Mr. John Doe dropped his Smartphone. It got a huge crack on its screen. He rushed to the customer service center and they charged him 170 dollars. However, due to the Smartphone insurance for which he pays 2 dollars a month, it cost 10 dollars!
Ms. Jane Doe is paying a fixed monthly fee on her pension insurance. Her daughter was accepted to well-known university and Ms. Jane needs to pay big money for her daughter’s tuition. However, she has no money at the moment. She decides to cancel her insurance prior to the maturity date although she is charged substantial penalties.
The FSC announced that it will reform the current insurance policies to provide sound insurance services. Such move came as there are still concerns that insurance policies are difficult and complicated. Also, there has been little development in insurance policies compared to the speed of change in economy and demography. The FSC set forth “better regulations” and came up with three goals: building credibility, preparing for the future, and innovating insurance industry.
1. Build credibility by promoting public interest.
Insurance is too complicated which makes customers find it hard to compare different insurance products. In addition to that, insurance brochures which explain the coverage usually run to more than 15 pages. The FSC will simplify the contents to help customers enhance their understanding. In this way, customers can choose what is best for them from diverse options.
Moreover, the FSC will introduce a new system to manage insurance planners. Insurance companies should report their sales records to financial authorities and check past sales records when they hire new insurance planners. If there are enough data, incentives can be given to insurance planners who show excellent performances.
Smartphone insurances prevent customers from paying a huge amount of money when their phone is damaged or lost already exist. As such, the FSC is to allow insurance agencies to sell specific insurance products. For instance, you can purchase insurance for a laptop in electronics department or for an animal in veterinary clinic.
2. Prepare for the future with innovative insurance products
As mentioned above, when there is an unexpected expense such as medical or tuition fee, individuals can withdraw money within certain amount of rate, say 25%, from their pension plan before maturity date. This will help people maintain their pension insurance rather than cancelling it when they need big money.
Also, the FSC is considering the introduction of natural disaster bonds and weather insurances. Weather insurance is a type of insurance product which aims to help control the financial risk associated with exposure to weather conditions. For example, temperature insurances can be designed to protect people from damage due to either below or above normal temperatures. (i.e., ice-cream companies, agricultural industries)
3. Innovate insurance industry
It is hard to find insurance for elderly and disabled individuals. This is because they have higher risks which indicate the possibility of receiving insurance money. The FSC will discuss ways to vitalize insurance designed for them. The FSC is considering a way to allow extra charges to those people and pay the difference if they have shown low risks in a certain period of time.
New policies are receiving positive response from related organizations. Insurance companies are especially showing interests in weather insurances and natural disaster bonds. They said that they are ready to introduce weather insurances as soon as financial institutions set guidelines for them. The FSC and related organizations believe that these policies will improve customer satisfaction and boost the insurance industry at the same time.