Singapore's financial services regulator MAS has issued guidelines stating that a direct life insurer may offer all types of life policies via online direct channels, with no advice provided. The guidelines also set out the Authority's expectations on the safeguards that direct life insurers should put in place for such distribution methods.
Before a financial adviser (FA) offers a specific life policy online, it should first determine if it offers an equivalent Direct Purchase Insurance (DPI). If an equivalent DPI is currently available, the financial adviser should also make available that DPI on its online direct channel, said the Guidelines on the Online Distribution of Life Policies with No Advice, which took effect on 31 March.
The MAS has not required all direct life insurers to offer DPIs online, recognising that not all direct life insurers have an online platform for the distribution of life policies. However, where a direct life insurer has an online platform to distribute life policies, it should also offer the equivalent DPI online to its clients.
Provision of key information
As safeguards, the guidelines call for the FA to provide the standard key information for life policies at the point of a client’s application for the purchase of a life policy via the online direct channel. These include full product information and policy wordings, conditional acceptance conditions and incorporation of the prominent statement (such as via a pop-up prompt).
The adviser should also obtain the client’s acknowledgement that he has read and understood the benefit illustration and product summary including exclusions, and made the applicable declarations on medical conditions and financial situation.
Tools and calculators
The guidelines also state that a FA should encourage its clients to go through steps such as checks with Insurance Estimator, Budget Calculator, compareFIRST and assessing whether the life policy they have chosen is suitable for their circumstances compared against others, before buying a life policy via the online direct channel. This will enable the client to-- (a) calculate the amount of life insurance coverage the client would need, so that the client may determine if the life policy meets his protection needs; (b) check if the premium payable for the life policy is affordable based on his income and expenditure; and (c) consider the different types of DPI and other types of life policies available, and whether the life policy is suitable for his financial circumstances and needs.
This may not be applicable for all types of life policies sold via the online direct channel such as monthly renewable group term life policies, where there is no long term financial commitment.
Handling of queries, complaints and claims
A FA should set up appropriate avenues to address general queries from its clients relating to the life policies offered on its online direct channel, such as telephone or email helplines. Information such as contact details, the claims process and the process for filing complaints, should also be provided on the online direct channel.
Implementation of internal controls, policies and procedures
It is an existing obligation for a FA to ensure that it has adequate policies, procedures and controls to mitigate money laundering and terrorism financing risks, and also address any specific risks associated with non-face-to-face business relations with a client. Other existing obligations that the FA should comply with include internal policies and processes to address technological, strengthen system security, reliability, resiliency and recoverability; deploying strong authentication to protect customer data, transactions and systems and putting in place appropriate business business continuity plans to minimise downtimes for the online direct channel.
It was at the Singapore FinTech Festival last November that MAS Managing Director Mr Ravi Menon had announced the regulator's intention to allow insurers to offer the full suite of life insurance products online without advice, while putting in safeguards.
The full Guidelines on the Online Distribution of Life Policies with No Advice can be found here.