Hong Kong Tighten Rules On Investment Linked Product

On 1 November 2021, Hong Kong’s Securities and Futures Commission (SFC) published a circular to provide additional guidance to issuers of SFC-authorized investment-linked assurance schemes (ILAS) on the application of certain existing requirements under the Guidance on Internal Product Approval Process (PD Guidance) to ILAS (Additional ILAS Guidance). The SFC has also provided further guidance to ILAS issuers in section 4 of its FAQs relating to Investment-Linked Assurance Schemes to elaborate on the requirements under the Additional ILAS Guidance.

The Additional ILAS Guidance formulates further product design and disclosure enhancements, following a recent review of ILAS products on the market by the SFC.

Existing ILAS issuers have until 30 April 2023 to ensure that their SFC-authorised ILAS comply with the enhanced requirements under the Additional ILAS Guidance.

What is required under the Additional ILAS Guidance?
The Additional ILAS Guidance is built upon the existing requirements on product design, fees and accountability throughout the product life-cycle under the PD Guidance. Key points are summarized below.

1: Product Design
When determining the product features, ILAS issuers should consider, without limitation, the following to ensure that their ILAS products are designed fairly and deliver a fair outcome to the target market:

• the level of life insurance protection (e.g. whether and the extent to which the ILAS product provides insurance protection above the premium paid or payable similar to a term life insurance product);

• the fee charging model and structure (e.g. whether policy charges are calculated based on account balance or on a transaction-by-transaction basis) and overall fees and costs borne by an investor;

• the number and variety of underlying funds and fund houses for selection

• the premium payment structure and level (e.g. whether single or regular premium payment, the premium payment amount and period); and

• product liquidity (e.g. whether any surrender charges may apply in the event of early policy surrender or partial withdrawal).

2: Fees
ILAS issuers should ensure that the fees of their ILAS are fair, proportionate and commensurate with the insurance protection offered by the ILAS (when compared with other alternative products) throughout the whole policy term. In particular:

• Cost of insurance (COI) – ILAS issuers should ensure that in general the COI rates of an ILAS product are not higher than those charged by comparable alternative products (e.g. term life insurance products).

• Platform fee – Platform fee should be comparable to corresponding alternative products over the lifetime of the ILAS policy, and upfront charge (if any) should not significantly reduce the amount of premium available for investment and therefore lowering the surrender value and the death benefit of the ILAS policy in early years.

• Early surrender or withdrawal charge (SC) – ILAS issuers should seek to lower the SC and shorten the SC period depending on the level of insurance protection offered by the ILAS. In particular:

1. An ILAS that provides low or minimal insurance protection is generally expected to charge a lower SC over a short period;
2. An ILAS with high insurance protection (comparable to other life insurance products) may charge a higher SC or with a longer SC period; and
3. Issuers should also assess whether investors will receive a comparable payout if they surrender after holding the product for a reasonable period of time as compared to holding comparable alternative products.

3: Complex Product Features
ILAS issuers should ensure that the product features are not unduly complex when designing their ILAS products. ILAS issuers should avoid (a) features or terms which are unnecessarily complicated, incomprehensible or provide no (or limited) additional value to investors; or (b) using multiple variables or complicated formulas unnecessarily to determine the return or which render the policy difficult for investors to understand.

4: Review And Monitoring
ILAS issuers should conduct regular reviews of compliance with the PD Guidance and the Additional ILAS Guidance (based on the latest comparable alternative products available in the market) and submit a written confirmation of compliance to the SFC every two years for products that are on offer to Hong Kong public.

5: Enhanced Disclosure Requirements
The SFC has also revised its illustrative template for ILAS product key facts statement to enhance the disclosure requirements relating to fees, including platform fee and SC.

When does the Additional ILAS Guidance take effect?
The Additional ILAS Guidance took effect on 1 November 2021 (Effective Date), and applies to new ILAS for which applications for authorization are submitted to the SFC on or after the Effective Date. All applicants are required to submit a written confirmation in the prescribed form to the SFC that the PD Guidance and the Additional ILAS Guidance have been and will be fully complied with.

A transition period of 18 months from the Effective Date (expiring on 30 April 2023) will be provided for existing SFC-authorized ILAS to comply with the enhanced requirements under the Additional ILAS Guidance.

Enhanced authorization process for new ILAS applications and additions of investment choices
To facilitate the processing of applications, the SFC has also published a circular on 1 November 2021 to introduce an enhanced process for applications for authorization of new ILAS (Enhanced Process). The Enhanced Process is similar to the process the SFC adopts for applications for authorization of unit trusts and mutual funds.

