Malaysia Motor Insurance - Unfair To Policyowner

Motor insurance practices that are allegedly unfair to consumers are now being sorted out by the authorities and the Federation of Malaysian Consumers Association (Fomca).These alleged practices include failure to cover the full amount of repair costs quoted, lengthy claim settlements that drag on for months and refusal to compensate consumers for loss of use of the vehicle.

Fomca said Bank Negara must protect consumers in such situations. Bank Negara has contacted Fomca, saying it took such matters seriously and is reviewing the issues. BN have asked Fomca for more information on specific cases and the points we have raised in order for them to respond.

Between January and March, a total of 86 complaints on motor insurance and workshops were received by Fomca through the NCCC. From 2019 to 2020, we received 1,354 complaints involving insurance for vehicles and property.

When claiming motor insurance, one common issue faced by consumers was being denied their right to choose the workshop to repair their vehicles even though the workshop is registered under the General Insurance Association of Malaysia (PIAM) and Road Transport Department. Consumers may want their regular mechanic as they have more confidence in them, adding however that they were only allowed to send their cars to workshops under the insurer’s panel.

Insurers will appoint their own adjuster to evaluate the amount of damage so there is no need to insist that consumers send the vehicles to the insurer’s panel workshop. Panel workshops should be taken out in the terms and conditions of insurance policies and Bank Negara should come up with standard operating procedures on this to be fair to consumers.

Fomca called on the central bank to ensure that third party claims (when a driver claims from the insurer of the driver at fault) to be made easier and done within a specified time. For some consumers, the waiting period is agonising, with several cases dragging on over three months. If the driver only has one vehicle, it is troublesome as the car is kept in the workshop for months. No temporary car for use is offered or payment for loss of use is given to the policy holder.

Bank Negara must impose rules whereby consumers are compensated if their vehicles are kept too long without any repair work done beyond a stipulated time. Consumers faced with this situation are advised to email to the authorities such as Bank Negara, Ombudsman for Financial Services, the insurance companies involved and PIAM.

Nippon Life Enters Microinsurance

Japan's Nippon Life Insurance will start selling "micro" plans targeting low-income customers in Asia, with the goal of issuing at least 350,000 policies in the next five years. Nippon Life will first make the policies available in Indonesia as soon as this month through the local group company Sequis Life. The business will then expand to three more group companies in India, Thailand and Myanmar.

The Nippon Life group looks to enter the microfinance business, which is estimated to have a global market topping $90 billion. But microinsurance is a domain that contains potential pitfalls that Nippon Life must navigate.

Nippon Life will offer life insurance policies that grant payouts of roughly $1,300 on monthly premiums of about 38 cents. The provider will mainly target employees at companies that do business with multinationals.

To extend the reach of the business, customers will be able to bypass background checks to be eligible. Nippon Life sees demand among local companies that seek to broaden employee benefits from a social responsibility standpoint.

Major local banks, including affiliates at Japanese banks, have found success in the microfinance sector. Such operations generate annual yields of 10-20%. But there is no proven business model for microinsurance. Many parts of the emerging world have not developed health insurance infrastructure. When it comes to low-income customers, providers are exposed to substantial insurance payouts due to the unstable quality of life.

Nippon Life looks to reap stable earnings by selling policies to workers through their employers. The company will tap the know-how accumulated from domestic workplace sales.

Global rivals such as Germany's Allianz have taken the lead in this field. But policies targeting low-income clients are normally marketed directly to individuals, and the business has yet to take off. Nippon Life is entering Asian microinsurance in part to shore up its overseas business by developing a new business groupwide. The company has twice injected capital into Australian life insurance affiliate MLC since the unit encountered financial trouble last year.

Insurance Fraud Hong Kong

The Insurance Authority (IA) has issued a trio of warnings about possibly fraudulent websites and mobile applications purporting to insurance companies in Hong Kong.

On May 03, the regulator identified a website with the domain name “cmbwinglunginsurances.com” which is pretending to be the official website of a regulated Hong Kong insurer, CMB Wing Lung Insurance Company Ltd. The company has confirmed it is not connected to the website.

The following day, May 04, the IA issued another alert related to CMB Wing Lung, this time a fraudulent mobile application using the insurer’s name. The application, located at “https://appsliner.com/cmb-wing-lung-insurance-for-pc-how-to-install-free-download-windows-mac/” purports to be the insurer’s official mobile app. However, Wing Lung has denied this.

