FROM THE DESK OF
CEO, Zurich Life Singapore
THE recent report by the Life Insurance Association (LIA) showing a significant narrowing of the protection gap in Singapore came as no surprise to me and others closely associated with our business.
The government and the regulator – the Monetary Authority of Singapore (MAS) – have done an excellent job getting the right message out to people about the need for cover and, generally speaking, high-earning Singaporeans are fairly sophisticated when it comes to managing their futures.
The LIA report showed the overall protection gap among working adults in Singapore dropped by S$63.5 billion last year. An average working person would need almost
10 times of the average salary at S$626,000, which means that after taking into account existing life insurance cover – which amounts to S$319,500 – and CPF savings, the average gap is still S$242,500 or 3.7 times his or her annual income.
Much has been done since the last protection gap study in 2006, but the above figures also show there is still a very long way to go.
Total penetration rates for life cover are still only around 5 per cent in Singapore, compared to 12 per cent in Hong Kong, and as an industry there is still a need to educate the entire population.
As a nation, we must be prepared for every kind of outcome, whether death, illness or incapacity. The most important question people must ask themselves is: “Can I predict what will happen 10 years from now?”
AS CEO of Zurich Global Life Singapore, I know that our FA distribution partners ask the right questions and I ensure that our financial advisers are asking all the right questions so customers are covered for every eventuality.
The training and character development of our staff is at the heart of our entire operation and this is how we make sure the Zurich team remains committed to delivering quality advice and having genuine respect for the customer.
We have to make sure our customers' needs are catered for at every stage of the process.
A recent MAS survey by mystery shoppers suggested that as an industry, customers are being short-changed in terms of the quality of information they receive.
Half of the 126 surveyed were not asked about their tolerance of risk or long-term financial goals.
It was also revealed that 30 per cent of the products offered to them were not suitable.
If you put this together with the enormous amount of information available to the customers provided by the insurer, there really is no excuse for this type of result.
Our own insights have shown us that average consumers in Singapore are particularly discerning and that more of them are doing their own research before purchasing protection plans.
But at the same time, it’s obvious that the needs of people are moving at a rate of knots which makes the work we do in providing people with expert advice and tailor-made protection plans even more pertinent.
Zurich’s target audience sits right at the top end in terms of affluence and emerging affluence, which is a section of society generally aware of the need for insurance cover.
These people know that if they die, their family, or their business could be in trouble. This is not a new concept to this segment of the population.
But if you took someone in our target market – a foreigner working for a company in Singapore or a high-flying Singaporean – no matter who you are, it is never enough.
Change is the new constant, whether it is a new job or if your income has gone up or down, or you just had your first child. Your protection gap will change and your life coverage needs to follow suit.
You should absolutely be looking at the changes in your situation at least once a year. I am the CEO of a life insurance company, yet I still won’t have enough cover when the year ends – guaranteed.
This is a cautionary tale I have tried very hard to stitch into the fabric of the Zurich model. Zurich believes in the importance of advice and education so customers can make the most informed decisions about their futures. Without our clients, we have no business. So we always seek to put their needs first. This principle is ensured within a code of conduct called the “Zurich Basics”.
Many people acquire life cover and simply stick it away in a drawer and forget about it. You wouldn’t do that with a bank account. And in reality, this is likely to be the most important bank account you and your family will ever need.
People need to manage life insurance and related benefits in the same kind of way they would manage their bank accounts and investments. You need to ensure that your balances are appropriate and continually renewed.