insurance industry as motor and fire classes account for 66% of the general insurance market. From July, premium pricing for motor insurance products will be determined by individual insurers and takaful operators.

This meant consumers could shop around several insurance companies to choose the best policy for their vehicle. Every insurance company will give a different price. But now with the liberalization, consumer will have better choices and can find one that suits you the most. 

The prices would be determined based on several risk factors. This followed recent reports claiming the new policy on motor insurance coverage would victimize vehicle owners from the lower-income bracket, as one of the factors considered when determining premium prices was the geographical location of the vehicle.

Price is not just determined by the location. There are a few other factors too, in determining the price of the premium that vehicle owners have to pay, such as owner’s age, occupation and the type of vehicle. Only then can insurers consider what kind of premium one would have to pay.

For the past three decades, the premiums which insurance companies can charge have been regulated by a tariff structure. The tariff structure is a fixed table. So finally, for the first time, Malaysia is saying that this tariff will be freed up. This means the rates that they charge for insurance premiums or the cost of insurance will no longer be fixed by a table. 

The liberalization is also expected to see insurance companies increase their competitive advantage by offering customers creative and attractive packages. Examples of such offers include discounted rates or the provision of child seats, which are expensive, for free.

Buyer can insure your pets in your vehicle, too. Buyer can also insure your sophisticated electronic ignition key. In the past, these were not covered. These are the new things that are available for the consumers with the new rule.

But innovation alone will not be the only factor insurance companies bank on to attract customers. Service offered by the companies and how quickly they could settle insurance claims would also play a big role. When you have an accident and you have to make a claim, this is when you test the service level of the insurance company.

PIAM data showed Malaysia recorded a whopping 7,152 road accident fatalities in 2016, which is a 6.7% increase from the 6,706 deaths recorded the year before. Speeding. Irresponsible driving. Bad habits. Disregard for safety. So what we are doing in motor insurance is, we are trying to change the mindsets of motorists so they will become aware and change their attitudes  - hopefully that the rationale for the new policy would make an impact on the roads. This kind of change in the insurance industry will naturally require some preparation on the part of insurance companies.

Full market liberalization - insurance companies had been preparing themselves since BNM made the announcement on the changes back in 2011. The industry is expected to offer new products and optional add-on coverage which will be determined by the market. From there, further development and refinement of the product and pricing strategies will provide additional choices, allowing consumers to purchase the insurance that best suits their needs.

Over time, premium rates for owners with lower risk profiles will be lower while those with higher risk profiles will be appropriately "incentivied" to undertake measures to improve their risk profiles. With all this in line, the changes in risk behavior might reduce the overall incidence of accidents and thefts, and moderate inflation in claims costs and premium rates.