Covid - Inoculate Or Full Hospitalization Cost

The financial cost of remaining unvaccinated ⁠against COVID-19 is rising. Health insurance providers are now asking people who contract the disease to share the cost of treatment, which can get expensive if it requires a lengthy hospital stay.

Early in the pandemic, most private insurers waived cost-sharing for patients under their plans or even covered the full cost of treatment. In November 2020, nearly 90% of insured individuals would have had their out-of-pocket costs — including copays, coinsurance or payments toward a deductible — waived if they had been hospitalized for COVID-19.

Inoculated or pay - with effective coronavirus vaccines widely available, most insurers are no longer waiving those costs. The change reflects a broader push by U.S. companies to nudge workers into getting inoculated in hopes of holding down medical expenses. To that end, Delta Air Lines this week said that it would charge unvaccinated employees an extra $200 a month for health coverage. Today, by contrast, more than 70% of the nation's largest insurers are no longer waiving COVID-19 treatment costs. Another 10% of plans plan to phase out cost-sharing by the end of October.

Insurer profits - soared during the pandemic, as consumers skipped routine care and delayed elective procedures. Health insurance companies were spending so much less than expected because during pandemic. No one went to the hospital, elective procedures were delayed and insurers had more money than they were supposed.

Vaccines are preventive medicine - The rationale is simple: Subsidizing COVID-19 patients' treatment runs counter to efforts to encourage Americans to get preventive care for the disease. The hospitalization rate of unvaccinated COVID patients is 29 times that of vaccinated patients. Now that COVID-19 is largely preventable for most adults and employers are pushing people really hard to get vaccinated, it makes a lot less sense for those employers to be giving people who do get infected a break.

Still, patients won't be responsible for the full cost of treatment, which can reach up to $50,000 for a severe case. Fully insured patients hospitalized with pneumonia — which involves similar treatment as for people with COVID-19 — typically end up owing around $1,300, for example. The cost of hospitalization for COVID-19 is tens of thousands of dollars, but most people admitted to hospital, even if they're paying cost-sharing, are only responsible for a fraction of that. It's not like they're hit with a big bill.

BJAK Online Life & Medical Insurance

BJAK has expanded its insurance offerings from auto to life and medical on its website. Bjak is the first in South-East Asia to offer instant customization and online purchase for life and medical insurance policies that were previously only available through agents.

Customers can now customize plans according to their needs for medical coverage, critical illness and life coverage easily using the platform. The online application can be completed in five minutes. As physical meet-ups are not allowed during lockdown, Bjak offers a seamless, transparent, end-to-end service for customers to customize and purchase instantly.

Bjak offers free health screening, unlimited doctor consultations, medicine delivery and a dedicated 24-hour claim service to address customer issues that are commonly faced in the industry. Bjak is also the first to employ in-house licensed agents with no-commission to offer customers unbiased advice and support. On top of that, all claims are processed by insurance experts.

The platform presently offers full comprehensive policies from two major insurance partners, including term-life and investment-linked products. Bjak is in talks with three more leading insurers and its agencies to offer more policies on the platform.

Buying Car - Dealer To Agency

The automotive retail business is being disrupted. Many automotive brands no longer believe in the need to have dealerships to reach out to the market, partly because of the digital revolution and declining margins in the industry. This disruption has been happening in several countries around the world, or at least automakers have already stated their intention to do away with dealerships. In Australia, marques such as Mercedes-Benz and Honda have decided to take this route.

In Australia - Mercedes-Benz has announced that it will do away with dealerships and adopt an agency model in 2022 after trialing it with the EQC SUV. Honda turned to the agency model in July, with up to half of its dealerships in Australia being axed. In Europe, Volkswagen AG announced that all of its dealer partners have signed a new retail agreement, starting with its all-electric ID range. It is believed that the company will start using the agency model in 2023.

Industry observers are of the opinion that the agency model will be brought to Malaysia soon. This would mean car dealers will have to accept a different arrangement in the future, one that will change their relationship with the original equipment manufacturers (OEM).

