Introduction Of Insurance Industry In Singapore Commerce Essay

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In Singapore although every employee has the CPF (Central Provident Fund), which is aimed to provide basic protection for life, the amount is proven to be inadequate when people come to certain situation, suffering from disease, encountering accident for example. Therefore, insurance products in this country in highly accepted or needed by everyone. People are willing to pay extra premium to insurance companies to make supplementary protection to their lives.

The insurance industry is a prosperous business because of its huge domestic market, and also the international market which lies in the HNWI (High Net Worth Individuals) in some emerging areas like China, India and Indonesia, etc. The health insurance sector in Singapore has been affected by rising healthcare costs across the island nation, with residents recognizing and acting on the potential need for medical protection. In order to manage the business and cater for the clients, the insurance companies have developed their sales channels. The sales channels of insurance companies in Singapore include banks distribution channel, sales agencies and call centers of insurance companies' own. Among hundreds of insurance companies in Singapore, the top three companies are the Prudential, Great Eastern, and AIA, without exception, these three companies have been always regarding the agencies as their most significant sales channel.

Take AIA for instance: in 2011, the agency is again AIA's dominant distribution channel, achieved an outstanding result with VONB (value of new business) up 58 per cent. The main drivers of the growth were higher activity levels from the agency force and successful new product launches. Recruitment remained an on-going challenge in Singapore's strong labor market. To improve agency retention and productivity, AIA continued to implement an advanced training program. As a result, the number of active new agents recruited increased by 69 percent compared with 2010, demonstrating AIA's ability to recruit higher-caliber agents and provide them with the right tools to enhance their careers and improve retention.

The significance of agency as a sales channel

The business model of insurance companies is to collect more in premium and investment income than is paid out in losses, and to also offer a competitive price which consumers will accept. Profit can be reduced to a simple equation:

It is obvious that the most significant step of profit earning for insurance companies is collecting premium for investing; then, using the income to cover the losses paid out and remaining profitable. In order to collect sufficient fund from premium, sales need to be exercised either directly by insurance agency or indirectly by bank outlets.

For certain consideration, the insurance companies prefer agencies better than other channels. First of all, cost efficiency the most important reason, whatever direct or indirect channels an insurance company, commission or other fees should be deducted from the sales and the rate for indirect sales channels tends to be higher than its own channel. Furthermore, generally the insurance agents are more professional than salesmen in banks in terms of familiarity to products and insurance knowledge, insurance agents in Singapore could only do their jobs after acquiring the licenses corresponding to certain categories of products, not to mention the standard of the financial services. Last but not the least, human resource development is a rising consideration for every company, agency building is frequently proposed in all kinds of conventions and written in development plans.

Taking AIA for example again, in its Kick Off Event of 2013 which was conducted on December 7, 2012, the CEO of Singapore company addressed five elements for its Winning Game Plan, including recruitment, training and development, products, technology and customer services, among the five elements, there three of them highly related to agency building, which aims to develop its own strong sales channel. AIA's proprietary tied agency channel remained the cornerstone of our distribution platform, providing the Group with continuity of access to customers and the important opportunity to service their on-going needs. Close ties between AIA's customers and agents resulted in improved persistency during 2011 to 94.5 percent continuing the previous year's positive trend. Its agency channel represented 78 percent of the Group's total VONB compared with 77 percent in 2010 and generated US$811 million of VONB during the year, which is an increase of 40 percent compared with 2010.

The culture of insurance companies in Singapore

From AIA's case, it could be perceived that the agency productivity has great effect on the whole sales of the company, and other insurance companies share the similarity with AIA in this regard. As it known to all, insurance companies always develop distinctive cultures to enhance the productivity of their agents. The general culture could be summarized as respected, sharing and learning, Inspiring and innovative, inspiring and supportive.

3.1 Respected

In the new year's Kick Off event of AIA, when the CEO wanted to presented the top FSCs (financial services consultant), FSMs (financial services manager), FSDs (financial services director), without directly telling out the names, he took his time to touch on the background of each person, and let all the employees in the event hall to interpret the right name. This showed the concept of respect in its culture. More than 2,600 agents as well as other employees under the platform would feel they were valued and highly respected because of their contribution and dedication to the company.

3.2 Sharing and learning

There are always seminars and other event held almost every month. Guest speakers were invited to give lectures on the topics of their own successful experiences and working skills. Each employee is entitled to join the events to learn from others and also share their ideas. Like other international financial institutions in the world, online learning and sharing is provided to employees to study the new products, policies and information like promotion, training, launching events, etc.

3.3 Inspiring and innovative

In a country like Singapore whose culture consists both eastern and western style, open is inevitably element existing everywhere. In insurance companies, it is obvious that one should be open-minded, easy-going, and self-driving to be a qualified agent.

Companies like AIA have created certain environment for its agencies to develop a characteristic open and innovative culture within agencies. After observing different agencies of different districts, it is not difficult to catch the impression of diversity. Diversity leads to innovation, however, if without empowering from managerial team, diversity and innovation could not be lasting.

