Insurance Industry Reform Needed to Safeguard Consumers

26/10/2016 15:14

With the country’s leading insurance companies committing to make insurance accessible and affordable for Fijian rural dwellers and low income earners, the Consumer Council of Fiji is calling for a ‘pragmatic approach’ to reform the industry.

The insurance companies should not just offer tokens but take positive steps to ensure consumers get product disclosure statement from the agents selling the insurance covers to allow them to make an informed decision when investing their money.

The Council supports the proposed initiatives by insurers such as Life Insurance of India (LICI) for tailor-making insurance products to cater the needs of less well to do families as highlighted to the Parliamentary Standing Committee on Economic Affairs (The Fiji Times, 26 Oct 2016) early this week.

Our experience with handling complaints against agents, has shown that some agents are not transparent in their dealings with consumers. Misinformation, non-disclosure, and lack of knowledge of the various products are some of the issues dealt with against agents who tend to mislead consumers in a bid to sell the product so that they get commission. 

Even the Regulator, Reserve Bank of Fiji (RBF) has only implemented minimum guidelines for the appointment and supervision of agents. It has left it to the industry to implement their own code of conduct to suit themselves. As such, there is no standard and consistency. We have constantly called for a ‘standard code of conduct’.

The Council also supports the call by the insurance industry to look into the sub-standard building products that are being brought into the country. Standards need to be implemented and enforced to stop these substandard products at the border and to ensure that importers only bring into the country, building material that is of quality. This goes hand in hand with the enforcement of the National Building Code.

Whilst the Council welcomes the current awareness initiatives being carried out by the insurance industry, the Council feels that more needs to be done on the technicalities of the insurance products that are available in the market. Insurance companies need to boost consumer confidence by making full disclosures about the products. Consumers need to know exactly what they are paying for.

The Council has noted the concern over the loss suffered by the insurance industry because of TC Winston early this year. The premium pool for TC Winston may have wiped out 85% of the total $160 million premium pool in Fiji resulting in loss only for one year. We are interested to understand the status for other years when there were no natural disasters? For non-disaster years, much of the premium pool would have remained intact and so would be the profit for insurance companies.

The Council supports the statement made by the Attorney-General and Minister for Economy, Hon. Aiyaz Sayed- Khaiyum when he commented on the need for reform of the Insurance industry while presenting the 2016-17 National Budget in Parliament on 22nd June 2016.  He stated “We must develop an insurance framework, designed to reach to the underserved in our country, in our society who desperately need protection they cannot afford and in future they have some form of protection”.

The Council finds it ironical that the insurance industry collectively have set standards for compliance to be met by consumers if they want a cyclone cover.  BUT the Regulator has not imposed any standard in terms of how key information should be disclosed or even a standard Code of Conduct for insurance agents? Why?

We would like to see a flourishing insurance industry and this can happen with reforms.  We need the industry to become more accessible to the consumers. We are calling for more accountability and a more robust monitoring from the Regulator, which has been lacking.  

With the country’s leading insurance companies committing to make insurance accessible and affordable for Fijian rural dwellers and low income earners, the Consumer Council of Fiji is calling for a ‘pragmatic approach’ to reform the industry.

The insurance companies should not just offer tokens but take positive steps to ensure consumers get product disclosure statement from the agents selling the insurance covers to allow them to make an informed decision when investing their money.

The Council supports the proposed initiatives by insurers such as Life Insurance of India (LICI) for tailor-making insurance products to cater the needs of less well to do families as highlighted to the Parliamentary Standing Committee on Economic Affairs (The Fiji Times, 26 Oct 2016) early this week.

Our experience with handling complaints against agents, has shown that some agents are not transparent in their dealings with consumers. Misinformation, non-disclosure, and lack of knowledge of the various products are some of the issues dealt with against agents who tend to mislead consumers in a bid to sell the product so that they get commission. 

Even the Regulator, Reserve Bank of Fiji (RBF) has only implemented minimum guidelines for the appointment and supervision of agents. It has left it to the industry to implement their own code of conduct to suit themselves. As such, there is no standard and consistency. We have constantly called for a ‘standard code of conduct’.

The Council also supports the call by the insurance industry to look into the sub-standard building products that are being brought into the country. Standards need to be implemented and enforced to stop these substandard products at the border and to ensure that importers only bring into the country, building material that is of quality. This goes hand in hand with the enforcement of the National Building Code.

Whilst the Council welcomes the current awareness initiatives being carried out by the insurance industry, the Council feels that more needs to be done on the technicalities of the insurance products that are available in the market. Insurance companies need to boost consumer confidence by making full disclosures about the products. Consumers need to know exactly what they are paying for.

The Council has noted the concern over the loss suffered by the insurance industry because of TC Winston early this year. The premium pool for TC Winston may have wiped out 85% of the total $160 million premium pool in Fiji resulting in loss only for one year. We are interested to understand the status for other years when there were no natural disasters? For non-disaster years, much of the premium pool would have remained intact and so would be the profit for insurance companies.

The Council supports the statement made by the Attorney-General and Minister for Economy, Hon. Aiyaz Sayed- Khaiyum when he commented on the need for reform of the Insurance industry while presenting the 2016-17 National Budget in Parliament on 22nd June 2016.  He stated “We must develop an insurance framework, designed to reach to the underserved in our country, in our society who desperately need protection they cannot afford and in future they have some form of protection”.

The Council finds it ironical that the insurance industry collectively have set standards for compliance to be met by consumers if they want a cyclone cover.  BUT the Regulator has not imposed any standard in terms of how key information should be disclosed or even a standard Code of Conduct for insurance agents? Why?

We would like to see a flourishing insurance industry and this can happen with reforms.  We need the industry to become more accessible to the consumers. We are calling for more accountability and a more robust monitoring from the Regulator, which has been lacking.