Motoring Exchange Services (PMX), Carilar platform, has been launched today in efforts to assist people facing insurance issues. In collaboration with the Malaysian Muslim Consumers Association (PPIM) and Motorcycle Welfare and Protection Club Malaysia, this platform provides transparent price quotations with the best offers for citizens.

Complaints on Insurance - PPIM has been receiving various complaints related to insurance issues for several years, considering they are all concerning matters. PPIM wants to express concerns about issues related to fraud occurring in the insurance sector and aim to address this matter.

Among the complaints received are challenging insurance claims and instances involving lawyers deceiving to make claims, leaving users ultimately lost and unsure of what to do.

In this platform, users have the opportunity to interact with experts in the field where they are constantly deceived in insurance. The platform is not a profit centre; its sole purpose is to assist individuals in need of any type of insurance guidance.

Other Services - The platform will establish a helpdesk to address any issues related to insurance, covering a range from motorcycle insurance to airplane insurance, including life insurance and others.

There is a 10 per cent discount if you explore the platform, and it's not something we receive or give. 

Husband Bought Sex Doll From Insurance Claim

A husband who murdered his wife cashed in on her life insurance policies and spent almost $2,000 on a life-sized sex doll. Colby Trickle called 911 on the morning of Halloween 2019 to report that his wife, Kristen Trickle, 26, had shot herself dead in their home in Hays, Kansas.

A responding cop found the scene suspicious, but a coroner ruled Kristen’s death a suicide three days later and Colby was freed. Colby, an army reservist, received more than $120,000 on two life insurance policies for Kristen.

Only two days after getting the payouts, Colby purchased the sex doll.

Cops arrested Colby on July 14, 2021, and a jury convicted him in his wife’s death in November 2023. He was sentenced to life in prison with no parole for 50 years.

Medical Insurance Abused By Bank Staff

The Bank of Singapore (BOS) has conducted a wide-ranging investigation into the misuse of medical benefits by staff who made claims for ineligible items such as bird's nest. Hundreds of employees were involved in the investigation which ultimately led to some people being sacked.

Launched Investigation - BOS, the private banking arm of OCBC Group, launched an investigation last year into employee medical claims involving one of its company panel clinics. Those involved were found to have submitted claims for bird’s nest, skincare products, supplements and toothbrushes – items that are excluded under the company’s medical benefits. They were told to pay back the money for these claims.

The “more serious cases” also had disciplinary outcomes that affected people's bonuses. They also did not receive a one-off cost-of-living support of S$1,000 (US$735) for junior staff across OCBC Group.

Reports From Website - News of the dismissals and irregularities in staff medical claims at BOS was first reported by financial services careers website eFinancialCareers. The article by eFinancialCareers said that BOS had sacked up to 40 employees last week after an investigation of past medical claims. A source with knowledge of the matter corroborated that number to CNA and confirmed that the dismissals occurred over two days last week.

The claims were made under the company’s medical insurance scheme, which allows employees to claim up to S$10,500 for medical and dental expenses. The list of claimable items, includes outpatient consultation and medication issued by a general practitioner or specialist, non-aesthetic dental services, vaccinations, X-rays and blood tests.

Expenses that are not allowed to be claimed largely cover those that are not medically needed, such as cosmetic surgery, items such as toothbrushes and toothpaste, as well as care devices like wheelchairs.

BOS did not require itemized receipts for medical claims below S$200. 

EPF Account 3

The Employees Provident Fund (EPF) announced the much-anticipated restructuring of contributors’ accounts that would allow some portion of their retirement fund to be withdrawn anytime. The restructuring is a recalibration to change a decades-long system put in place to help private sector workers build old-age savings.

Account 3 - All contributors will have their savings distributed between three accounts. The percentage of contribution that goes into the first account, to be renamed “Persaraan”, will now be 75 per cent, five higher than under the replaced system. Fifteen per cent of savings will then go into the “Sejahtera” account. The remaining portion will go into the third and new account, dubbed “Fleksibel”. This account will be the portion of savings that contributors can withdraw from.

How does it work - All contributors can withdraw from the Fleksibel account which will start with zero balance. However, contributors will be given a one-time option to “front-load” some of their account 2 savings into the third account. Those who want to front-load will see a third of the 30 per cent savings they currently have in account 2 credited into the Fleksibel account, while a sixth of it will be credited into the Persaraan account.

Contributors withdrawal - Funds credited into the third account with the option to withdraw. Application to front-load can either be done on the EPF smartphone application or at any EPF branch offices.

Conditions to withdraw - No. Those with more than RM3,000 in their Sejahtera account will have RM1,000 credited into their Fleksibel account once they choose to front-load, while contributors with less than RM3,000 in the Sejahtera account will still have a minimum of RM1,000 wired into the third account. The lowest withdrawal amount permitted is RM50, and can be withdrawn anytime. Any contributor age 55 and below will have until August 31 to decide if they’d want to front-load or not.

Dividend rate - Any withdrawals will affect the dividend rate similar to the previous system. The more a contributor withdraws, the lower the rate. Inversely, this means a contributor’s dividend rate will not be affected if the contributor keeps his or her Fleksibel account untouched, even after they opted in to front-load.

Implications - The fund projected some RM25 billion would be withdrawn in the initial three-month offer period, while the monthly withdrawals after the front-loading phase would be around RM4 billion to RM5 billion. 

Medical Insurance Malaysia

Less than half of the Malaysian population is insured. Public need to have adequate medical coverage to handle unexpected illnesses in their old age. This is important especially as the country is moving towards an ageing society.

Medical Claim - Medical claim payouts had surged by 14.9%, from RM13.4bil in 2022 to RM15.4bil last year, while there was a 41.4% hike in disability payments and a 26.2% rise in medical claims. In addition to takaful - the number of people (who are insured) is about 45%. 

Counting policies per capita, it’s closer to 60%, but Malaysia is still relatively low (although) it is on a par with the overall economic development of the country.

Medical claims during the Covid-19 pandemic went down 2% in the early part of 2020 but experienced drastic increased post-pandemic. 

Premium Hike - Insurance premiums would continue to surge as higher medical claims are expected to add pressure. Senior citizens, especially those over 70, would be at risk if they can’t afford an insurance plan since they would have limited options for medical coverage.

If you’re 65 or 70 years old, you cannot buy (insurance). There’s no company willing to sell a brand-new policy to somebody over the age of 70.

Vietnam - Abuse Of Trust

Tran Qui Thanh, chairman of leading beverage manufacturer Tan Hiep Phat, and his two daughters are standing trial Tuesday for “abuse of trust to appropriate assets.” Prosecutors said they offered loans against collateral and then coerced borrowers into selling the assets at cheap prices to appropriate VND1.048 trillion (US$41.2 million).

If found guilty, Thanh, 71, Tran Uyen Phuong, 43, who is also deputy CEO of Tan Hiep Phat, and Tran Ngoc Bich, 40, face prison sentences of 12-20 years.