Technology development has great relation with innovative spirit of employees, such as the paperless system of AIA, as we noticed during the observing period, there are several FSCs, or agents, aging from 30 to 55, using different electronic devices, e.g. ipad, laptop of Windows, laptop of IOS, whatever devices they use, there are corresponding technology supporting them, at the same time, they contribute improving suggestion to the IT department. The most important thing is that during the complaining and advising process, the system is constantly updated aiming to give both clients and employees convenience.

Apart from technological innovation, agency managing process could be regarded as another innovative point. There are more than 200 agencies in AIA, each agencies has its specified field in terms of client base, products profession, and way of approaching and marketing. Therefore, the managers of different agencies need to develop the appropriate managing process to suit the agency culture.

3.4 Inspiring and supportive

Sales are vital for insurance companies. To help the whole team of agents to generate high productivity, companies always take necessary measures to inspire the agents and offer support to them.

Incentive criterions are clearly stated so that the agents could easily set goals according to their abilities and energy they want to put in and strive for success. There are several layers of incentive standard for agents of different working experiences and ranking groups to meet, which means even a beginner in this field could get corresponding reward if his or her performance meets the criterion the companies set for the layer he or she belongs to. After one becomes more experienced, the one could fight for the goals of higher layers. Wherever one agent is in his or her career path, there always are explicit goals to guide the agent to work for excellence, because the material reward as well as spiritual incentive like titles show the high productivity and outstanding performances are right there to drive the motivation. Spiritual incentive such as that MDRT (Million Dolor Round Table) qualifier will get a small separate office in the companies building and attend MDRT meeting aboard to meet other outstanding insurance people all over the world.

Incentives do not necessarily lead to high productivity; it is the abilities of that helps a agent to perform excellently, those abilities include knowledge of finance and insurance products, sales skills, communication skills, etc. In order to help the agents to improve their skills, the companies provide certain facilities and guidance to their employees, such as call centers and seminars. AIA has built its call centers to support the agents for sales. Their employees could make reservation to do cold calls in the center, certain scripts are offered to them to exercise their callings. Callings dial from the call center could be recorded for them to check if there is something to improve regarding the calling skills. Mentors are there to recheck the calling quality and improving suggestion would be kindly given. The call center has another important function, the employees there are responsible for scanning clients profile in the systems to seek opportunities for selling or reselling, then, they will call the clients and try to make appointments for the original agent to proceed. If an appointment is successfully made, a SMS will be sent to the agent, this also helps the agents to improve their productivity. Such supports are offered under the principle of win-win strategy for both agencies and the company.

The culture of insurance agency ( taking Agency SP-Willing as a case study)

The culture in the agencies follows the big map of company culture however have certain characteristics from agency to agency.

When we do our internship as observers in the agency of SP-Willing, we spent two months working with the team, trying to figure out the specialty in its culture. From our perspective after the observing process, we noticed several highlight which worth to mention as following:

Managerial pattern of agency

Weekly meeting

The agents are gathered once a week during the working time on Monday, the meeting follows the routine efficient and informatively. Normally the meeting consists of three parts:

Graph 1

In the beginning of the meeting, the manager conducts the performance review to show the performance of the agency and also the agents respectively. The main purpose is to brief the agents where they stand in the whole agents profile. By knowing their ranking, they could be motivated to some extent.

The second part of the meeting is activities report, which is given by agents, indicating the content of their work during the week before. After an agent's report, other agents could judge, make comment, or even challenge their working activities. In this process, good or bad experiences were shared for future reference.

The meeting ends with a role play set in the scene of client approaching; the agents take turns to perform. By doing this, everyone could perceive and learn useful skills from each other to develop their sales abilities.


Training is conducted when new recruits join the agency or new products are launched. The manager of the agency is responsible for working skills training with the new employees, these skills include client approaching tactics, marketing knowledge, working modules, etc. some of the skills were developed by the manager of the mentor of the manager and specifically used in the certain agency, for instance, there are 3 triangles of client approaching process and 7 stages of life, these theoretic innovation seems to be easily understandable and workable. When new products are to be launched or new policies come out, there always some experts in the company come to the agency to give orientation to the agents.

Team activities

Team activities are often organized to strengthen the agency culture. Everyone in the team would have a birthday celebrating event during the weekly meeting when there birthday come. Annual planning activity is designed by the whole team, normally held at a place of resort, and the company offers financial support to the agency. The manager also has the freedom to set certain incentive goals with attractive rewards to its agents to motivate their morale.

Culture of agents

Working in an organization like insurance agency, self-driven is one of the important requirements for a qualified and successful agent. In a well performed agency like SP-Willing, agents plan for their own work, decide their workload, working time and leisure time. However, they could do their work efficiently and dedicatedly although they enjoy such freedom. That's all because of self-driven whatever reasons they are willing to work for, the motivation are there to support their spirit. The agents are diversified in terms of working styles or preference of client groups so that they have a lot to share during the weekly meeting. Once the agents choose this job as their career, they realized that they need to be dedicated because what they could get is highly related to how much time and energy they contribute; this value has been discussed in every event of the company.

Activities lead to productivities

In sales department of insurance industry, performance could be easily measured by looking at agents productivities. However, the manager always says that activities lead to productivities. As long as the agents conduct the right activities in a right way, for instance, enough time is devoted in admin, calling clients, meeting clients, using the right methods, providing financial services with high standard of quality, every one of them could get excellent performance.