Dealers is considered an unnecessary cost. If customer can buy directly from the brands, why do you need a dealer?” A dealer typically makes a 6% to 8% premium on the ex-factory price of a car. A research firm noted that the ongoing Covid-19 crisis is leaving severe and lasting effects on the automotive retail and distribution cost for OEMs, as it costs them billions of dollars to prop up their retail partners. With retail revenues expected to decline between 20% and 30% this year, dealers require support from the OEMs. These support measures increase the OEMs’ cost of distribution by 10% on average.

OEMs that employ direct and online-focused sales models can achieve cost of distribution of below 10% of gross revenues, compared with between 25% and 30% by OEMs with traditional sales and distribution channels.

Agency sales model to be the best answer. Acting as a ‘golden mean’ between direct and indirect sales, agency models allow OEMs and dealers to benefit from a more centralized sales model, creating efficiencies in the overall system. Altogether, the cost of distribution for OEMs can be decreased by one to two percentage points in the short term and up to 10 percentage points in the long term.

For an automotive manufacturer in an increasingly competitive environment, earning more by removing the middlemen is something they must consider in order to stay afloat. And the middlemen they can easily control are the dealers.

In Volkswagen model, it lays the contractual foundation for integrating the online business with the showroom-based business. With the agency model, customers can order vehicles directly from the group and select their preferred dealer for personalized customer care and local services.

Under the agency model, dealers will assume the role of an agent to sell cars to private customers and small commercial enterprises, according to Volkswagen. These agents will look after the acquisition, sales consultation, organizing of test drives, transaction process and vehicle handover in coordination with Volkswagen.

The preferred dealer chosen by the customer at the beginning of the sales process receives the same commission and bonus as it would in the showroom, even if the vehicle is purchased online directly from the automaker.

Volkswagen decides on the vehicle price, thus dispensing with complicated price negotiations. Dealers can therefore count on calculable compensation regardless of whether the customer buys the vehicle online or in the showroom.

The agency model differs from the dealership model in that the agents do not have to invest in a showroom or hold inventory. Without these investments, the agents do not have to worry about making a return on investment as they only have to sell the cars. This means the car prices will also be fixed by the OEMs, rather than being differently priced from one dealer to another due to their respective cost structure. So, from a customer’s point of view, the cost of a model will be the same across the market.

The OEMs will provide the agents with the demo cars for customers to test drive. The agent may also be able to lease the demo car from the OEM for its customer to test drive. In an agency model, the agent will only be paid commissions.

One of the pioneers of this model is Tesla, as it does not have a dealership showroom. Anyone who wants to purchase a vehicle can do so via its website. While Tesla does have stores, they are small pop-up stores in a mall that the brand owns, more as a showcase than a dealership.

Can this be done in Malaysia - While the agency model sounds fair and workable, will it work in Malaysia and what will happen to the investments already made by the dealers? The millions of ringgit sunk in to develop the showrooms’ sales, service, spare parts and other systems will have to be recouped somehow.

According to an industry observer, a car showroom can cost around RM20 million (Proton) to RM50 million for luxury brand. 

Dealer Termination without compensation - This is where it could get tricky, especially for the dealers. That is because most dealership agreements in Malaysia are renewable on a yearly basis, according to industry insiders, who also point out that there is no compensation clause in those agreements. If an OEM wants to change the dealership model to an agency model, they won’t have to pay any compensation for the millions of ringgit in investments that the dealers have put in to build the dealership.

Indeed, the move out of the dealership model has been in the works for quite some time. Even some major Malaysian dealerships have started to move out or indicated that they want to move away from this business segment over the last few years.

While it is unclear whether OEMs in Malaysia will move to the agency model, what is clear is that this is the way forward for automotive companies globally, with many brands taking steps towards this direction. Hence, auto dealerships in the country should prepare for an eventual disruption in the industry.

Revenue Group Buys Into VSure Tech

Revenue Group Bhd is expanding into the insurance sector with the purchase of a 25% stake in VSure Tech Sdn Bhd (VTSB) for RM12mil cash consideration. Revenue said its unit Revenue Harvest Sdn Bhd (RHSB) was buying a 2.5% stake in VTSB for RM1.20m from 14 vendors and 23% of the enlarged VTSB for RM10.80mil. Upon completion of the proposed transactions, VTSB will become a 25% associate company of RHSB and indirect 25% associate company of Revenue.