Between January 2019 and November 2020 the trio provided loans to many people at an interest rate of 3% per month. But instead of loan contracts, they allegedly coerced them into signing sale contracts at prices significantly lower than the actual value of the collateral.

Even when the borrowers paid back the money with interest, Thanh would use different reasons to not give back the assets he took. When the loans were repaid in full, Thanh reportedly refused to return the assets to the borrowers, claiming they had forfeited their repurchase rights due to contract breaches.

The trio is accused of misappropriating assets from four individuals, including two property projects and 35 land lots, amounting to a total of VND1.048 trillion.

Throughout the investigation, they denied the accusations. The prosecution said Thanh was the mastermind and his daughters followed his instructions. Thanh and Phuong were arrested in April 2023, while Bich remained out of custody.

Manulife Financial Advisers - 12 Year Probation

The Monetary Authority of Singapore (MAS) has issued a 12-year prohibition order against Ong Ka Yong for cheating offences. Ong, a former representative of Manulife Financial Advisers Pte. Ltd., was convicted of 11 counts of cheating under section 417 of the Penal Code on Aug 23, 2023. Under the code, cheating is punishable by imprisonment or a fine, or both. The term for imprisonment may extend to three years.

He also has 14 other cheating charges that were taken into consideration for the purpose of the sentencing. Ong was sentenced to 47 months’ imprisonment on Sept 4, 2023.

Ong had deceived 25 victims to transfer over $1.2 million to him for “fictitious investment opportunities” that were allegedly offered by Manulife and another unnamed private company between April 2020 and October 2021.

The PO, which took effect from April 22, means Ong is prohibited from performing any financial advisory services for 12 years. He is also banned from taking part in the management or acting as a director of any financial advisory firm under the Financial Advisers Act. Ong is also not allowed to become a substantial shareholder of any financial advisory firm for the period of the PO.

Sonali Life Suspended

The Insurance Development and Regulatory Authority (IDRA) has suspended the current board of directors of Sonali Life Insurance for six months, and appointed an administrator in the institution.

IDRA made the disclosures in an office order last Thursday. The order to dismiss the board of directors of Sonali Life Insurance and appoint an administrator will be effective from yesterday.

According to the order, IDRA took this decision in accordance with the Insurance Act 2010 with section 95 (1) to protect the interests of the insurers and a large number of policyholders.

IDRA also said that the appointed administrator will submit a report to the authority as per Section 96 (1) of the Insurance Act, 2010. Besides, according to section 95 (3) of the Insurance Act, he will conduct all activities including insurance policy issues.

The newly appointed administrator will receive monthly remuneration and allowances as applicable from the authority. Apart from this, the IDRA has directed to complete the full audit of Sonali Life Insurance through a qualified domestic or foreign audit organization as soon as possible.

Credit Life Insurance

If you have financed purchases, and big-ticket items, like a house or car, when you die. Instead of your chosen beneficiaries getting a death benefit from the policy, the lump sum goes directly to the lender or creditor.

How Credit Life Insurance Works - Banks, credit unions, car dealers and finance companies may offer a credit life policy when you apply for a loan or credit line — but you’re not required to buy it. If you decide to purchase coverage, premiums could work in 2 ways

• Single premium: The cost of the policy is added to your loan principal, and you pay interest on what you borrow and that premium.

• Monthly outstanding balance: Premiums are paid monthly, either in fixed installments or payments that change depending on your balance. Adjusting premiums are common for credit lines with balances that change from month to month.

If you choose to buy credit life insurance, you don’t have to be stuck with it forever. Credit life insurance can be canceled, but the process varies. If a lump sum was initially added to your total loan balance, the coverage you don’t use might be refunded. Insurance premiums paid in installments may not get refunded, but cancellation could put an end to future premiums.

What Does Credit Life Insurance Cover - Credit life insurance can cover debt for larger purchases and credit lines a policyholder doesn’t want to burden family members with when they die. Credit life insurance may cover:

• Credit lines and credit cards
• Mortgages
• Auto loans
• Retail financing (e.g., furniture and appliance installment payments)

Which Credit Life Insurance - When you die, your debt doesn't die with you. Assets in your estate may go toward paying off debt, or co-borrowers and co-signers are responsible for paying it. In community property states, spouses may be held responsible for the outstanding debt you leave behind.

If you think a spouse or co-borrower may struggle to make monthly loan payments, buying credit life insurance could make sense to eliminate the financial burden. And when that debt is gone, more of your estate can be passed down to heirs.

However, consider that other term and permanent life insurance policies may offer more coverage for your money — and at a better price — if you’re healthy. Where credit life insurance benefits go directly to the lender, traditional life insurance policy payouts go to your chosen beneficiaries, and they can use funds the best way they see fit.

The Bottom Line - When borrowing money for a large purchase, companies may pitch credit life insurance as a way to financially protect your family if you die. While it’s not required, buying it could help you avoid leaving behind outstanding debt that strains your family and depletes your estate.

However, life insurance coverage you already have may be enough for beneficiaries to handle financial obligations. If not, buying a new policy or increasing coverage could be a strategy to consider. The right life insurance depends on your situation, and comparing options can help you weigh which one makes the most financial sense.

Vietnam Bancassurance Increased Scrutiny

Vietnam law pertaining to the distribution and purchase of insurance products through the bancassurance channel is expected to constrain sales growth over the near term, more so for life side products than the non-life side of the business.

Increased Scrutiny - Increased Regulatory Scrutiny of Bancassurance to Impact Vietnam Insurance Industry. The amendments to Vietnam’s Law on Credit Institutions is geared toward improving financial conduct and restoring consumer confidence in the country’s bancassurance channel.

The new law takes effect in July and focuses primarily on credit institutions operating in Vietnam, such as banks, foreign bank branches and leasing companies; however, it includes a restriction prohibiting credit institutions from bundling the sale of non-compulsory insurance products alongside any financial services. The amended law is expected to benefit consumers by giving policyholders the ability to choose only products they require at competitive prices. The regulatory shift will generate near-term headwinds for Vietnam’s insurers.

Bancassurance Channel -  This is an important distribution channel, especially for the life segment, accounting for approximately 20% of total life insurance premiums and 14% of total non-life insurance revenue in 2022. Some insurers derive a higher proportion of premiums from bancassurance due to strategic partnerships or corporate affiliations with banking groups.

Business acquired through Vietnam’s bancassurance channel has grown considerably in the run-up to 2023, owing to rising insurance demand, economic growth and increased tie-ups between banks and insurance companies. However, following complaints from the clients of banks and insurance companies related to unfair sales practices and the subsequent regulatory scrutiny, revenue sourced through bancassurance may have peaked. Many banks reported double-digit declines in revenue from insurance services in the first three quarters of 2023 from the prior year period.

The fallout has had a material impact on the broader insurance industry, resulting in an 8.3% decline in insurance premiums to VND 227 trillion (USD 9.2 billion) in 2023, the first fall in a decade after years of double-digit growth, according to the report. The contraction was attributable mainly to a year-over-year decline of 12.5% in life insurance premiums.

