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Tuesday, January 17, 2006
Insurance industry performs 50% lower; aims to do better
The performance of the entire insurance industry plunged 55 percent as of November last year compared to a year ago largely due to the liquidity problem of some pre-need companies, especially College Assurance Plan (CAP) and Pacific Plans.
According to Sun Life Financial president and chief executive officer Lorenzo Tan, the negative perception of the public on the insurance industry, as a whole, due to the inability of CAP and Pacific Plans to pay their plan holders, is one of the challenges which the industry aims to overcome and defeat this year.
The industry’s competition with banks on the “bancassurance” trend is another challenge confronting the insurance industry, he told Sun.Star Cebu.
CAP and Yuchengco-owned Pacific Plans, considered to be stable pre-need companies, were questioned early last year after many of its plan holders complained of not receiving the benefits due them.
Claims
Pacific Plans claimed that it is financially sound but it is just experiencing a liquidity problem because the bonds it acquired for investment purposes will mature in 2010 yet.
“We don’t have enough cash at present to pay our obligations,” according to a statement.
CAP also cited liquidity issues as the reason for its negligence.
Tan said the insurance industry is sensitive to issues based on trust, as the insurance industry is a trust industry.
He believes, however, that the industry could regain the public’s confidence if the players continue to provide quality products and services.
Tan cited Sun Life’s “out-of-the-box” solution, which the company implemented in October yet when it saw CAP’s and Pacific Plans’ problem coming.
Incentive system
From three percent, Sun Life’s market share in the pre-need market surged 46.5 percent in November, a month after the company implemented a reward and incentive system to customers, he said.
With regard to bancassurance, Sun Life is joining the bandwagon by partnering with Standard Chartered Bank, as its distribution partner, beginning this year.
Tan said bancassurance or the “encroachment of banks into the insurance industry’s territory” might not have affected the sales performance of insurance companies but banks “slice into our potential market.”
“In terms of physical infrastructure, insurance companies are at a disadvantage because banks have more branches,” he said.
Sun Life is an international financial services organization providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers.
It has operations worldwide, including in Canada, US, Hong Kong, the Philippines, Japan, Indonesia and China.
Its products include Sun Solution Series and Sun Intensi5 insurance plans, Sun education plan and asset management Sun Life Prosperity Fund. (JBN)
For Bisaya stories from Cebu. Click here. (January 17, 2006 issue)
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