VTSB operates a digitalized insurance platform and also provides management and consultancy services over the Internet and insurance technology (insurtech). The proposed transactions would enable it to take a stake in VTSB and enable it to further expand and develop a more robust business-to-business-to-consumer (B2B2C) environment.

This will be via the provision of innovative products and services to Revenue’s customers, such as on-demand insurance, catering to the special needs of individual and businesses, which will then further complement Revenue’s core business, i.e. electronic transaction processing.

The total consideration of RM12mil was after taking into account of the audited loss after taxation (LAT) of VTSB for the 12 months period for the financial year ended May 31, 2020 of RM206,134; and the unaudited LAT for the 10 months period until March 31, 2021 of RM237,881.

It also included the vendors guarantee of two years combined projected earnings before interest and taxation of RM3.70mil for financial year ending May 31, 2022 and FY23 and the future prospects of VTSB in the enlarged Revenue.

Lifepal - Indonesia InsureTech

Jakarta-based Lifepal offers to simplify the process for Indonesians with a marketplace that lets users compare policies from more than 50 providers, get help from licensed agents and file claims. Liepal claims it is the country’s largest direct-to-consumer insurance marketplace, announced today it has raised a $9 million Series A. The round was led by ProBatus Capital, a venture firm backed by Prudential Financial, with participation from Cathay Innovation and returning investors Insignia Venture Partners, ATM Capital and Hustle Fund.

Lifepal was founded in 2019. The new funding brings its total raised to $12 million. The marketplace’s partners currently offer about 300 policies for life, health, automotive, property and travel coverage. Indonesia’s insurance penetration rate is about 3%, but the market is growing along with the country’s gross domestic product thanks to a larger middle-class.

Market Player - Other venture-backed insurtech startups tapping into this demand include Fuse, Pasarpolis and Qoala. Both Qoala and PasarPolis focus on “micro-policies,” or inexpensive coverage for things like damaged devices. PasarPolis also partners with Gojek to offer health and accident insurance to drivers. Fuse, meanwhile, insurance specialists an online platform to run their businesses.

Lifepal Target Market - Lifepal takes a different approach because it doesn’t sell micro-policies, and its marketplace is for customers to purchase directly from providers, not through agents. Based on Lifepal’s data, about 60% of its health and life insurance customers are buying coverage for the first time. On the other hand, many automotive insurance shoppers had policies before, but their coverage expired and they decided to shop online instead of going to an agent to get a new one.

Lifepal’s target customers overlap with the investment apps that are gaining traction among Indonesia’s growing middle class (like Ajaib, Pluang and Pintu). Many of these apps provide educational content, since their customers are usually millennials investing for the first time, and Lifepal takes a similar approach. Its content side, called lifepal Media, focuses on articles for people who are researching insurance policies and related topics like personal financial planning. The company says its site, including its blog, now has about 4 million monthly visitors, creating a funnel for its marketplace.

While one of Lifepal’s benefits is enabling people to compare policies on their own, many also rely on its customer support line, which is staffed by licensed insurance agents where approximately 90% of its customers use it.

Complicated Product - insurance is complicated and it’s expensive. Most people want to take their time to think and they have a lot of questions that need good customer support. Liepla enables self-research while providing support is similar to the approach taken by PolicyBazaar in India, one of the India's largest insurance aggregators.

To keep its business model scalable, Lifepal uses a recommendation engine that matches potential customers with policies and customer support representatives. It considers data points like budget (based on Lifepal’s research, its customers usually spend about 3% to 5% of their yearly income on insurance), age, gender, family composition and if they have purchased insurance before.

Lifepal’s investment from ProBatus will allow it to work with Assurance IQ, the insurance sales automation platform acquired by Prudential Financial two years ago. Lifepal’s “three-pronged approach” (its educational content, online marketplace and live agents for customer support) has the “potential to change the way the Indonesian consumer buys insurance.