Dai-ichi Alternate Investments Strategy

Japan’s largest listed life insurer has a dilemma — its traditional investment strategies aren’t working. Yields on Japanese government debt are too low. Foreign bonds have too much currency risk. And the company is cutting its holdings of domestic equities, which are surging, to avoid too much exposure to the asset class.

Alternate Investments - As a consequence, Dai-ichi Life Holdings has begun to include more alternative investments in its ¥33.9 trillion ($219 billion) portfolio. The company is also looking at increasing mergers and acquisitions and will only start buying 30-year Japanese Government Bonds again once yields rise to 2%.

Insurers have long been major investors in super-long JGBs because they need to own investment assets that generate stable income for years to pay for insurance obligations often spanning decades.

Market expectations for insurers to ramp up JGB buying have gained momentum after the Bank of Japan terminated the negative interest policy last month. However, yields remained below what the company gauged to be sufficient for investment.

Given JGBs’ paltry returns, U.S. Treasuries and other foreign bonds used to be an attractive investment for insurers. That changed once the Fed started aggressively raising rates, which drove up hedging costs, more than wiping out the returns on the notes.

Japanese Stocks - Even the rally in Japanese stocks is causing Dai-ichi a headache. The company plans to cut its domestic equity holdings by ¥1.2 trillion over the next three years to reduce risks in its investment portfolio. The Topix index has gained 12.5% so far this year and the Nikkei 225 has risen to a record high. That’s undermining the company’s efforts to rebalance its portfolio.

Mergers & Acquisitions - Mergers and acquisitions is one area where Dai-ichi plans to allocate more resources. The insurer is hunting for acquisitions to expand overseas and add non-insurance businesses at home. The firm plans to spend ¥300 billion over the next three years for acquisitions. Japanese insurers and asset managers are primary overseas targets.

As part of its strategy, Dai-ichi agreed to buy Benefit One, a Japanese company that provides employee benefit programs, for $2 billion last month. The company has set up a mergers and acquisitions team to focus on a growing list of potential deals and is hiring outside talent.

Dai-ichi will aim for bigger acquisitions once it hits its capital efficiency goal during the current three-year plan that ends in March 2027.

Malaysia Life Insurance 2023 Growth

The life insurance industry recorded a double-digit growth of 11.6% in new business total premiums to RM13.4 billion last year, compared with RM12 billion in 2022.

Strong Growth - The Life Insurance Association of Malaysia (LIAM) said the growth was driven by the strong performance of group policies (up 14.5% to RM5.1 billion) and investment-linked policies (growing 13.6% to RM6.2 billion). 

The overall new business sum assured saw a 9.4% growth to RM544.4 billion in 2023, from RM497.7 billion in the previous year. New business sum assured of investment-linked policies registered a double-digit growth of 13.4% to RM155.8 billion, followed by that of group policies by 10.3% to RM368.8 billion.

The number of new investment-linked policies rose by 6.8% to 709,378, and new group policies increased by 5.8% to 21,975 last year. New traditional policies recorded a decline of 56.9%, from 1.2 million in 2022 to 496,115 in 2023, resulting in the overall number of policies falling 33.2% to 1.2 million in 2023, compared with 1.8 million in 2022.

Total Premium - LIAM said the total premium in force grew by 5% to RM46.3 billion in 2023, compared with RM44.1 billion in 2022. The number of policies in force of group policies grew by 4.5% to 28,685, followed by investment-linked policies which expanded 4% to 6.7 million, in 2023.

However, traditional policies declined by 9.7%, which contributed to a drop in the total number of policies in force to 3.1% in 2023, amounting to 13 million against 13.4 million in 2022, due to the expiration of the policies issued under the Perlindungan Tenang Voucher Scheme in 2022.

Claims - Total payout surged by 14.9% to RM15.4 billion last year, compared with RM13.4 billion in 2022, primarily driven by a 41.4% hike in disability payment and a 26.2% rise in medical claims.

The surge in claims payout was also due to a high medical inflation rate in Malaysia, and the higher medical claims are expected to add pressure on premium increases going forward, it added.

Bank Officer Referral Kickback

Two bank officers have been arrested by the Malaysian Anti-Corruption Commission (MACC) for allegedly soliciting bribes totaling RM316,064 from several law firms here. The two are aged 35 and 43 and were detained when they turned up at the MACC office in Alai here on Wednesday evening (April 17) to have their statements recorded.

The two work at a reputed bank where one of them is attached to the headquarters in Petaling Jaya (Selangor, Malaysia) while the other is an officer at a branch here. Both the officers had allegedly demanded kickbacks from several law firms here as inducements for referring property buyers to these firms for documentation purposes to apply for loans.

Globe Life Shares Plunged

Shares of insurance giant Globe Life Inc. plunged 53% today and trading was halted eight times after a short-seller issued a damning narrative on the company. Fuzzy Panda Research described "extensive allegations of insurance fraud" at Globe's wholly-owned subsidiary American Income Life.

Last year, Agents at a leading AIL sales agency, the Pittsburgh-based Arias Organization, had forged signatures and opened accounts in the names of dead people. Short seller report says "dozens of former executives and agents told us that the problems of fraudulent insurance production for Globe Life is an AIL problem, not limited to Arias" and claims Fuzzy Panda uncovered allegations of fraud at many of AIL's largest agencies.

Fuzzy Panda sent people undercover to apply for jobs at AIL agencies. They reported back that one recruiter had a criminal record, another suggested the applicant use a fake address to avoid seeking a license in a state where standards were high, and a third appeared to offer cocaine if the recruit had great sales in his first week.

It characterizes AIL as a "pyramid scheme" where agencies were incentivized to write more and more bad policies each year to fuel growth. "If you thought it could not get any worse," Fuzzy Panda writes, "American Income Life has also fostered an environment permissive of sexual assault, rape, racism, and widespread illicit drug activity."

Insuring Life of Other Person

People purchase life insurance on other people for a variety of reasons. Still, in every case, it’s about protecting themselves from financial hardship in the event that something happens to the insured individual. Here are a few reasons why you might buy a life insurance policy on someone else:

You’re financially reliant on another person - If you are receiving financial support from a parent or alimony from a former spouse, buying life insurance on them could provide comfort that your needs will be covered after their death

You’re looking out for your grandchildren - Some parents buy life insurance on the lives of their adult children for the benefit of their grandchildren. Their adult children may not have it in their budget to buy life insurance, leaving the grandparents with the option to buy a policy that makes sure their grandkids are protected.

You’re a business owner - If you own a business, you may buy life insurance on a business partner. This may allow you to be able to buy their interest in the company without the need to take on debt.

There are plenty of situations where it makes sense to buy life insurance on another person. 
There are many different types of people you can buy life insurance on. Here are just a few of the most common types of people you can buy life insurance on and some helpful reasons why someone may consider this.

