THE general insurance (GI) industry has published a set of guidelines outlining best practices for GI intermediaries, as part of efforts to build consumer trust and confidence.
The guidelines were issued by the Insurance Culture and Conduct Steering Committee (ICCSC), which was established in 2019 to strengthen the standards of conduct among insurers.
Best practices include cooperation among industry players to mitigate “rolling bad apples” – that is, to prevent individuals with prior misconduct from re-entering the industry.
Here are some highlights of the best practices:
- Mitigating rolling bad apples: Recommendations include checking for past misconduct when hiring, and establishing accountability in staff responding to reference checks.
- Prohibition of referral or introducer fees, and preventing the use of sub-agents in the sale of GI policies: Insurers and GI intermediaries should not allow online partners to function as intermediaries without proper licensing or registration. They should not remunerate such partners with a percentage of sales for each policy sold, and/or participate in pricing packages that may result in biased and inappropriate product recommendations, ranking or advice.
- Remuneration practices and agency performance management framework: Appropriate incentives and a balanced scorecard should be used to ensure that reward and recognition go beyond financial indicators. These include two hours of training annually on ethics, conduct and compliance, among others.
The latest publication is the fourth paper in a series. The first three focused on human resources, corporate governance and life insurance intermediaries. They were released in two tranches in 2022.
ICCSC chairperson Khoo Kah Siang said: “Following the publication of our best practice papers and Insurance Trust Indicator Study, the industry has observed an increase in the levels of involvement and accountability of individuals within the insurance ecosystem – including leaders, supervisors, agents, brokers, and financial advisers – on matters relating to ethics and conduct.”
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He added: “This is good progress, and we will continue to engage all stakeholders to further uplift the industry.”
In a joint statement, the General Insurance Association of Singapore, Life Insurance Association and Singapore Reinsurers’ Association said action has been taken by some industry players. These include enhanced risk-management frameworks and policies, such as rigorous training on risk-related activities.
Some companies have also implemented a quality assurance scorecard for more comprehensive performance evaluation across financial and non-financial metrics.
Last year, the ICCSC published its first insurance trust indicator study, which showed that consumers and businesses have good levels of trust in the industry. More than 2,000 consumers and 500 business employees were surveyed, with all trust scores in the moderate to strong range.
The annual study will be conducted for three years.
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