Part of Lifepal’s funding will be used to build products to make it easier to claim policies. Upcoming products include Insurance Wallet, which will include an application process with support on how to claim a policy—for example, what car repair shop or hospital a customer should go to—and escalation if a claim is rejected. Another product, called Easy Claim, will automate the claim process.

Ace Your Interview

No matter how many job interviews you’ve been on, or how well you think on your feet, most people are rarely as prepared as they should be. Here are five obvious things too many people forget to do before the big job interview:

Learn about the company’s story, products and services - People miss this one all the time: They go into an interview without a strong understanding of what the company does.
Just knowing the basics isn’t enough. Learn all you can about the company — its history, leadership team, current successes and challenges. If possible, get the company’s products and services: Buy them, try them and talk to people who use them.

And use your head in the interview. If you’re meeting with PepsiCo and you’re offered a beverage, don’t ask for a Coke. Greater knowledge about the company’s customers will also help you present your skills and experiences in context. You’ll appear more relevant to the hiring manager, and the more relevant you are, the better the connection you’ll make.

Research who you’re going to meet and prepare some icebreakers - When your interview is arranged, get the names and titles of everyone you’ll meet. You can even ask the coordinator if there’s anything they think you should know about those people. The goal isn’t just to research who they are, but to look for connection points, e.g., you both worked at the same company several years ago.

If you can’t find anything in the interviewer’s profile, look for current themes. Maybe the company just announced a new product, or the CEO was recently on CNBC with positive news about the company.

Have meaningful questions to ask - Midway into the interview, the hiring manager asks, “What questions can I answer for you?” Replying with “I’m good, thanks!” shows a lack of preparedness, interest and engagement. Your questions should be smart and strategic, probing the job responsibilities and goals or how the department functions. The questions you ask also show the interviewer how you think. For example:-

i: Why is this position open?
ii: How can I contribute in ways that go beyond the job listing responsibilities?
iii: Can you give examples of people who previously held this role but were a bad fit? And why?

At the end of the interview, don’t ask about “next steps.” If you did well, the hiring manager will let you know soon enough. Instead, tell them how much you love the company, enjoyed the conversation and are interested in the position.

Put your phone on silent - You’d be surprised by how many times I’ve seen this happen. From the hiring manager’s perspective, a phone going off during an interview is a short but lethal sin; it shows carelessness and a lack of respect. Turn your phone off or put it on silent before you reach the front door of the building. Should you forget, and your phone pings a message or rings with an incoming call, never answer it.

Pick the right clothes and do a ‘mirror check’ - Don’t procrastinate on this: Plan your outfit ahead of time. Try it on. Make sure it’s clean, pressed and still fits. Not every job interview requires professional attire, but you still should present yourself as well-groomed and put together. When in doubt, ask people in your network who currently, or used to, work at the company about what’s considered appropriate. Sometimes the person arranging the interview will tell you.

The day of the interview, do a “mirror check” before you leave. Anything stuck in your teeth? Breath fresh? Hair combed? Shoes polished? On the way to the interview, don’t buy or bring anything that could spill on you. Just ask the guy who flew from Chicago to New York the morning of his interview. He ordered tomato juice; there was turbulence.

Aeon Acquired Broker License

Aeon Credit Service (M) Bhd said it has obtained Bank Negara Malaysia (BNM)’s approval to acquire insurance and takaful broking firm Insurepro Sdn Bhd for RM1.7 million. Insurepro’s primary business focus is to provide comprehensive insurance services to strategic and specialized industries in Malaysia.

It said the acquisition, which is expected to be completed in October, will allow the group to distribute both commercial and personal insurance products, including life insurance products by leveraging on the Aeon Group Retail network and Eco system.

Currently, the overall income earned from the insurance is less than 5% of the company’s total income. The newly acquired subsidiary will be transformed into a digital insurtech company, with its main strategy being the direct-to-consumer approach.

With the new Insurtech availability in the market, the group said Insurepro can offer vast insurance and protection schemes to consumers via online tools with more pricing and product options as an advantage of being a broker.