Spouse - Buying life insurance on a spouse — or ex-spouse — can be a valuable part of a financial plan. If your spouse is the family’s breadwinner, you might buy life insurance on your spouse to cover final expenses, including funeral expenses and unsettled health expenses. You could also put the life insurance payout toward income replacement, paying off your mortgage or estate planning.

Children - Many people buy life insurance on their minor child to protect their future insurability or to provide some money for them through the cash value account. Children are more likely to get stronger rates with no-exam life insurance because they’re young and healthy.

Grandchildren - A common strategy is for grandparents to buy a life insurance policy on their grandchildren. This is a nice legacy gift that protects your grandchildren’s future insurability, provides some cash value later in life and reminds the grandkids of their legacy.

Business partners - If your business partner were to pass away unexpectedly, how could your business handle buying out the partner’s family? This is why it’s common to have a buy-sell agreement with your business partner. Buy-sell agreements are most commonly funded with term insurance.

Key employees - Making sure your company can survive and thrive after the death of a key person is important. Having a life insurance fund the replacement of revenue lost or new expenses is important to your livelihood. These policies are often whole life insurance because it lasts the life of the insured and allows the business, as the policyholder, to build cash value.

Nippon Life Launched In India

Nippon Life Insurance, an insurance firm from Japan, has announced the establishment of its newest subsidiary in India. The firm stated that the launch of the new subsidiary in the country will help in bolstering its operations in the market. Singapore-based unit Nippon Life Asia Pacific has formed Nippon Life India as its direct subsidiary, which will provide management support as well as market research for the affiliates of Nippon Life located in India.

India is an important market to the firm as it was the world’s most populous country and that it had promising growth prospects. Prior to the launch, the firm had only been conducting its business in the country through partially owned local entities. With the new subsidiary, the life insurance division will be offering products to individuals as well as organizations while the asset management division will be dealing with stocks, bonds, and exchange-traded funds.

The firm’s operations in India had been managed by Nippon Life’s headquarters, which is located in Tokyo. However, such functions were being transferred to its subsidiary in Singapore at the start of the new fiscal year.

The goal of the new subsidiary in India is meant to further enhance collaboration within Nippon Life’s local affiliates in the country as well as boost its capabilities when it comes to the line of research.

China Taiping Insurance Scandal

Xiao Xing, a former deputy general manager of state-owned China Taiping Insurance Holdings Company Limited, has been indicted on charges of accepting bribes.

Following the completion of the National Commission of Supervision's investigations, the people's procuratorate of the city of Xinxiang in central China's Henan Province filed Xiao's case to the city's intermediate people's court.

Prosecutors accused Xiao of taking advantage of his various posts and abusing his power to seek illicit gains for others, while illegally accepting a huge amount of bribes in the form of money and valuables in return.

China National Health Scheme - 95% Insured

The National Healthcare Security Administration of China has announced a steady maintenance of over 95% coverage within the country's basic medical insurance scheme, alongside noted enhancements in the system's overall quality.

Records from the administration – reported by China Daily – illustrated that, over the past two decades, governmental contributions to the basic medical insurance fund for the rural populace and unemployed urban citizens have escalated at a rate surpassing individual payments.

This development signifies increased governmental support for economically disadvantage groups and individuals requiring assistance, China Daily reported.

Contributions of medical insurance policyholders in China - Detailing the financial contributions, the administration highlighted that an individual continuously insured from 2003 to 2023 has contributed a total of 2,640 yuan (equivalent to approximately US$371.90), which accounts for nearly 30% of the overall premium.

The period witnessed the inclusion of 744 pharmaceuticals into the medical insurance catalogue, with the system successfully integrating more than 80% of new drugs within two years of their market introduction.

Currently, the basic medical insurance scheme offers a reimbursement rate of about 70% for inpatient healthcare expenses for rural and non-employed urban residents. In the fiscal year 2023, personal payments towards the basic medical insurance premium for these groups totalled 349.7 billion yuan, with governmental subsidies almost doubling to 697.8 billion yuan.

In its annual work report, the government said it was committed to refining medical services, emphasizing a strategy centered around patient care.

Ping An Trust - Missed Payment

Ping An Trust's missed payment adds to signs of spreading stress in a financial market dragged down by the property crisis. A subsidiary of China's Ping An Insurance failed to repay a roughly $107 million trust product on time, citing the property market crisis and adding that it is suing developer Zhenro Properties with which it invested the sum. 

Real Estate Exposure - Concerns have grown over the past year about the outsized exposure of China's $3 trillion shadow banking sector, roughly the size of Britain's economy, to developers and the wider economy as the real estate sector lurched from one crisis to another.

Ping An Trust has delayed repayment of its "Funing 615" trust plan, it said in a statement on Wednesday. It said the delay was "due to the overall downturn in the property market".
The firm said it is actively following up on the project development, sales and the return of funds of the underlying real estate project.

Its overall performance remains stable and its business conditions are sound, it said in the statement. The trust product matured on March 29 and was launched in September 2021. It raised 772 million yuan ($106.74 million), state media Securities Times reported.

Ping An Trust reported 14.55 billion yuan in revenue last year and had 662.5 billion yuan of assets under management at the end of last year, according to Ping An's financial report.
Shares of Ping An Insurance fell 0.89% in Shanghai in Thursday morning trade and shed 1.38% in Hong Kong, underperforming the Shanghai and Hong Kong benchmark indexes.

Headwind Economy - The debt crisis engulfing China's beleaguered property sector is one of the main headwinds to the country's economic growth, and has led to an uncertain future for some of the biggest real estate developers, including Evergrande Group and Country Garden.

The trust sector had been a major fundraising channel for property developers seeking rapid expansion. But since 2021, when real estate slipped into a downturn, some trusts have gone bust, while others have divested investments in property firms amid Beijing's stepped up efforts to regulate the shadow banking sector.

The latest wave of missed payments in the shadow banking sector could weigh on already fragile consumer confidence as many individual investors are exposed to the high-yielding trust products.

Wealth manager Zhongzhi Enterprise Group filed for bankruptcy liquidation in January 2024 after its trust firm failed to repay debt. And early this month, Sichuan Trust was approved to go bankrupt after it failed to pay a wave of WMPs in 2020.

On Wednesday, Shanghai police said in a statement it had launched an investigation into local wealth management firm HHSC Capital. The investigation came after the firm said in a letter to investors it is insolvent and cannot continue operations, local media reported. The firm failed to repay some WMPs last year, they reported.

Sub Life Launched Universal Life - Singapore

Sun Life Singapore and Prudential Financial Advisers Singapore (PFA) signed a collaboration to offer the insurance package SunBrilliance Indexed Universal Life for PFA clients. 

SunBrilliance Indexed Universal Life will be the first universal life solution plan for PFA clients.
Through this partnership, it will be the first universal life insurance solution made accessible to active PFA clients.

Target High Net Worth - SunBrilliance Indexed Universal Life is the most recent offering from Sun Life Singapore for affluent and high net worth (HNW) clients.

