Low penetration of insurance companies has been realized by most countries in the world. However, there has been a paradigm shift in the insurance business in the recent years. For instance, in Singapore, there has been a market boom for insurance business in 2015 after they realize a 14% increase from the previous year. There have been factors which have contributed to the rapid growth of the insurance sector in Singapore.
Changes in the regulations
Some few years ago before the realization of profits, there was a significant push by the regulator to have all the business conduct by insurance companies made transparently. That means that the principle of utmost good faith ought to be display by both parties. The principle states that both sides are oblige to disclose all the information before the actualization of business, and this make the insurance companies achieve many profits. Nearly all the defaulters had to disappear which was a major hindrance to the growth of insurance firms in Singapore.
Reduction of sales commissions
All sales agents must be giving a commission on each and every purchase they make. This is seen to act as an incentive to the marketer, and this makes them work harder. Therefore, bringing more clients will improve the growth of a firm. Before the Financial Advisory Industry Review was done in Singapore, the sales commissions for the sales agents were too high. Therefore, making the company has no or fewer profits. The industry review advice that progressive growth in the insurance industry. Therefore, commissions must be reducing for the money to be plough back to the business to realize profits.
Introduction of direct purchase
This policy was introduced by the Monetary Authority of Singapore in a bid to curb intermediaries as well as operating costs. The insurance companies would spend a lot of money to send out agents to go out to the citizens of the country and sell out their products. To curb indirect purchase, the authority introduced direct purchase from the company itself so as to maximize the revenue. For example: the products like life policies, health policies and so on. This change did not only help the companies maximize their revenue, but it also assisted them to retain long term business which assures the business continuity.
The insurance industry in Singapore it growing and although the penetration levels are still low, there is still a great potential in the market where various companies can compete and make a huge impact in the market.
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