HSBC Acquires AXA Singapore

HSBC has agreed to acquire AXA's Singapore insurance business for US$575 million ($780 million). HSBC Insurance (Asia-Pacific), which is an indirect wholly owned subsidiary of HSBC, has proposed to acquire 100 per cent of the issued share capital of AXA Insurance in Singapore, subject to regulatory approval.

AXA Singapore is currently the eighth-largest life insurer in Singapore by annualized new premiums. It is also the fifth-largest property and casualty (P&C) insurer and has a share of the health insurance market.

The combined business would create the seventh-largest life insurer based on annualized new premiums and fourth-largest retail health insurer based on gross premiums. This comes to about 600,000 policies in force, covering life, health and P&C. If the deal goes through, the intention is to merge the operations of HSBC Life Singapore and AXA Singapore.

The merged entity will target high net worth individuals and their families in Singapore and across the region, as well as employees of smaller companies.

Once the acquisition is complete, AXA's policies in Singapore will be rebranded as HSBC policies. However, the terms and conditions will remain unchanged. There will also be a wider range of products, including investment products, available to AXA clients.

As at Dec 31 last year, AXA Singapore had net assets of US$474 million, annualized new premiums of US$85 million and gross written premiums of US$739 million. It reported a profit before tax of US$23 million for last year. The move comes at a time when demand for life insurance coverage has been on the rise amid the coronavirus pandemic.

A recent report released by the Life Insurance Association, Singapore's life insurance industry drew $2.68 billion in weighted new business premiums for the first six months of this year, surpassing the same period in 2019 and last year. New sales for the first half of this year surged 61 per cent from $1.66 billion in first half of last year. This was also higher than the $1.91 billion in new sales for the first half of 2019.

Singapore Life Insurance Growth 2020

Singapore's life insurance industry garnered $2.68 billion in weighted new business premiums for the first six months of this year, surpassing the same period in 2019 before the onset of the Covid-19 pandemic. New sales for the first half of this year surged 61 per cent from $1.66 billion in the year-ago period, which felt the impact of Singapore's circuit breaker measures. But new sales were also higher than the $1.91 billion recorded in the first half of 2019.

Singapore's economy, which shrank 5.4 per cent last year, is now expected to grow by 6 per cent to 7 per cent this year.

Weighted new business premiums measures premiums collected on new policies by taking into account 10 per cent of the value of single premium products, all of a year's premiums for annual premium products and adjusted value for products with premium payment durations of less than 10 years.

Single-premium products recorded a 106 per cent annual increase in sales, generating $1.28 billion in weighted premiums, LIA said yesterday in its report on the industry's first half performance.

Annual premium products also saw significant uptake, with sales rising 35 per cent from the same period last year. This amounted to $1.4 billion in weighted annual premiums.

LIA said that single-premium par and non-par products comprised 84 per cent of all single-premium purchases, while single-premium linked products made up the remaining 16 per cent.

Meanwhile, 8 per cent of the overall single-premium policy sales came from Central Provident Fund Investment Scheme-included products, with cash-funded products accounting for the remaining 92 per cent.

New policies bought online grew to 203,351 in the first half of this year, compared with just 32,952 in the same period a year before.

As at June 30, 43,000 more Singaporeans and permanent residents were covered by Integrated Shield Plans (IPs) and riders which provide coverage on top of MediShield Life. A total of 2.85 million lives - or about 70 per cent of Singapore residents - are now protected by IPs and riders.

Total new business premiums for individual health insurance for the first half of this year amounted to $176.8 million, with IPs and IP rider premiums accounting for 82 per cent and other medical plans and riders making up the remaining 18 per cent.

A total of 22,137 retirement policies were purchased in the first six months of the year, up 34 per cent from the first half of last year.

Employment in the life industry dipped slightly compared with the corresponding period last year, taking the Singapore life insurance industry's workforce to 8,589 employees as at June 30.

In the same period, 14,893 representatives held exclusive contracts with companies that operate a tied agency force.

Millennials Reshaping Insurance

There’s nothing more impactful than the loss of someone close to you to shine a light on the need for life insurance. And this past year, most of us have experienced some sense of loss, collectively if not personally, through the grief and suffering brought on by the global pandemic. Many of us who never before spent time thinking about or planning for our own death, or that of a loved one, likely found ourselves confronting this subject over the past year.