With an indexed account linked to the S&P 500 index performance, the package offers first-in-market features, like Legacy Plus for death benefit payouts and a cap of S$27,000 (US$20,000) for every purchase of SunBrilliance Indexed Universal Life towards charity programmes under the Sun Life Singapore Philanthropic Pledge.

Sun Life Singapore made the product available in July 2023 as a response to HNW clients in Singapore and Asia switching to more lucrative life insurance solutions, given the market volatility and high-interest rates.

With lifetime coverage, high growth potential, and tighter protections, SunBrilliance Indexed Universal Life aims to meet the wealth planning needs of HNW policyholders.

Lower EV Premium Partnership Thatcham Research UK

One of China’s top carmakers has partnered with the UK’s only not-for-profit automotive risk intelligence organization to verify that every vehicle coming off the company’s factory lines is insurable.

Higher Insurance Cost - Chinese electric vehicles entering the UK carry higher insurance costs due to longer repair wait times, with some coverage companies totaling these cars over their lack of service accessibility. These longer repair times stem from more extended shipping times for replacement parts, poor coordination between insurance firms, and lower technical knowledge of the electric vehicles’ (EVs’) designs.

Some insurers have decided not to cover any Chinese electric cars. On average, EV insurance premiums increased 50 per cent in the UK — about twice that of gasoline vehicles. 

Thatcham Research - However, Chery’s two-year deal with Thatcham Research includes consultancy on all new models launched across all international markets. Thatcham Research will also upskill Chery’s teams in producing effective regional repair methods.

The goal is to ensure that Chery vehicles coming off the production line are as insurable as they are innovative, bridging the gap between cutting-edge design and practicality in maintenance and repair.

By doing so, Chery is signaling its intent to anticipate the needs and challenges of the future and address them today, creating a better total cost of ownership experience for its drivers.”

Korean Insurers Cease Bancassurance

Samsung Fire & Marine Insurance has stopped offering bancassurance services, after operating in the field for 21 years. Bancassurance is a collaboration between a bank and an insurance company where the lender acts as a distribution channel for the insurer's products.

According to industry officials, Samsung Fire & Marine Insurance, a leading player in the non-life insurance sector, said it halted new sales of its long-term insurance products through banks starting on April 1. The insurer intends to uphold its agreements with banks and will continue to oversee the products that have already been sold. Additionally, it aims to explore sales opportunities in international markets, such as Vietnam, while observing industry developments.

Prioritize Protection - Pension and other savings-based insurance policies account for over 70 percent of all sales through the bancassurance channel. However, the introduction of the new International Financial Reporting Standard (IFRS) 17 has reduced their prevalence. IFRS17 encourages insurance companies to prioritize selling protection-based insurance over savings-based ones. This shift enhances the service margin, a key indicator of profitability. As a result, the appeal of bancassurance, which relies heavily on savings-based insurance products and involves paying commissions to banks, is waning.

Meritz Fire & Marine Insurance and Heungkuk Fire & Marine Insurance have already stopped offering bancassurance services. Other companies, such as Hyundai Marine & Fire Insurance, DB Insurance, and KB Insurance, continue to offer the service. However, their commitment is marked by growing internal discussions, indicating possible reconsiderations of their positions.

According to the Financial Supervisory Service, Korean non-life insurers have seen their income from bancassurance fall 15 percent from 6.2 trillion won ($4.5 billion) in 2018.

Regulatory Changes - As a growing number of non-life insurers pull out of bancassurance, banks are facing growing challenges in adhering to existing regulations. These rules limit the sale of any single insurer's products to no more than 25 percent of a bank's total insurance sales. The regulation aims to prevent banks from preferentially promoting the products of insurance companies affiliated with their own financial group, ensuring a more competitive and fair market.

Korea Non-Life Growth Strategy

Faced with a rapidly aging population and ongoing low birthrate, Korea's non-life insurance sector is planning to create more plans tailored for older adults while strengthening coverage related to pregnancy and childbirth-related illnesses.

Industry Association announced four key strategies for the growth of the non-life insurance sector: expansion of older adult-customized insurance plans, digital innovation, establishing a sustainable insurance system and solidifying consumer-centric services.

Target Older Customers - Aiming to expand older adult-customized insurance products and services, the association plans to pursue regulatory improvements, particularly in easing entry barriers for nursing and caregiving services business into the markets. It also plans to further utilize public health care data in developing more sophisticated older adult-tailored insurance plans.

Low Birth Rate - Non-life insurance sector plans to upgrade insurance its products to address the country's low birth rate by introducing youth- and child-friendly services in medical insurance, such as covering medical expenses related to pregnancy and childbirth.

Additionally, auto insurance providers plan to offer more discounts on insurance premiums for families with multiple children.

Data Driven - Another key strategy of the industry's growth lies in advancing insurance products based on data-driven innovation, as it can result in a wider range of tailored insurance products for each customer.

Overseas Opportunity - Association vowed to support non-insurance companies' attempts to make a foray into foreign markets to seek another growth momentum.

Regulatory Changes Indonesia Insurance

An extensive overhaul is expected in Indonesia's insurance industry as new regulations aim to reshape its operational landscape. Stricter minimum equity standards for Indonesian insurers leading to a reconsideration of market participants, potentially fostering a more robust competitive environment. These impending regulations, particularly those concerning credit insurance, are likely to have ramifications across the broader financial sector, impacting micro and consumer lending practices.

Insurance Industry - Currently, Indonesia's insurance market is characterized by fragmentation, boasting 49 life insurers, 72 non-life insurers, and seven reinsurers (2023). This proliferation of companies has fuelled intense competition, driving aggressive expansion strategies and diluting pricing power and profitability.

Increase Minimum Equity - The Financial Services Authority (OJK) is set to enact an increases in minimum equity requirements by the conclusion of 2026. Furthermore, a subsequent phase, slated for implementation by the end of 2028, will see further elevations in minimum equity standards, with a particular focus on insurers offering comprehensive product suites, including credit insurance. Reinsurers will also face heightened equity thresholds under a tiered framework commencing from the end of 2026.

These change are expected to prompt insurers falling short of the new requirements to explore options such as capital raising or mergers and acquisitions. Meeting the revised equity thresholds will pose challenges, particularly for insurers grappling with profitability issues or lacking shareholder backing.

For those insurers unable to meet the heightened standards by the end of 2028, joining an Insurance Business Group (KUPA) might serve as an alternative route.

Compliance - Initial assessments suggested that a significant portion of rated issuers are already compliant with the impending end-2026 requirements based on current equity levels. However, a substantial portion of the rated portfolio, primarily in the non-life and reinsurance segments, will require additional equity infusion to meet the elevated standards by the end of 2028.

While organic capital generation may suffice for approximately half of the insurers requiring equity augmentation to meet the end-2026 benchmarks, meeting the more stringent end-2028 requirements will likely prove challenging without external support.

Credit insurance regulations - The anticipated impact of the new credit insurance regulations to be favorable for rated insurers, although the implications for banks remain uncertain.