Under the Enhanced Process, a “two-stream” approach will be adopted, whereby new ILAS applications will be classified into a “Standard Applications” stream and a “Non-standard Applications” stream. Standard Applications will be fast-tracked with an aim that SFC authorization (if granted) will be given around two to three months from the take-up date of the applications. Non-standard Applications will be also processed under an enhanced process with more discipline in response time.

The SFC will (i) take up or refuse to take up a new ILAS application within five business days upon receipt of the application; and (ii) issue the first set of response/requisitions to the new ILAS application within 14 business days from the take-up date.

A new ILAS application will generally lapse at the expiry of six months from the take-up date.

The SFC has also provided further guidance to ILAS issuers in section 1 of its FAQs on Investment-Linked Assurance Schemes to elaborate on the requirements under the Enhanced Process. The FAQs note that the Enhanced Process will generally apply to the processing of applications for authorization of new investment options under existing SFC-authorized ILAS and that application for authorization of a new investment option solely linked to an SFC-authorized fund will be treated as a Standard Application.

Agent Is A Serial Conman

A 56-year-old insurance agent was sentenced to one year and five months’ jail on Friday (Sept 24) for cheating about S$58,000 from longtime friends he had taken on as clients. Selvarajulu Subramaniam lied to one victim, who had been his friend for 15 years, that he had lung cancer in order to get S$14,000 from the other man.

Selvarajulu had earlier pleaded guilty to four cheating charges, with another seven similar charges — including criminal breach of trust as an agent — taken into consideration for sentencing. The Singaporean worked for Great Eastern Life Assurance as a financial advisor at the time of his offences in 2019.

The court heard that among Selvarajulu’s four victims, one of them — Mr G Ravichandran, 56, — had known him for more than 20 years and was his client as well. The two men met in April 2018 to review a loan policy. During this meeting, Selvarajulu told Mr Ravichandran that he had a “refunding plan” which would let the other man reinstate the cash value of an insurance policy he held with Great Eastern.

Selvarajulu then got Mr Ravichandran to sign a form which would purportedly allow him to receive S$11,700 from the firm, and told him to transfer S$10,200 to Selvarajulu’s bank account once he received the money from Great Eastern. This meant Mr Ravichandran would get a net refund of S$1,500.

On May 3, 2018, Mr Ravichandran followed his friend’s instructions after receiving a cheque for S$11,700 from Great Eastern. But a few weeks later, Great Eastern sent him a letter saying he had successfully applied for a second and separate loan policy for that sum.

After making some checks, Mr Ravichandran realized the form Selvarajulu had given him to sign was for a second loan policy. Selvarajulu had also misappropriated the S$10,200 that Mr Ravichandran transferred to him.

Another Victim - Selvarajulu targeted his other victims in a similar fashion. He cheated S$13,700 from another friend, Madam Shahariah Yusoff, whom he had known for 30 years. He had also been the 55-year-old woman’s financial advisor since 199In September 2017, they met to review her insurance policies when he told her that Great Eastern offered this for a term of two years, and she could expect to obtain about S$16,000 as investment returns to be credited into her bank account if she put in a sum of S$13,700. Mdm Shahariah agreed and signed a form Selvarajulu gave her.

She then contacted him two years later after the two-year term was supposed to have elapsed. He had made two bank transfers totaling S$3,037 but this fell far short of what he had promised. She approached Great Eastern representatives on her own accord and was told Selvarajulu had lied to her. She then lodged a police report as well.

Another Victim - Selvarajulu also told another victim —Mr Muhammad Juffri Sayadi, 62 — that he was required to pay penalty fees to keep the policies that he and his family held with Great Eastern active, as Mr Juffri had omitted to make payments on multiple monthly payment cycles.

Over multiple occasions from April to July 2019, Mr Juffri transferred about S$8,000 to Selvarajulu’s bank account. He discovered this was wrong only after being assigned a new financial advisor, who told him to lodge a police report.

Another Victim - Selvarajulu cheated Mr Vadivelu Satchithanant Venkita Ramanan, 50, of S$14,575 by lying that he had been diagnosed with lung cancer and needed money for his hospital bills.

The two men had known each other for about 15 years. Selvarajulu claimed he was unable to reach his wife, who was purportedly abroad, to pay the bills and that he could not do it himself because he had been warded. Mr Vadivelu made four bank transfers to Selvarajulu in January 2019. He subsequently filed a police report two months later.