Millennials - The shift has been particularly significant among millennials, who now range from age 22 to 40, as they begin to plan for the next stage of their lives. Millennials are the most likely to be influenced by the pandemic to purchase life insurance. Forty-five percent of millennials said they are more likely to buy life insurance due to COVID-19, compared with 15% of baby boomers and 31% of Gen Xers.

And just as millennials have redefined everything from appropriate workplace attire to car-buying options, they’re reshaping the life insurance market as well. This digital-savvy group prefers online research and information that they supplement with financial advice from a human professional to make sure they’re on the right track.

Here are several ways the life insurance market has adapted in recent years and some navigating tips for millennials considering their options:

Fewer employers are offering life insurance as a benefit - About 56% of Americans who work for private companies have access to life insurance through their employer. The number of employers offering such benefits, largely through group plans, has been in steady decline in the last decade. The result? More than 50% of those who have life insurance purchased it individually.

our move, millennials: If your employer does offer life insurance, it’s worth reviewing the coverage options. You may find the value you need for your circumstances. You may also discover that you need to purchase additional coverage on your own. Many employer life insurance plans offer very basic coverage, and the policy may not be portable if you part ways with your employer. That’s an important factor for millennials, who tend to have higher rates of job changes.

The process continues to get faster and easier - Millennials are comfortable researching and buying nearly everything from groceries to cars online. Life insurers and agents were already making enhancements to digital tools to make it easier for consumers to research and purchase life insurance online, but the pandemic accelerated those improvements. It’s now easier than ever to gather quotes from multiple insurers, research potential providers, and even go through the application and delivery process entirely online.

In addition, physicals for many policies are optional (but you might still want one). A growing number of insurers have ditched the physical examination requirement in recent years, meaning you can purchase a life insurance policy without a medical exam or blood tests. Exam-free policies typically have faster underwriting times than traditional policies, and they offer the convenience of avoiding an additional appointment. But they’re not the right choice for everyone. Exam-free policies, for example, typically cost more than those that include a physical, and coverage may be capped at $500,000.

Millennial consumers love customization - With so much information readily available, there is quite a bit you can do on your own if you choose to. And when you are ready and have questions or want a more guided experience, there is a financial professional who will be able to help. Whether by phone, by video, online or the good old-fashioned face-to-face meeting, a financial professional is always a great stop on this journey to be sure you have considered your needs and options. There are nuances to the features and benefits of life insurance, and an experienced professional can help you sort it all out. Among millennials who purchased life insurance in the pandemic, more than half used a live adviser, and 30% used both a live adviser and online elements in their purchase.

In addition to helping provide financial security for your loved ones in case you pass away, many life insurance policies now also offer optional riders (sometimes at additional cost) that can help address other concerns, like chronic illness or longevity risk.

As millennials become more likely to purchase life insurance, insurers have evolved their offerings to create new products and innovations to meet their needs. That’s great news for first-time applicants who may find a much more painless process than expected.

China Crack Down After Online Insurance

China's banking and insurance watchdog is stepping up scrutiny of the nation's insurance technology platforms, widening a regulatory dragnet that has roiled global investors. The regulator ordered companies and local agencies to curb improper marketing and pricing practices, and step up user privacy protection. It encouraged companies to address these issues voluntarily and said those that failed to comply would face "severe punishment".

The sweeping order goes beyond the targeted action that has hit a few listed companies including Waterdrop Inc and operations backed by Ping An Insurance Group Co in the months since China began a broad crackdown on its fintech sector this year. It has since moved to rein in some of its biggest technology companies, as well as edtech, ride-hailing, and short video platforms.

The online insurance industry had been expected to grow to 2.5 trillion yuan (US$385 billion) in a decade. The China Banking and Insurance Regulatory Commission (CBIRC) did not immediately respond to a request seeking comment.

Just a year ago, the insurance industry seemed ripe for disruption as start-ups vowed to transform traditional practices with technology. Regulators have since moved to shutter operations including crowd-sourcing healthcare platforms operated by Waterdrop and Ant Group Co.