Tighter underwriting standards could potentially temper micro and consumer lending activities, positively impacting banks' risk profiles. Conversely, assuming a greater share of insured risk could lead to a deterioration in risk profiles and capitalization ratios for banks.

Other changes - Other regulatory amendments aimed at reducing information asymmetry between banks and insurers. For instance, OJK's mandate for inclusion of credit risk profile data from banks in credit insurance agreements is poised to enhance transparency.

Expected adjustments in capital requirements for credit insurance providers may incentivize smaller non-life insurers to realign their focus away from this segment towards simpler product offerings, fostering a more competitive landscape and facilitating more accurate risk pricing for the remaining firms.

Indonesia Life Insurance Projected Growth 2028

The life insurance sector in Indonesia is on a trajectory to achieve a valuation of $12 billion in gross written premiums (GWP) by the year 2028. This growth is forecasted at a compound annual growth rate (CAGR) of 3.8% from the year 2024, escalating from IDR161.3 trillion (US$10.5 billion) to IDR187.2 trillion (US$12.1 billion) within a four-year span.

This optimistic outlook emerges despite a preceding phase of slowed growth, highlighted by a downturn in the sales of endowment insurance policies, expected to dominate life insurance premiums by nearly 70% in 2024.

Indonesian life insurance market forecasts - Industry trends suggested a looming 2.0% shrinkage in the industry in 2024, following a 5.4% reduction in 2023. Factors contributing to this trend include a downturn in investment-linked insurance product sales amid global financial uncertainties and a shift in consumer preference, impacting new premium acquisitions.

Nonetheless, a resurgence is anticipated in 2025, fuelled by a rising demand for traditional life insurance offerings and evolving demographic dynamics in Indonesia.

Indonesian endowment insurance market forecasts - Endowment insurance, claiming a substantial 69.3% of the GWP in 2024, is foreseen to witness a 7.0% decrease in the same year, subsequent to a 10.9% fall in 2023.

These contractions are largely attributed to enduring market volatilities, deterring long-term returns and swaying consumer interest towards more traditional insurance plans focused on long-term security and protection.

In a bid to counteract these trends, regulatory enhancements initiated by the Financial Services Authority of Indonesia (OJK) in January, aimed at reinforcing investment-linked insurance product marketing, are expected to cultivate consumer trust and favorably impact endowment insurance growth, with a projected CAGR of 1% through 2024 to 2028.

Indonesian PA&H insurance market forecasts - Additionally, the personal accident and health (PA&H) insurance category, positioned as the industry's second-largest segment and representing 13.8% of the GWP in 2024, is poised for a 13.1% expansion in the same year.

The segment's growth is bolstered by an uptick in health awareness, escalating medical expenses, and demographic shifts, including an aging population and extended life expectancy projections. The PA&H insurance segment is projected to exhibit a CAGR of 10.8% between 2024 and 2028.

Indonesian term life insurance market forecasts - Term life insurance, accounting for an estimated 12.9% share of Indonesia's life insurance GWP in 2024, is slated for a 9.8% growth due to demographic changes and an increase in consumer disposable income.

Innovations by insurers, including the introduction of cost-effective term insurance plans, are anticipated to further stimulate term life insurance growth, with an expected CAGR of 7.9% from 2024 to 2028.

57% Policy Lapsed - AIA Vietnam

The Department of Insurance Management and Supervision (Ministry of Finance) has just announced the conclusion of the inspection of insurance sales through banks (bancassurance) at AIA Vietnam Life Insurance Company in 2022.

High Policy Lapsation - Almost 57% of AIA insurance sold through banks were canceled after the first year. Some employees were not eligible but still sold insurance. AIA distributes insurance through 6 banks including VPBank, BVBank, KienlongBank, CitiBank, HSBC, PVBank. Among them, the insurance distribution partner with the highest new revenue is VPBank. By the end of 2022, AIA has paid the initial support amount to its largest partner, VPBank, of more than 7.200 billion.

In 2022, AIA's insurance premium revenue sold through banks will reach nearly VND 5.300 billion, accounting for 28% of total premium revenue. If calculated based on the sale of new contracts, the banking channel contributes 42% of AIA's total new operating fees.

Accordingly, the company issued more than 73.400 new contracts through banking channels. Cancellation rate after the first year is 57%, calculated based on insurance premium.

In addition to AIA, the abandonment rate of insurance contracts sold through banks after the first year, according to previous inspections by the Ministry of Finance, at other businesses is also high, from 32% to 73% (2021).

No License To Sell - At AIA's banking insurance distribution partner, VPBank, there are 167 employees of this bank introducing customers to participate in more than 230 universal life insurance contracts even though they have not yet been granted an agent training certificate, or have not yet received an agent training certificate. Certificate of completion of course on universal life insurance products.

In addition, the inspection showed that more than 3.000 bank employees of VPBank, BVBank, KienLongBank... were trained by AIA company to introduce customers to unit-linked insurance but did not ensure full content. , training duration according to regulations of the Ministry of Finance. Accordingly, these bank employees only introduce customers and do not participate in consulting, offering, or arranging contracts.

Allowing employees of insurance agents who have not been fully trained to approach customers and have not completed all the steps agreed upon between AIA and the bank, but still receive full commissions and bonuses, according to the results. inspection, is not in accordance with regulations.

Payment Not In Accordance With Law - In addition, in 2022, AIA will spend more than 376 billion to pay "fixed allowances" and bonuses to personal insurance agents in the bancassurance channel, however, the Ministry of Finance determines how to determine and calculate the bonus payment amount. not in accordance with the law.

Accordingly, the Insurance Supervision Administration requested the general director of AIA Vietnam to review and strengthen the management of insurance sales activities through banks to reduce contract cancellations and ensure the interests of buyers. The promulgation of bancassurance regulations must ensure that customers are advised in accordance with their needs and financial situation, clearly aware of benefits, fees, as well as risks.

In fact, after the "boom" period, cross-selling of insurance through banks has also recorded a stricter, healthier shift. Some insurance units have asked their banking partners to commit to the contract maintenance rate, but most units have not made this number public.

The main violations of insurance enterprises are mainly related to the promulgation of regulations and improper supervision of insurance agents; improper management and use of insurance agents; Accounting and bookkeeping are still negligent.

Transforming Distribution of Insurance

In the age of smartphones and instant access to information, it’s no surprise that even the most traditional industries are undergoing a digital makeover. The insurance sector, once synonymous with stacks of paperwork and lengthy meetings with agents to get quotes, is no different.

Digital Transformation - Today, InsurTech, an emerging category in the connected economy, is spearheading this digital transformation, with startups leveraging advanced tools and technologies — from artificial intelligence (AI) to big data analytics — to transform how individuals choose and purchase insurance.

The proportion of consumers shopping online for insurance surged from 22% to 27% between 2022 and 2023, while those turning to agents dropped from 42% to 35% over the same period. The study further reveals a notable trend among younger consumers, who are turning to online communication channels when assessing life insurance options.