95% Car Not Insured Due To Flood

The Federation of Malaysian Consumers Associations (FOMCA) are asking insurance companies to consider offering 50% rebates on vehicle repair costs incurred due to floods as a corporate social responsibility (CSR) initiative to aid victims.

FOMCA President claimed that around 95% of Malaysian vehicle owners won’t be compensated for repairs. This is because their insurance policies do not cover natural disasters like floods. Most Malaysians are not aware that their insurance providers even offered such coverage as companies failed to advise buyers about the product before proceeding with their purchases.

FOMCA said that they would be sending a request to Bank Negara and the government to get them to tell insurance companies to promote natural disaster insurance coverage to the public. FOMCA is also of the opinion that Malaysians have undermined the severity of natural disasters such as floods that are impacting the nation.

Although there are insurance policies that include natural disasters like floods as part of a comprehensive, all-in-one package, there are those that don’t and would charge extra for it to be included. Most people don’t subscribe to insurance policies that include natural disaster coverage because of these additional costs. The standard rate for natural disaster coverage for your homes and property costs an additional 0.086% (for floods) and 0.081% (for landslides) of the total coverage amount of an individual’s insurance package. While for vehicle insurance, premium holders would usually pay between 0.2% to 0.25% of the total coverage amount.

A report counted an estimated 50,000 cars were left damaged and broken down across the country due to the floods. The number of stalled vehicles were especially high in Selangor and Pahang. It would cost vehicle owners between RM1,700 to RM54,000 to repair the damage done by floods depending on the size of the vehicle and the extent of the damage.

Most owners would also need to continue on paying for their vehicle loans as it remains immobile and unusable while being repaired. This could take a period of between three to six months to complete.

General Insurance Association of Malaysia (PIAM) and the Malaysian Takaful Association (MTA) urged policyholders to have another look at their insurance policies to ensure that they are covered against floods and advised insurance companies to expedite the payments to victims.

Flood victims are also advised to make a police report on the damages done to their properties and vehicles as soon as possible and snap as many pictures of the damages as they can.

RM3 Billion Claim From Recent Flood

The General Insurance Association of Malaysia (PIAM) today said it estimates payout from claims as a result of the devastating floods that swept across the peninsula could total RM3 billion. 

It pledged to add RM2.4 million to its recently launched flood relief fund to cushion the losses suffered by motorists with water-damaged vehicles. It said the additional fund is part of its corporate social responsibility (CSR) initiative. It also promise to speed up the settlement of claims and ad hoc ex-gratia assistance given by individual general insurers.

This CSR assistance will initially be in the form of a subsidy towards a clean-up at workshops for vehicles directly affected by the floods (note: not repairs at this stage), capped at a one-off per vehicle subsidy of RM500 for cars/commercial vehicles and RM100 for motorbikes.

Claim Process - Claimants will need to produce requisite evidence of flood damage to their vehicles and proof of previous insurance cover. The said vehicle must be either currently insured (any type of motor policy with or without flood cover is eligible) or a vehicle that was last insured on June 1 2021. 

The association said it will announce later the details of how affected motorists can apply for claims from the CSR initiative. The group also said it welcomed contributions from any other party or industry to increase its flood relief fund.

Previously, PIAM and the Malaysian Takaful Association assured policy holders insured against flood damages that they would expedite the claims process, and that “special considerations” will be given on a case-by-case basis.

Should Bank Distribute Complicated Insurance Investment Policy

With the increasing liberalization of the economy, banks have started aggressively selling a number of financial products to their customers as mutual funds (MFs) and insurance policies. We are witnessing an increasing practice of banks selling complex life insurance products to their customers, particularly those unwary ones who have some money and are looking to keep it in a low-risk instrument.

A fixed deposit (FD) placed with a big-name bank is probably the safest investment next to government bonds. The foundation of the bank-customer relationship is trust. Now, there is a serious issue with the way some of these banks misuse the trust placed in them by their customers. It is more obvious in a nation where financial literacy of an average bank depositor is very basic, if any, and there is an implicit belief that the bank will do what is best for the customer.

Diverting Customers Towards Better Returns - Several instances of banks ‘diverting’ funds of their unwary customers have come to light over the past years. This diversion follows a set pattern. An unwary bank customer comes into some funds, possibly a few lakh rupees, as retirement money or on sale of an asset. The customer then goes to her high street bank and says that she would like to place this in a FD. The ‘relationship manager’ swoops in. This ‘banker’ informs the customer that interest rates on the FDs being what they are, they have a better product that will give them a higher return and provide other attractive benefits.