The IA also highlighted another potentially fraudulent website at ““https://www.hangfungins.com” containing false or misleading information about a firm known as Hang Fung Insurance Services Limited (HFIS). However, HFIS is currently not a licensed insurance intermediary in Hong Kong, and the company said that it has no official website.

Interacting with these unauthorised websites and applications may expose users to cyber risks such as spyware, ransomware, and hacking. The IA has advised individuals who have transacted through these websites and apps to report the incident to their insurer, the IA, and the Hong Kong Police Force. The public must also make sure that the company they are transacting with is registered by searching for it on the Register of Insurers and Register of Licensed Insurance Intermediaries on the IA website.

Taking Insurance To Rural Doorstep

The IRDAI has suggested selecting several villages throughout the country as models of insurance so as to increase insurance penetration in rural areas. The concept was mooted by the IRDAI in a discussion paper on insurance in rural areas with a special focus on agriculture and allied activities, reported Press Trust of India.

"The concept may be implemented in a minimum of 500 villages in different districts of the country in the first year and increased to a minimum of 1,000 villages in the subsequent two years," the paper said.

The paper says that the choice of villages is to be made carefully, considering various relevant aspects and parameters in order to implement the concept successfully for a period of three to five years.

General insurers and reinsurers - Every general insurance and reinsurance company with an office in India needs to be involved in piloting the concept, and the efforts in selected villages need to be continued for a minimum period of 3-5 years so as to make the insurance benefits visible to the community.

The IRDAI paper says insurers can set up a dialogue with state governments and ministries that run various developmental programmes/schemes for farmers, rural and vulnerable sections of society. Insurance companies can integrate insurance with such programmes, it adds.

Target market - The discussion paper says the target segment consists largely of rural low-income households or individuals who have little savings and limited financial capacity.

The central government's initiative through Pradhan Mantri Fasal Bima Yojana (PMFBY) — the government-sponsored crop insurance scheme — has helped improve insurance protection for crops in recent years. However, a large number of crops and cropped areas remain outside the scope of the PFMBY and are still uninsured. These can be served through tailored indemnity-based /weather index-based products. Allied farm risks, MSMEs, agro-businesses, livestock and other personal insurance needs of the rural population are also largely unserved.

Lack of awareness, limited choice of insurance products, absence of a people-friendly and transparent claim settlement mechanisms, and a weak network of insurers, are some of the issues and challenges in advancing growth of rural insurance business.

The IRDAI has invited feedback from stakeholders on the proposal, with 17 May as the deadline for submissions.

InsureTech Trending

Insurtech has long been a factor in the sector, but arguably never more so than during the Covid-19 pandemic. With lockdowns and social distancing, life insurance companies have been forced to reach out to customers by alternative means. They've been encouraged to tailor communications that suit present realities and digitize unwieldy underwriting processes. On top of that, many have automated data processing via artificial intelligence and machine learning.

Insurtech firms raised $2.5 billion in funding during the third quarter of 2020, an increase of 63% over the second quarter. Offerings should be customized to the individual in the interest of meeting their special needs.

Clunky processes on the part of insurers likely contributed to this shortfall. Consider something as simple as getting a physical examination, which is often required to purchase a policy. In 2018, over 50% of respondents indicated that they would be more likely to purchase if they could skip this invasive step.

There’s also a matter of the data insurers have accumulated on customers and what they are able to do with it. These companies tend to be “data rich and information poor.”

An insurtech infusion could address both of these problems, as it would provide the tools to analyze existing data while also collecting new information. Additionally, it could make predictive modeling possible, which would expedite the application and underwriting processes. This could lead to customized products (i.e., it would likely eliminate the need for things like physicals, in most cases). It could also improve efficiency, result in more affordable coverage and decrease costs for the insurers themselves.

There’s the personalization of the industry — be customer-centric, and in the end, it'll benefit all concerned.

Digital Gaining Traction - insurtechs gaining greater traction recently, the trend is not new. In 2010, a German company known as Friendsurance launched a peer-to-peer model designed to make the process of searching for and purchasing policies more customer-friendly. A similar model has been adopted in the U.S. by insurance company Lemonade.