Younger individuals are more likely to have auto and health insurance, over 60% of Gen Z and millennial consumers plan to purchase one or more insurance types within the next 12 months, with nearly half eyeing life insurance specifically.

Simplification Is Key - One significant way digital platforms are transforming the life insurance landscape is through the simplification of the purchasing process. Websites and mobile apps offer intuitive interfaces that guide users through the process, eliminating the need for complex forms and confusing terminology.

Moreover, with just a few clicks or taps on their smartphones or computers, consumers can compare quotes from multiple insurance providers, assess different policy options, and make informed decisions about their coverage.

By inputting basic information such as age, health status, and desired coverage amount, users can receive tailored insurance options in seconds, enabling them to make informed choices without the need for extensive research or consultation.

Enabling Agent - InsurTech firms are also transforming the sector with platforms tailored for life insurance agents, enabling agents and their clients to access near-instant quotes, compare, and apply for life insurance and long-term care insurance across multiple major carriers.

Prioritizing agents’ convenience underscores the industry’s recognition of the crucial role plays in the insurance process. In fact, despite their preference for online convenience, Gen Z and millennial consumers continue to place significant value on the agent, even as they conduct their research and gather information online.

Specifically, nearly half of each demographic value the expertise provided by financial experts when making their ultimate insurance purchase decisions. This preference is rooted in a widespread lack of confidence among young consumers regarding their understanding of insurance products.

In conclusion, digital platforms are reshaping the life insurance industry by streamlining the purchasing process for consumers, while simultaneously equipping agents with advanced tools and technologies. This convergence of technological innovation and professional expertise is positioning the sector to better meet the evolving needs of today’s connected consumer.

Malaysia - General Insurance 2023 Updated

The general insurance industry saw a 7.8 per cent rise in gross written premiums, reaching RM21.4 billion in 2023 compared to the previous year.

Motor & Fire - Motor and fire lines of business remained the leading premium contributors, with motor maintaining its position as the largest line of business, commanding a 45 per cent share of the total premium.

Despite the upward trend in gross written premiums, the underwriting profit contracted by 26 per cent to RM1.16 billion. This decline is largely due to a contraction in profitability for motor and fire lines of business. Motor insurance experienced an underwriting loss of RM156 million with net claims incurred ratio of 66.7 per cent, returning to pre-pandemic levels. Inflationary cost pressures on vehicle spare parts and a rise in road accident rates are challenges facing this line of business.

Fire Insurance - The fire line of business, accounting for a 21 per cent share of total premiums, recorded an eight per cent increase in premiums in 2023, totaling RM4.4 billion compared to 2022. The decline in underwriting profit due to increasingly volatile weather events, including various flood events in 2023, coupled with rising reinsurance costs which will continue to exert pressure on underwriting margins.

General Insurance Industry - The statement said the overall general insurance industry settled an average of RM21 million daily on total insurance claims in 2023, an 11 per cent increase year-on-year.

Over the past decade between 2014 and 2023, the payout for motor claims averaged RM13.4 million per day and constituted 72 per cent of the total payout. In 2023, payout for motor claims rose to RM15.1 million per day, the highest payout in the recent five years.

Hanwha Life - Earn Dividends - Vietnam

Hanwha Life Insurance Co. is set to earn dividends from its Vietnamese subsidiary, reporting a cumulative profit after 15 years, becoming South Korea’s first insurer to collect such a return from its overseas units.

Hanwha Life’s wholly owned unit in Vietnam decided on cash dividends of 100 billion Vietnamese dong ($4 million) at an employees’ general meeting last week. It was the first time for a South Korean insurer to collect dividends from overseas subsidiaries, excluding those of equity investments. South Korean life insurers Samsung Life Insurance and Mirae Asset Life Insurance have overseas units in Thailand and Vietnam, respectively, that have posted profits. But they have yet to collect dividends from those subsidiaries.

Hanwha Life’s Vietnamese subsidiary achieved cumulative profit after 15 years in 2023, marking the first overseas unit of a South Korean insurer to record such a surplus. The subsidiary logged a net profit of 47.1 billion won ($34.1 million) last year, about six times the 8 billion won in 2021.

Few South Korean financial companies such as banks and securities have earned dividends from their Vietnamese subsidiaries due to the Southeast Asian country’s tough regulations. Most South Korean financial firms have accumulated profits from their subsidiaries in the nation only as retention or for re-investments.

Hanwha Growth In Vietnam - Korean insurers have been increasingly expanding their overseas businesses as the local market has become saturated due to the country's aging population and record-low fertility rate.

The subsidiary, the first overseas unit of South Korean insurers, became one of the top 10 life insurers with assets of 981.6 billion won last year. Its premium income surged to 210.5 billion won last year, about 100 times the 23 billion won in 2009, its first business year.

The unit, which had only two offices in Ho Chi Minh and one in Hanoi in 2009, now operates 119 branches in major cities. Hanwha Life aims to expand its business further in the Southeast Asian country, given its strong growth potential.

Hanwha Life’s Vietnamese unit has been focusing on localization for the market to expand the business. The subsidiary has only three employees from its headquarters in Seoul, while all other staff are locals who better understand the domestic financial environment.

Insurance Liabilities - Baltimore Bridge

The owner and manager of a cargo ship that rammed into Baltimore’s Francis Scott Key Bridge before the span collapsed last week filed a court petition Monday seeking to limit their legal liability for the deadly disaster.

The companies’ “limitation of liability” petition for cases litigated under U.S. maritime law. A federal court in Maryland ultimately decides who is responsible — and how much they owe — for what could become one of the costliest catastrophes of its kind.

Singapore-based Grace Ocean Private Ltd. owns the Dali, the vessel that lost power before it slammed into the bridge early last Tuesday. Synergy Marine Pte Ltd., also based in Singapore, is the ship’s manager.

Cap Liability - Their joint filling seeks to cap the companies’ liability at roughly $43.6 million. It estimates that the vessel itself is valued at up to $90 million and was owed over $1.1 million in income from freight. The estimate also deducts two major expenses: at least $28 million in repair costs and at least $19.5 million in salvage costs.

The companies filed under a pre-Civil War provision of an 1851 maritime law that allows them to seek to limit their liability to the value of the vessel’s remains after a casualty. It’s a mechanism that has been employed as a defense in many of the most notable maritime disasters, said James Mercante, a New York City-based attorney with over 30 years of experience in maritime law.

Casualties & Losses - Eight people were working on the highway bridge — a 1.6-mile (2.6-kilometer) span over the Patapsco River — when it collapsed. Two were rescued. The bodies of two more were recovered. Four remain missing and are presumed dead.

The wreckage closed the Port of Baltimore, a major shipping port, potentially costing the area’s economy hundreds of millions of dollars in lost labor income alone over the next month.

Experts estimated cost to rebuild the collapsed bridge could be at least $400 million or as much as twice that, though much will depend on the new design.