The relationship manager then offers the customer an investment product, which also combines life insurance. The aspect that is played up is that the customer has to pay a lump sum as premium now and at the end of five or 10 years, the customer will receive a guaranteed multiple of this amount as maturity proceeds. This guaranteed amount seemingly provides a far higher rate of return over a conventional FD, ranging between 10% and 12% per annum as against 6% or thereabouts on a five-year FD in the current environment. The icing offered on the cake is the life insurance benefit attached to the product, which incidentally helps this product qualify as ‘insurance’. The maturity amount is also the sum insured in case of death of the insured during the policy period.

This icing on the cake is actually a poisoned chalice. Sometimes multiple policies are sold, taking away the entire funds of the customer as premiums. After eleven months, when the customer receives a premium payment notice, she realizes that she has no more funds left to pay the renewal premium. The bank thereupon very politely points out that the customer had agreed to pay the annual premium and that the policy can lapse if premium is not paid.

The bank may also explain that in certain circumstances, the policy can be cancelled, but the refund amount is far less than the premium actually paid, that too at the insurer’s discretion.

The customer panics and her first reaction is that “I was not told all this at the beginning”. The bank then points out to the customer that the proposal forms the said customer had signed at the inception of the policy and the 30-odd page policy document subsequently issued to her, cover all of this in black and white and the customer has agreed to it.

Moreover, the customer had a 15 or 30-day free look period during. which she could have cancelled the policy and received a full refund, but the customer has not done so.

All protestations of the customer are met with anodyne responses. It may also happen that the ‘relationship manager’ has moved on. While the unfortunate customer has no access to the relationship manager, the bank manager may also have moved on and the higher authorities in the bank stonewall all enquiries behind the smokescreen of terms and conditions.

Insurance Company Taichi The Blame - Of course, the insurance company in question is even more numb, claiming that the distributor, the bank, is responsible for selling the product. In other words, the miss-selling, if any, is on the part of the distributor, not the insurance company.

Why does this happen? The answer lies in the fact that most of the banks are corporate agents of insurance companies, often several companies, both life and general. The commission can be as large as 30% to 35% on a high-premium, investment-linked life insurance product. Thus, if the annual premium is a couple of lakh rupees, the bank ends up netting sixty to seventy thousand rupees as commission on each policy sold. No wonder the banks use high-pressure selling tactics. This is also the reason why the surrender value of the policy in the first few years is so low.

Probable Mis-selling Tactics Of Bank:

1. The customer is not told that there is a minimum payment period. Therefore, the customer does not realize that she is entering into a long-term commitment to pay a hefty amount regularly for a few years.

2. The customer is not explained clearly that if premium payment is not kept up, she will end up losing her entire money, or under certain circumstances, the customer will get back only a small portion of the premium paid by her, entirely at the discretion of the insurance company.

3. The customer is also not informed clearly of her options in case of her inability to keep up the annual premiums. Policy becoming ‘paid up’ is too complex for a customer to understand.

Cancellation Policy - The feature common to these products is that in the event of cancellation for reasons acceptable to the insurance company, the return of premium during the first five years of the policy ranges from 30% to 70% of the premia paid, depending on the period the policy was in force.

The main issue is that unless the policyholder keeps up the premium payment for the stipulated period, her invested amount is at risk. How does it compare with the standard FD, where the principal amount is not at risk unless the bank fails?

Moreover, in an emergency, the customer has no access to the funds for the first few years of the policy. Unless the policyholder dies early enough during the policy period, the ‘survival benefit’ is actually a survival rip-off!

The most insidious feature is that such products are generally sold to older customers who are retired or close to retirement and trust their bank implicitly. Banks are better equipped to play in this space since there is no single individual answerable for any mis-selling. This readiness of the bank officials to refund the large sum involved from their own pockets clearly shows that a racket was flourishing across the bank at multiple levels!

Regulators, both banking and insurance, need to acknowledge that banks selling investment products in the guise of life insurance entail an inevitable conflict of interest. In reality, their methods are tantamount to miss-selling, which can be defined as selling a product which the customer hasn’t understood, doesn’t need, and can’t afford to pay for in the long run. As a result, many first-time buyers fail to keep up premium payments, thus foregoing their already paid money.

Recommendations - Sadly, private sector life insurance companies have been leaders in mis-selling during the first few years of insurance liberalization. It is an established fact that quite a few private sector life insurance companies made ‘profits’ in the initial years of their operations from lapsed insurance policies until the regulations governing lapsation and appropriation of funds were further tightened.