Momentum continued to gather from there, showing that global investment in insurtech, which stood at $348 million in 2012, had reached $4.15 billion six years later. There is no going back now. Nor should there be. A report in 2020 honed in on the underwriting/onboarding process when it described the following best practices for those life insurance firms that are still getting up to speed technology-wise:

• Evaluate the entire operation: This includes stepping back and examining the entire customer experience — which is where personalization can come into play.

• Make sure everyone’s in step: This includes shattering silos and coordinating every phase of the operation, from underwriting to actuarial work and from risk to compliance departments.

• Trust the process: Digital transformation takes time, so that needs to be understood up front. There will be missteps. Mid-course corrections will be required. It is a matter of keeping the faith and maintaining momentum.

• Maintain short-term goals: There is value in getting immediate wins in that they demonstrate to shareholders and customers alike that you are headed in the right direction.

There is more to come. A day in the not-too-distant future where insurance follows a pay-as-you-live model. That is, your life insurance premiums could be determined by the lifestyle you maintain, as tracked by various wearable devices. Is your blood pressure trending up? Then so too will those premiums. Are you training for a marathon? Then your premiums will hit a downslope.

Internally, marketing and communications leaders need to continue to bang the drum for digital transformation, making it clear that this is what consumers want, and indeed, what they already have in other sectors. They can order virtually anything they want through their phones, up to and including their groceries; why should insurance be any different?

It's vital to build a culture that ties compensation to customer outcomes (NPS and CX journey scores) and create a marketing/UX “center of excellence.” The industry often falls into the trap of creating cultures focused on tech and operations — with an emphasis on driving these functions with meeting dates and revenue goals. There should also be an emphasis on operationalizing consumer focus (or centricity).

A marketing/UX “center of excellence” should apply discipline to customer experience and the idea of delivering consistently with design thinking and experimentation approaches; executing on user research, behavioral tracking and reporting; building advanced analytics/big data capabilities; and applying measurements and learnings based on those capabilities. The center of excellence enables marketers and UX experts to incorporate human-centered design and empathy into product offerings and build solutions for customers that are transparent and easy to understand. Moreover, they can use their learnings to pivot based on customers' needs.

Personalization is needed and expected, and insurtech illustrates how the industry can accomplish that. This may sounds strange: The machines will bring us closer together? Absolutely. And I that will continue to be the case going forward.

Universal Life Insurance

Universal life insurance — which may also be referred to as adjustable life — is a type of permanent life insurance that’s intended to provide benefits until the day you die. However, this type of policy may be more flexible than a traditional whole life insurance policy.

While both whole life insurance and most universal life insurance policies build cash value, universal life insurance policies generally earn “a market rate of interest” - which is used in part to keep your premiums lower and to add to the cash value portion of the policy.

However, unlike standard whole life policies, which have fixed premiums for the life of the policy, the premiums on universal life insurance can fluctuate depending on the market and the policy’s related investments. That means you could be looking at higher premiums if the market or the investments you choose don’t pan out as expected.

Since the policyholder is taking on more risk with a universal life insurance policy, the cost of universal life insurance is generally lower than regular whole life policies.

How does universal life insurance cash value work - One of the attractive features of universal life insurance policies is its cash value component. The cash value component describes the investment portion of any life insurance policy, including universal life insurance. To build cash value, insurers set aside a portion of your life insurance premiums in a separate account, which are then invested over time. Life insurance policies that build cash value provide options for accessing that cash in an emergency.

Some people borrow against the cash value of their life insurance policy when they need it for major life events or in an emergency. Others might use it to help pay their life insurance premiums later down the line when their income is lower after retirement. Another option is to access part of the cash value of your policy by surrendering it if you no longer want to keep paying for the policy.

A universal life insurance policy that builds cash value can be useful if you want to have a cushion down the road. It can also help if the premiums on your policy become difficult to manage, as you can rely on the cash value to extend the policy for a while even if you stop paying the premiums. But keep in mind that using the cash value in this way will lower your overall death benefit.

Types of universal life insurance - Under the universal life insurance umbrella, you can drill down to find specific types of universal life insurance. Policy options include the following:

A: Indexed universal life insurance

This is a type of permanent coverage that offers its own cash value component, but the main difference is where that money is kept. With indexed universal life insurance, you can invest the money in your cash value account and earn interest based on a stock market index. In addition, many indexed universal life policies offer a guaranteed interest rate “floor” that promises you’ll never receive a return lower than that rate.

