Insurance portal raises transparency, pushes insurers to be competitive

SINGAPORE - A month after the launch of a one-stop web aggregator that lets consumers compare life insurance policies before they decide which to get, at least one insurer is trying to re-price its products to up its game.

compareFIRST, which has made the market more transparent, is a joint effort of the Consumers Association of Singapore (Case), the Monetary Authority of Singapore, Life Insurance Association Singapore (LIA) and national financial education programme MoneySENSE.

It is understood that AIA Singapore, whose term and whole-life products have not been as competitive in pricing and benefits, has re-priced some of its direct-purchase insurance (DPI) term products, pending approval from the MAS.

When asked, other life insurers said they have not made changes to their products, but will review them from time to time.

Seah Seng Choon, executive director of the Case, said compareFIRST has pushed insurers to be more cost-competitive and productive, and to compete; he said he hoped it would also generate more innovative and competitive pricing for the benefit of consumers.

Besides this, the web portal also gives a glimpse into the varied product-placing strategies of life insurers.

Industry players had noted that AXA Life stood out from the pack when compareFIRST was launched, with its lower total premiums for its term and whole life products. That aside, they noted the insurer was also aggressive in terms of guaranteed death benefits and surrender values.

Comparisons by The Business Times found that in general, NTUC Income offered a wide range of whole life products at different premium terms, and Aviva Singapore stood out for its high surrender values.

A comparison of whole life policies for a sum assured of S$200,000 with critical-illness benefits for a non-smoking consumer aged 30, over a premium term of more than 40 years, threw up 22 products each for men and women.

Of these, half were direct-purchase insurance (DPI) products.Total premiums for this type of policy were generally lower than non-DPI policies, as these are sold direct to consumers, without commissions or agents.

Among the 22, Aviva Singapore's DPI for both sexes offered the lowest premiums - between 8.8 per cent and 9.5 per cent lower than the cheapest non-DPI policies.

In terms of distribution costs of non-DPI plans, it was 2.22 per cent to 2.3 per cent of the total premiums for NTUC Income - the lowest among the six insurers that gave DPI and non-DPI comparisons. Distribution costs ranged from 2.94 per cent to 4.06 per cent for AXA Life, Manulife Singapore, Great Eastern Life, Prudential Singapore and Aviva.

For guaranteed death benefits, Aviva's non-DPI was twice the sum assured of S$200,000; this amount is halved to S$200,000 in the 30th year of the policy for both sexes, though the guaranteed amount upon surrender is significantly higher.

Of the 22 policies, those by NTUC Income, AXA and Manulife offered the highest death benefit guarantees of between S$600,000 and S$700,000. But their total premiums were correspondingly higher. Some Aviva and Manulife products pay higher guaranteed amounts in the various surrender periods, particularly in the later years.

For similar comparison parameters, AXA, NTUC Income and Tokio Marine Life showed up as the three cheapest options for policies with premium terms of up to 25 years; for premium terms of 31 to more than 40 years, Aviva, Etiqa Insurance and HSBC Insurance appeared more competitive in terms of pricing.

This article was first published on May 8, 2015.
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