What the banking and insurance regulators can jointly do is this: firstly, and most importantly, banks should not be allowed to sell investment-linked insurance policies. Banks should only be allowed to sell term life policies, if at all.

Secondly, life insurance companies should be required to show clearly the risk premium charged for death benefit under such policies, separately from the investment part of the premium.

Thirdly, the bank being directly instrumental in selling the product, should be mandated to disclose the commission income to the customer.

Fourthly, there should be a short, easy to understand summary of the downsides in plain English (for example “your investment is at risk if you fail to keep up premium payments”) or the regional language.

Judge Jail Former Agent Of Tokio Marine

A district court judge has ordered a woman to serve four weeks of jail time, after she repeatedly refused to comply with two court orders to take down offensive social media posts that she had made against Tokio Marine Life Insurance Singapore.

Tay Tiang Choo, who was herself a former insurance agent, reposted her false statements on her Facebook account after the first order.

Tay accused Tokio Marine of committing “scam and fraud” in 2018. She thought the company had discontinued her retirement policy when an internal warning to her agent was mistakenly triggered. She then sent a letter to the firm’s headquarters in Japan demanding compensation and forwarded it to multiple parties, including the Monetary Authority of Singapore and Prime Minister Lee Hsien Loong.

Soon after, she agreed to a settlement with Tokio Marine when it agreed to apologize for its service lapse and offered S$890 of shopping vouchers. However, in June 2019, Tay learnt that a second life policy that she bought with Tokio Marine had lapsed. She claimed that her bank account had enough money in March and April that year when attempts were made to deduct the policy premiums, and that she was not notified of the lapse. Tokio Marine arranged a meeting to explain the reason and offered to reinstate her policy upon payment of the unpaid premiums.

From late 2019 to August last year, Tay sent complaint letters and email messages to several high-profile parties again, demanded S$1 million in compensation from Tokio Marine, and threatened to go to the press and publicize the matter on social media.

She then uploaded various posts and a video on her Facebook and TikTok accounts, alleging that the firm had cheated and defrauded her. The TikTok video showed her protesting in front of Tokio Marine’s office with a board listing the allegations.

In October last year, Tokio Marine filed a court summons to stop Tay from publishing the allegations until a court decided if they were false. The company also sought an order for her to post a notification on her social media accounts that she had made false statements and to forward them to the parties she contacted.

Tay’s allegations included Tokio Marine being “unprofessional and disrespectful” to her, actively lying to and misleading its customers about its policies, and “bleeding out” Tay’s policy until she could no longer pay premiums.

The court granted an interim order the next month, but she did not comply. Instead, she reposted the allegations on her Facebook page three times and encouraged others to like and share the posts.

Under the orders, Tay had to immediately remove her posts, stop publishing such allegations and publish a correction notice on her social media accounts by March 3 this year. It was only after these orders were served on her in late February that she considered complying with them, District Judge Kaur noted in her judgement.

Tay took the Facebook posts down in March. Tokio Marine was then granted leave to begin committal proceedings — that is, to penalise her for non-compliance with a court order. By June, Tay had completely removed the posts from her accounts but refused to publish the correction notice, telling District Judge Kaur: “Like what I have said many times, Ma’am, even if you kill me, I will not do this correction order or correction notice.”

As of the date of the judgement, Tay had not served her jail sentence because of Covid-19 public health concerns.

Insurers To Speed Up Claim For Flood Victims

Insurers providers in Malaysia are ready to help speed up the process for flood victims with flood insurance to claim payment for losses suffered, and also reminded others unaffected by floods to make sure their properties are insured against floods.

In a joint statement released today, Persatuan Insurans Am Malaysia (PIAM) and Malaysian Takaful Association (MTA) both gave an assurance that insurance and takaful companies will expedite the claims process for policy holders who are insured against flood damages.

Policy / certificate holders are advised to contact their insurers or takaful operators for further advice as the scope of cover, terms and conditions including relief measures accorded by one insurer or takaful operator may differ with another.

PIAM and MTA also provided a guide for customers to help enable a quicker claims process.
In the unfortunate incident of suffering a flood loss, kindly refer to the checklist below to ensure that your insurer / takaful operator could assist to provide for an expedited claims process:

“Step 1: Check to ensure that your policy / certificate is extended to cover flood;

Step 2: Notify your agent /intermediary with details of the loss;

Step 3: Provide complete information including all relevant supporting documentation to your insurer takaful operator including photograph if any;

Step 4: Depending on the severity of loss, your insurer / takaful operator may appoint an independent loss adjuster to assist you in filing your claim,” the statement said.