The main benefit of this type of policy is the fact that you have the potential for greater returns over time, and that you also receive a guaranteed minimum rate of return. You also get tax-deferred growth on the cash value of your policy as well as a death benefit that won’t require any federal taxes to be paid by your heirs.

On the downside, your returns with indexed universal life insurance may be low if the stock market isn’t performing well, and your returns will always trail an index since your insurer makes money by keeping a portion of the gains.

B: Guaranteed universal life insurance
If you’re looking for life insurance with near lifetime coverage for a lower price point, you might consider a guaranteed universal life insurance policy. Unlike other forms of universal life insurance, there’s no cash value component with this type of policy, which means the premiums don’t change over the life of the policy.

However, the flip side of that trade-off is that since there’s no cash value, if you stop paying the premiums, your policy will lapse since there’s no cushion to fall back on to cover the cost of the policy.

While the lack of cash value may dissuade some people from considering this option, keep in mind that the premiums on guaranteed universal life policies are significantly lower when compared to other permanent life insurance options.

Guaranteed universal life can be an interesting “middle ground” choice for people in their 60s to consider if they previously had a term life policy that expired and don’t want to commit to the high cost of a new permanent whole life policy in the retirement stage of their life.

Guaranteed universal life insurance can be an option for people in their 60's looking for a new policy at a lower cost.

C: Variable universal life insurance
With variable universal life insurance, you get permanent life insurance coverage that comes with a cash value component. The main difference is that you have the option to put some or all of your cash value into a separate account that’s made up of investments you choose.

This type of life insurance provides a tax-free death benefit to your heirs, but you also get more control over how the cash value component of your policy is invested and managed. This gives you the potential for much higher returns based on how aggressively you invest, yet you’ll also endure the market risk that comes anytime you invest in the stock market.

Variable universal life insurance also lets you pay flexible premiums, so it may sound like it represents the best of all worlds. However, many experts don’t recommend variable universal life insurance due to the high fees these policies often require.

How does universal life insurance compare to whole and term life policies - Broadly, the main two types of life insurance are term life insurance and whole life insurance. Term Life insurance only lasts for a specific length of time — usually 10 to 30 years — while whole life insurance lasts for a lifetime and often has a cash value component.

Universal life insurance typically comes in the form of whole life insurance, which means that like most whole life policies, premiums usually cost significantly more than a comparable term life policy, since your heirs are guaranteed to receive a death benefit so long as you continue to pay the premiums over the course of the policy.

Also, term life insurance policies are occasionally offered without a medical exam, whereas whole life policies — including most universal life insurance policies — generally require you to go through a physical to qualify for coverage.

Is universal life insurance a good choice for you? Many people who expect to have lower costs later in life don’t need permanent life insurance and shouldn’t pay the higher costs associated with a universal life policy. But if you think you do need that coverage and don’t want to have to worry about being covered as you get older, you may want to consider universal life insurance as an option.

Prudential Indonesia & OVO

Indonesian e-wallet unicorn OVO has expanded its partnership with Prudential Indonesia to launch a digital shariah life insurance product with affordable premiums. The Asuransi Jiwa Kumpulan Syariah PRUTect Care product is provided by Prudential Indonesia through insurance broker PT Salvus Inti and can be accessed through OVO’s app.

It is designed to offer users a highly affordable, highly accessible, shariah-compliant life insurance product. This arrangement gives Prudential Indonesia access to OVO’s large user base nationwide, spanning all of Indonesia’s 34 provinces. Users have a choice of monthly or yearly contribution payment schemes, starting from around IDR 5,000 (US$0.34) per month.

The product provides basic death-benefit and other preferred protections, such as daily hospital cash (non-ICU-Intensive Care Unit), daily hospital cash (ICU), permanent disability due to total accident benefit, death benefit due to infectious diseases and death benefit due to accident.

In 2019, Prudential Indonesia established a long-term partnership with OVO to expand access to life insurance for the Indonesians. In early 2020, OVO and Prudential Indonesia collaborated to provide premium-free accident and COVID-19 life insurance to help Indonesians at the onset of the COVID-19 pandemic. Approximately 222,000 individuals registered through the OVO platform during the programme period, which ran until 31 May 2020.