Investors and companies have poured an estimated 45 billion yuan into insurance technology. By the end of 2020, more than 140 insurance companies in China had started online insurance businesses, with total premiums of 298 billion yuan for the year, or 6% of the industry total.

Garuda Sukuk Default

The June 2021 default by Indonesian airline, PT Garuda Indonesia, on its USD500 million sukuk could provide clarity on sukuk restructuring, resolution and enforceability in the country. Legal precedent for effective enforcement in many jurisdictions where sukuk issuance is prevalent is lacking, including in Indonesia. It therefore remains uncertain whether certificate holders will be able to enforce their contractual rights in relevant courts.

Sharia requirements - could make sukuk default resolution more complex than bond default resolution. Complexity is also added by Garuda’s capital structure, which consists of several types of debt instruments, including sukuk, asset-backed securitizations, bank loans, factoring and aircraft leases. These involve various off- and on-shore parties. The sovereign owns over 60% of Garuda’s shares and the airline’s sukuk offering does not contain government or financial institution guarantees.

Garuda - announced that it will continue to defer the periodic distribution payment. The ongoing coronavirus pandemic remains the major risk to Garuda’s recovery and to that of other Indonesian-based sukuk issuers, with defaults of on-shore corporate sukuk peaking at 4.2% in 2020 (2019: 0.6%).

The country’s bankruptcy regime is difficult to navigate and its legal system lacks precedent of sukuk default treatment. Similar countries under this group are those where the law is not supportive of creditor rights or where significant volatility in the application of law and legal enforceability of any claim limits the practical chances of recovery or greatly increases the volatility of recovery prospects.

Court supervised debt moratorium and bankruptcy proceedings for sukuk are rare - given the intricacies of making such applications in the domestic religious court, as opposed to the commercial court. Indonesian law states that religious courts have authority in resolving Islamic financial disputes. However, in practice, these can be settled in commercial courts should both parties agree. Religious courts are frequently used to settle simpler retail transactions, while commercial courts typically adjudicate on complex commercial disputes, as litigants consider the officials to be more competent in ruling on such matters.

Sukuk default - by PT Berlian Laju Tanker Tbk in 2012 was resolved through the commercial court and resulted in a restructuring plan. Islamic financing defaults among financial institutions have been treated similarly to conventional loan defaults from what we have observed so far. Out-of-court restructuring of on-shore public sukuk generally follows similar treatment to bonds and includes maturity extensions and the deferral of periodic distributions.

Most international sukuk issued - so far create an economic effect similar to conventional bonds, with most sukuk instruments resembling debt obligations; for instance, ijara and murabaha structured sukuk. However, a number of local corporate sukuk that missed payments in 2019 and 2020 were based on mudharaba contracts, which have equity-like or profit-and-loss sharing features. These distinctions could complicate creditor or sukuk-holder treatment and affect their recourse, debt ranking and recoveries upon issuer default. The issuers that missed sukuk periodic payments included state-owned enterprise, PT Indah Karya (Persero), and real-estate developer, PT Prima Jaringan.

English law - Sukuk issued on the international capital markets are typically governed by English law and are subject to the jurisdiction of the courts of England or other courts that are recognized by international law and jurisdiction. However, part of the documentation and any judgement would also be governed and reviewed by the courts where the originator is domiciled and enforceability would be restricted by local laws.

Dai-ichi Bought Westpac Insurance

Life Holdings is acquiring an insurance arm of Australia's financial services company Westpac Group for about 900 million Australian dollars ($664.8 million). The Japanese insurer will acquire Australia's sixth biggest insurance company through its Australian subsidiary TAL. The deal is expected to be complete as early as the end of 2022.

Westpac, one of the four major Australian banks, has a customer base of more than 14 million and 5 million online users. Insurance premiums and other revenues amount to AU$1.1 billion.

Dai-ichi hopes to benefit from Australia's growing market, where the population is increasing, unlike in Japan. The acquisition is expected to bring in several billion yen per year in profit to the Dai-ichi Life group. TAL is increasing its share in insurance products that cover death and other unlikely events. After the deal, the Dai-ichi unit, already the largest life insurer in Australia, will control one-third of the market.