Urging the public to be extra careful amid the current rainy season, the two associations also advised the public to “remain vigilant, avoid taking unnecessary risks and to protect lives, assets and properties”.

As flood coverage is optional under standard insurance policies against fire and for motor vehicles, the two associations advised all their customers to review their policy coverage to ensure their properties are insured against flood, and to contact their agent or insurers or takaful operators for further advice if necessary.

PIAM and MTA would like to remind policy/ certificate holders who are not impacted by these unfortunate flood events to take time to review their coverage to ensure that their interests are adequately protected for natural calamities like flood which is occurring on more frequent basis due to the effects and fallout from the global climate crisis.

The two associations also provided a list of hotlines that insurance and takaful customers can call, including some that were specified as 24-hour hotlines. 

OraGate - Chinese Car Marketing Disaster

Chinese electric vehicle company Ora is facing mounting consumer backlash and potential legal action after it installed an old computer chip in one of its car models — despite telling buyers it came with a cutting-edge one worth around twice the price.

Buyers of the Ora Good Cat, which has a starting price of around 100,000 yuan (US$15,700), say when they complained they were offered a package of store credit including subsidized charging, free software updates and app memberships.

For many owners, that didn’t cut it. Now, some are demanding new chips for their cars or full refunds and compensation, saying the inferior processors have had a significant impact on their user experience, with some functions not working properly.

In a statement issued by a WeChat group of aggrieved Good Cat-owners, which was shared with Caixin, they accused the company of being “evasive” in its response and demanded it explains how the situation occurred. One lawyer who has been interacting with buyers in preparation for possible legal action says Ora’s actions could constitute “consumer fraud”. Ora, which initially responded to questions from Caixin, did not respond to that allegation.

Fishy chips - Claims emerged online last month from owners of the Ora Good Cat that the chip installed in the digital cockpits of their vehicles was an Intel processor released in 2016, and not the more advanced Qualcomm octa-core processor advertised by the carmaker. As a result, some said, the electric hatchback’s entertainment system’s third-party app options were seriously limited.

In a statement published on its mobile app on Nov 22, Ora conceded that the Good Cat models which hit the market a year earlier were not equipped with Qualcomm chips. Those were meant for future models, the firm said, adding that it had advertised the new chips “prematurely”.

Great Wall Motor, Ora’s parent company, later apologized for what it said was a marketing issue.

Older processors - In a since-removed ad for the Good Cat seen by Caixin, Ora had touted a “Qualcomm-powered in-car smart service platform” within its Ora Smart-cafe OS, referring to a platform launched in July 2020 that incorporates three systems — an intelligent cockpit, intelligent driving and intelligent services such as cross-device connectivity.

The Qualcomm processor advertised referred to the Snapdragon SA8155P, a cockpit chip described by the US chipmaker as “an integrated, next-generation automotive cockpit platform”, and used in the in-car systems of models such as the Weltmeister W6, Geely Auto’s Xingyue L and Xpeng’s P5, Caixin understands, while the chip installed in the Ora Good Cats was the Intel A3940, released in 2016.

Qualcomm’s 7-nanometer chip was released in 2018 and had begun launching in mass-produced vehicle models in 2020. The chip is currently the first choice for smart cockpit chips among mainstream new-energy vehicle companies.

By comparison, the Intel A3940 is a quad-core chip that adopts a 14-nanometer process, and its performance lags behind its newer competitor and has weaker compatibility in terms of application ecosystem. Qualcomm’s chips cost around twice as much as Intel’s.

Thailand Insurance Disrupted By Covid

The Office of the Insurance Commission (OIC) plans to enhance the size of the General Insurance Fund (GIF) to help insurance companies handle liquidity issues amid the pandemic as well as set up a new assessment unit to prepare the industry for emerging diseases.

OIC said insurance companies continue to be battered by the surge in claims from Covid policies, with lump-sum payments causing huge losses as these claims are depleting companies' capital reserves and liquidity.

Since the third wave of the pandemic erupted in the second quarter, two companies -- Asia Insurance and The One Insurance -- have been forced to shut down due to such issues.

Learning from Covid-19's impact on the industry, he said the OIC is considering setting up a new work unit to evaluate future emerging diseases to assess insurance risks. The unit would assist in designing insurance products, conditions, coverage and premium rates to lessen the effects new diseases would have on the stability of the insurance sector as a whole.

