Martin Lee @ Sg
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Relook Commission Policy for Agents Taking Over Cases

In response to a letter written by Foo Der Ho which was published on ST Forum online, I wrote a letter to ST Forum on 1 August 2013. My letter was published on 2 August 2013. I have appended both letters below.

Insurer’s Unfair Commission Practice by Foo Der Ho (30th July 2013)

Recently, I asked my health insurer, Aviva, to change the financial adviser assigned to me because of the unsatisfactory service and inaccurate advice provided.

Aviva told me that my request should not be a problem. However, I was told that the new adviser would not receive any commission for servicing my account, while the current one would continue to receive the commission – a rather hefty one for the product I was paying for.

When I inquired why this was the practice, Aviva would say only that this was its agreement with the financial advisory institutions.

While this may be beneficial for the financial advisory firm and the adviser, what about the customer? Will this not perpetuate poor after-sales service rendered to customers by advisers?

With this unfair practice, poor service continues to be rewarded and an ineffective adviser enjoys the commission without having to do any work.

Commission is important as it is a source of income for financial advisers and acts as an incentive, but it should not be treated as an entitlement after the initial sale.

I hope the Monetary Authority of Singapore or the relevant agencies can address this issue and make the necessary changes to ensure that financial advisers continue to provide good service and advice even after securing the sale.

Relook Commission Policy for Agents Taking Over Cases

Mr Foo Der Ho (“Insurer’s unfair commission practice”; Forum Online, Tuesday) brought up a valid point that the Monetary Authority of Singapore should look into.

This is an issue not only at Aviva, but also at most if not all life insurance companies.

While the recent Financial Advisory Industry Review suggested a spreading out of commissions to reward good long-term service to clients, it left open the issue of commissions for agents who take over the cases of others.

Currently, most such agents earn nothing from taking over policies. As a result, there is a greater incentive to engage in “churning” (persuading the client to surrender a policy and use the proceeds to buy a new one), which is detrimental to clients.

Agents, knowing their future commissions are secure even if they are replaced as the servicing agent, also have less incentive to service the client well after selling him the product.

The industry should move towards treating recurring commissions as ongoing service or advisory fees paid to the current servicing agent of the policy, rather than as a sales reward to the initial agent who sold the product.

Making the payment of recurring commissions to the current servicing agent compulsory will be a big step forward for the industry.

Leave a Comment:

Hidden says 7 years ago

If the “takeover” agent can earned the remaining commission, it will greatly improves the level of service that the first agent is providing for fear that the policyholder will assigned someone else to takeover his/her policy.
On top of that, there should be a pro rated refund to the policyholder if he/she should decide to cancel the policy within the first year (eg. Life insurance has zero refund if you cancel on the first, or even second year) which will also claw-back the agent’s commission by the insurance company.

someone to benefit from taking over says 7 years ago

you mean I can earn commission fron just taking over cases?


you mean institutions have to start paying whoever take over the cases which was previously under company servicing due to advisers leaving?


can we have an all out war on who can take over the most cases?

that would be so cool.

    Martin Lee says 7 years ago

    There is no extra commissions being paid by the institutions. They are already paying it to the firm of the first adviser who made the sale. The suggestion is meant to direct the commission to the current active servicing agent.

honchun says 7 years ago

I would definitely vote for a change if there is a petition.

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