The amount of money families can generally be awarded for wrongful death claims in maritime law cases is subject to several factors, including how much money the person would have likely provided in financial support to their family if they had not died.

Air-Ambulance Medical Claim Denied

Sara England was putting together Ghostbusters costumes for Halloween when she noticed her baby wasn't doing well. Her 3-month-old son, Amari Vaca, had undergone open-heart surgery two months before, so she called his cardiologist, who recommended getting him checked out. 

At Natividad Medical Center in Salinas, California, doctors could see Amari was struggling to breathe and told her that he needed specialized care immediately, from whichever of two major hospitals in the region had an opening first. Amari was declining rapidly, his mother said. Doctors put a tube down his throat and used a bag to manually push air into his lungs for over an hour to keep his oxygen levels up until he was stable enough to switch to a ventilator.

According to England, late that night, when doctors said the baby was stable enough to travel, his medical team told her that a bed had opened up at the University of California-San Francisco Medical Center and that staffers there were ready to receive him.

She, her son and an EMT boarded a small plane around midnight. Ground ambulances carried them between the hospitals and airports. Amari was diagnosed with respiratory syncytial virus, or RSV, and spent three weeks in the hospital before recovering and returning home.

Then the bill came - The Patient: Amari Vaca, now 1, who was covered by a Cigna policy sponsored by his father's employer at the time. Medical Services: An 86-mile air-ambulance flight from Salinas to San Francisco.

Total Bill: $97,599. Cigna declined to cover any part of the bill.

Cigna determined that Amari's air-ambulance ride was not medically necessary. He could have taken a ground ambulance instead of a plane to cover the nearly 100 roadway miles between Salinas and San Francisco.

Chinese Insurers - Challenges - Investment Earnings

Chinese insurance companies is facing challenges in maintaining their investment earnings amidst falling interest rates and significant volatility within the country's stock markets. Despite these hurdles, insurance firms under its purview have not significantly increased their allocations to higher-risk assets. This conservative shift in investment strategy is attributed to a more stringent capital regulatory environment established in 2022, which has led insurers to adopt a more cautious approach to risk.

Chinese insurers' investment yields in 2023 - During the first three quarters of 2023, several of China's major insurers listed on stock exchanges witnessed their investment yields fall short of their average performances over the past three years, despite a marginal improvement from the previous year. 

The aggregate annual investment return rate for Chinese insurance companies, excluding unrealized gains, dropped by 1.53 percentage points, settling at 2.23% from the previous year.

Chinese insurers' investment yields in 2024 - the investment returns are not expected to substantially recover in 2024 due to the persistently low interest rates and difficult investment conditions. The investment strategies of insurers in the real estate sector have come under scrutiny amidst ongoing concerns about the stability of Chinese property developers. Despite these challenges, insurers will face significant losses from their property investments, highlighting their diversified and moderate exposure to this area.

Certain life insurance providers have directed a portion of their assets into the real estate market, including investments in equity, fixed-income securities, and various non-traditional assets like trust plans and asset management products.

The firm estimates that the exposure of these rated life insurers to the commercial property sector is relatively low, generally a mid-single-digit percentage of their total investment assets. In contrast, non-life insurance companies show even less investment in commercial property, reflective of their shorter insurance liability durations and smaller operational scale.

Impact of China Risk-Oriented Solvency System - The introduction of the second phase of the China Risk-Oriented Solvency System (C-ROSS) in early 2022 has prompted insurers to tread more carefully in their investment activities, particularly in long-term equity stakes related to property.

The regulatory update has increased the capital requirements for such investments and included the acquisition costs of investment properties in the calculation of available capital, which has led to a more cautious investment posture among insurers.

While there has been a slight uptick in investments in policy-driven initiatives like social housing projects, aimed at mitigating distress within the property sector, these investments represent only a small portion of the insurers' overall portfolios. While these investments may align with government efforts to stabilize the property market, their immediate return potential may be limited, potentially placing further pressure on the insurers' return on assets.

Managing India Health Insurance

Patients admitted to hospital in India experienced delay dealing with insurance claims long after the treatment is over. Indian health insurance is notorious for a poor claims ratio, and “hidden” clauses that can result in partial coverage or sometimes denial of coverage. Improving regulation is an obvious fix to the problem. In addition - deeper reform requires aligning the incentives of patients, doctors and insurance companies, so that quality health care is provided at competitive prices.

Difficulties in providing health insurance - Insurance premium are calculated based on probabilities on hospitalization, claim, cost, investment returns and profit. This calculation goes awry if more than one person falls ill or if the procedure costs more than assumed probabilities. Example, there may be an unforeseen health catastrophe such as Covid-19, where the number of people falling ill shoots up unexpectedly. People may neglect early signs of their illness, not get check-ups as frequently as they should, or may demand more expensive care than necessary. The more healthy people may drop out of the pool and stop paying premiums, reducing the collective amount. Doctors and hospitals might also be incentivized to provide relatively expensive procedures, especially when they know that the insurance firm will bear the cost. As a consequence, the firm may scrounge on paying claims, or deny coverage altogether.

This simple example shows the number of things that can break down. There are incentive issues caused by “hidden information” in all transactions. The insurance firm cannot know if the level of care provided by the hospital is proportionate to the underlying condition. It has few levers to cross-check the decisions of either the customer or the hospital. The patient does not know if the hospital has overcharged or if the insurance company is misbehaving. The hospital and insurance company do not know if the patient neglected her health and could have come in earlier. In an environment where there is, often legitimate, mistrust between all stakeholders, it is no surprise that the results are sub-optimal.

Encouraging fair play - Weak enforcement, and poor grievance redress procedures lead to a lack of fair play in the health insurance system. These are an obvious fix to improve the working of health insurance firms and need to be taken up by the Insurance Regulatory Development Authority of India (IRDAI).

The deeper solution needs mechanisms that will align the incentives of all stakeholders in the system. Some potential solutions are as follows.

First - insurance companies could incentivize regular check-ups for their customers to save expensive hospitalizations later. However, experience suggests that customers are often not willing to undergo tests, and fear the potential increase in premium if the check-up reveals an adverse condition. Mandatory check-ups before access to insurance, especially for older customers, may be difficult to operationalize but offer a possible solution to keep costs low and also provide less intrusive healthcare.

Second - the design of protocols for health procedures may establish standards of care that hospitals should follow. This will allow insurance firms to evaluate whether the hospital is charging appropriately. Improving fair play in the medical establishment is as important as fixing the problems of health insurance.

Alternative - Another model used across the world is combining health care with insurance. This is known as the Managed Care model. In this model, insurance firms and health care providers form a network through which preventive care is emphasized. An example of such a model is the Kaiser Permanente in the United States. 

Establishing institutional frameworks where potential patients are given preventive care such that fewer of them need hospitalization will not only cut costs but also provide a better quality of life. Here, the incentive of the health care provider is aligned with that of the patient. The more hospitalizations that can be prevented, the better it is for everyone.