If the risks can be assessed correctly, insurance companies will not sell more policies than they can afford. Sixteen insurance companies offered Covid policies with lump-sum payments, but only two have had to close because the rest recognized the risks and their limits.

Several companies knew when to stop accepting new customers because they conducted effective risk analysis and put a cap on their sales. Hence, when claims from such policies surged, these companies were able to retain their capital funds and financial positions.

Two other non-life insurance companies with severe liquidity issues -- Syn Mun Kong Insurance (SMK) and Thai Insurance (TIC) -- also recently showed signs of recovery. 
SMK informed the commission there is a group of investors interested in funding the company, while TIC successfully increased its capital reserves and is likely able to pay outstanding claims.

SOCSO Paid RM630 Million - Employment Insurance

The Social Security Organisation (SOCSO) has channeled financial assistance amounting to RM629.2 million through the Employment Insurance System (EIS) since March 18 last year until Nov 5 this year.

The financial assistance was for job search allowances amounting to RM588.5 million, reduced income allowances (RM6.9 million) and early re-employment allowances (RM33.8 million). The number of applications for the benefits from March 18, 2020 to Nov 5, 2021 was 148,926 and, out of that, 119,500 applications were approved. 

55,742 people lost their job since January to Nov 5 this year and a total of RM324.6 million had been approved for the payment of benefits to the individuals involved. Almost 90% of individuals who applied for jobs through the MYFutureJobs portal were able to get a job.

Indonesia - Death Sentence For Corruption

Indonesian prosecutors made history on Monday by recommending a death sentence for a key defendant in a major corruption case at military insurer Asabri. Businessman Heru Hidayat is accused of misguiding the state-run insurer to bad investments for his personal gains and of laundering the ill-gotten money by re-investing in other assets.

Prosecutors told the Jakarta Anti-Corruption Court that Heru alone has inflicted a loss of Rp 12.6 trillion to Asabri. Asabri collects premiums by deducting 8 percent of the salary of soldiers, policemen, and civilian staffers at the Defense Ministry.

While the amended 1999 anti-corruption law carries capital punishment, such a demand has never been presented in the court before due to the vaguely prescribed prerequisites. Article 2 of the law stipulates that graft conviction can be punishable by death if the crime is committed when the country is under an emergency situation due to natural disaster or economic crisis, and/or it is a repeat crime.

Prosecutors argued that Heru is a repeat offender, saying that he was earlier found guilty in a separate corruption case related to another state-owned insurance company, Jiwasraya.

Jiwasraya - The Jiwasraya case already saw the country’s toughest anti-corruption trial in which six defendants were sentenced to life in prison last October. It was for the first time in Indonesian history that multiple defendants were sentenced to life in the same corruption case.

Heru, the chief commissioner of shipping company Trada Alam Minera, is also accused of enriching his company using the money he illegally obtained from Asabri. In their attempts to recover state losses, prosecutors seized the company’s assets such as its 51 percent share in subsidiary Hanochem Shipping and an LNG tanker. According to prosecutors’ documents, they only managed to collect Rp 2.4 trillion from the defendant’s assets.

The alleged corruption and money laundering against Heru took place in 2012-19 -- before he was convicted in the Jiwasraya trial -- dismissing prosecutors’ description that the defendant is a repeat offender. The indictment makes no mention about the specific death sentence article and accordingly the demand must not go that path.

There are eight defendants in the Asabri trial -- two of them were already sentenced to life in the Jiwasraya corruption scandal including Heru and renowned stockbroker Beny Tjokrosaputro. The Supreme Court has recently upheld the sentence.

The six others include two former Asabri president directors Sonny Widjaja and Adam Rachmat Damiri; two former Asabri finance directors Hari Setianto and Bacjtiar Effendi; consultant firm Jakarta Emiten Investor director Jimmy Sutopo; and real estate developer Eureka Prima Jakarta president director Lukman Purnomosidi.

Sonny was the first to appear in the hearing earlier in the day and heard a demand of 10 years’ imprisonment from prosecutors.

Graft convicts rarely got the maximum jail sentence in the Indonesian courts. Before the Jiwasraya trial, only two convicts were sentenced to life, including Adrian Waworuntu during the 2003 trial of a major embezzlement case in a state bank and former Constitutional Court Chief Justice Akil Mochtar who was found guilty in 2014 of taking bribes when handling regional election disputes.