Dai-ichi started operating in Vietnam in 2007, and has expanded across the rest of the Asia Pacific region. The company invested in TAL in 2008, and made it a full subsidiary in 2011. Overseas business accounts for about 20% of Dai-ichi's profit, and the company hopes to increase the overseas ratio.

Japanese insurance companies have been bullish in Australia. Nippon Life Insurance acquired MLC, a former life insurance division of National Australia Bank, for about 180 billion yen ($1.6 billion) in 2016. MS & AD Insurance Group Holdings has invested in Australian life insurance company Challenger.

Buying Life Insurance Online

Amid the pandemic, several businesses adopted the online model including the life insurance sector that built its digital outreach to remain relevant to their customers. Through the online medium, purchasing a policy becomes easy, quick, safe and stress-free. However, customers have to be equally discerning when selecting the right policy. How? Here are few tips to keep in mind before you sign the virtual dotted line: 

1. Comprehensive research is a must: Whether this is your first time buying a life insurance policy online or not, research is important. This should be a mix of both online and offline, as it will bridge gaps in cost-effective options and help you select the best cover. Choosing a life insurance policy with an adequate sum assured is vital. A higher sum insured as per financial need is important as it increases the amount you have in case of emergency, which truly adds value in safeguarding the financial future of your loved ones. This is where an online calculator comes in handy, as a tool to help you calculate the coverage amount as per your lifestyle, future goals, and other financial requirements.

2. Comparison is key: The online world offers a wide variety of options for policy buyers, and, therefore, it is pertinent to compare offerings when purchasing a policy. As a potential policyholder, your research should entail a comparison between premiums, policy coverage, benefits, terms and conditions, and other specifications that help you make the right decision. Customers should base the results of the comparison based on their personal objectives and goals that they seek from the product be it pure life cover, investment or a mix of both. 

3. Important to check to claim paid ratio of insurers: While a premium amount helps you assess the affordability of a life insurance policy, a claim settlement ratio or claims paid ratio is an important and reliable metric to determine if the insurance policy you are buying is an apt choice or not. This ratio helps assess the insurer’s commitment to delivering insurance claims settlement. A higher ratio helps understand the claims paid efficiency of the insurer and gives comfort to the family of greater chances, of the claim being settled by the company after the insured person’s unfortunate demise.

4. Be transparent and choose wisely: When buying a life insurance policy online or offline, it is important to disclose all information including medical history, lifestyle habits as this will go a long way to ensure speedy claims settlement. This will also ensure your family does not face any issues when filing claims if required. 

A life insurance policy offers a shield that can protect you and your family’s financial interests. By following these steps, one can make a sound and prudent financial decision when it comes to purchasing a life insurance policy.

Suicide & Life Insurance Claim

The widow of a 49-year-old architect who unexpectedly took his own life has appealed to an insurance company to treat her family “fairly and with compassion” after it used its small print to decline her £338,000 life insurance claim. Had his death happened eight days later, the company would almost certainly have paid the claim.

Billie Lee-Smith, who has two daughters aged 10 and 16, now faces having to sell what she thought was her and her husband Tony’s dream home. They had taken out the policy with the insurer Aegon, which was designed to pay off their mortgage should anything happen to either of them.

Aegon has declined to pay the life-changing claim on the basis of its suicide clause. Its life policies, along with those of most other insurers, have a term that states they will not pay out where the insured person takes their own life within the first 12 months of cover. Lee-Smith’s husband died eight days short of the clause’s expiry.

Insurers impose such terms to prevent people taking out life cover with a premeditated plan to solve their financial difficulties by taking their own lives. A year is generally considered more than enough time to prevent such claims from arising.

The couple only became Aegon customers when they bought a new home in Truro in October 2019, and were advised to upgrade their life cover for their newly increased mortgage. Had they stayed with their previous life cover provider of many years, that policy would have paid out.

Lee-Smith says her husband had no history of mental health problems or depression, and was a successful architect and company director. They had good incomes and at the time had no financial worries. His death came completely out of nowhere, and even to this day she says she has no idea what caused it.