Fuse Secured US$25 million Of Series B

Indonesia-based insurtech startup Fuse -  announced today it has secured $25 million of Series B extension round as it plans to enter more countries including Thailand and Vietnam in Southeast Asia. The startup has closed three funding rounds of Series B within the past six months, bringing the company’s total raised to over $70 million.

The fresh capital was led by an undisclosed global fintech fund with participation from existing investors East Ventures, GGV Capital, eWTP and Emtek.

Launched in 2017, Fuse connects insurance companies with multiple distribution channels and partners to make insurance services accessible and affordable through its technology. Fuse uses mobile applications to offer an agent-focused service, B2A (Business to Agent/ Broker). Fuse Pro app enables agents and broker partners to maximize choices for their customers. The startup also has B2C and B2B2C (micro insurance and financial institute), which provides digital small-ticket size insurance products, distributing insurance products cost-effectively to end customers by partnerships with e-commerce channels like Tokopedia.

Southeast Asia’s rapidly growing digitally savvy middle class that is expected to grow to 350 million consumers with $300 billion in disposable income makes the region an attractive market for insurtech companies. The pandemic accelerated the digital transformation in the insurance industry, one of the most conservative sectors. Fuse plans to tap into the huge and underpenetrated insurance industry in other countries in Southeast Asia, where more than 70 percent of Southeast Asia's population is connected to the internet.

Fuse claims it currently has more than 60,000 marketers or agent partners using the Fuse Pro mobile app. More than 40 insurance companies, including general and life insurance companies, use Fuse’s platform to offer over 300 insurance products for partners or end customers. The company has exceeded $70 million in gross written premium (GWP) for the first three quarters of 2021. The company said it has the largest GWP in Indonesia and Southeast Asia.

The company has over 460 employees, with branch offices in Indonesia, Vietnam, and China.

Life Insurance Record Payout and Purchase

Covid-19 didn’t have quite the impact on the life insurance industry that some were fearing, but it still has resulted in the highest-ever number of payments to beneficiaries. Life insurance policies paid out over US$90 billion in 2020, a 15.4% increase over 2019. That’s the largest year-over-year increase since the 1918 influenza pandemic.

While insurers paid out more than ever before, they were also busy with new business. Spurred by fears of the pandemic, people bought a record US$3.3 trillion in life insurance coverage last year—some 43.1 million policies. That brought total life insurance coverage last year to US$20.4 trillion in the U.S.

Things could have been considerably worse for life insurance companies. Many of the victims of COVID-19 have been older people who generally have smaller policies. The COVID-19 pandemic caused approximately 377,883 deaths in the United States during 2020. Some 81% of those deaths were of people age 65 and older. It’s unknown, though, how many of those seniors had life insurance policies.

The Delta variant changed the demographics. Since the arrival of that mutation, the number of deaths of those above age 65 has declined to 69% of the total, with a big increase in fatalities among people ages 45 to 64. And we’re still determining the impact of Omicron, which is 4 times as transmissible in its early stage as Delta.

COVID deaths in 2021, meanwhile, have topped 2020 as of last month, which could put the insurance industry on track for another record year of payouts.

Malaysian Court Orders Insurer To Honor Claim

An insurance company was today ordered to pay RM85,000 in damages to a widow who won the final appeal over the loss of her husband’s car that was reported missing soon after his death three years ago.

A three-member Court of Appeal bench held that Loh Swee Liang had proved her case on the balance of probabilities that the car had been stolen. The Court ordered AM General Insurance to pay interest of 5% per annum from July 3, 2018 until the settlement of the judgment sum. She was also awarded RM30,000 in costs.

A magistrates’ court in July 2020 dismissed her claim as no proof was furnished that the missing car had been stolen. The High Court, which affirmed the ruling last year, further held that the police had not arrested any thief to recover the car.

In her statement of claim, Loh said that on July 3, 2018, her husband, Tay Guan Song drove his car from their residential Prima Duta Condominium to Changkat View Condominium to clean up the place as the tenant had left.

Loh said Tay, 37, did not respond over the mobile despite repeated calls that day. She went to look for him at the Changkat View condominium, only to find him dead. She said a post mortem report revealed he had died of a heart attack.

After the mourning ceremony, she realized Tay’s car was missing and lodged a police report.
She made a third police report on Sept 1, 2018 and later made a claim with the insurance company but the claim was rejected as she could not prove the missing car had been stolen.

Loh, in her statement, said she inquired with Tay’s relatives and friends to determine if anyone had borrowed the car. She had also checked with Kuala Lumpur City Hall and the Shah Alam City Council to ask if Tay’s car had been towed away before making her insurance claim.