AIA Singapore has unveiled a new initiative aimed at improving customer understanding of insurance policies and boosting financial literacy, as part of a broader strategy to address Singapore’s protection gap. This program is launched amid significant growth in the life insurance sector.
A recent survey commissioned by AIA Singapore revealed that over 40% of customers are not fully acquainted with their insurance policies. Many respondents admitted to skimming policy documents due to their complexity, time constraints, and a preference for relying on insurance representatives. Irma Hadikusuma, Chief Marketing and Proposition Officer at AIA Singapore, emphasized that simplifying policy language and reducing jargon are key to enhancing financial literacy. “Our goal is to make policy documents more comprehensible, helping customers better understand their coverage and identify protection gaps,” Hadikusuma stated.
The initiative comes in response to the substantial protection gap in Singapore. According to the Life Insurance Association of Singapore’s (LIA Singapore) 2022 Protection Gap Study, there is a 74% shortfall in critical illness coverage and a 21% shortfall in mortality coverage. This gap is notably significant among young adults aged 20 to 24 and recent graduates, who, despite their interest in insurance, often lack the knowledge to make informed decisions.
Hadikusuma highlighted that using plain language in policy documents increases consumer confidence in making independent insurance purchases. This initiative complements AIA Singapore’s ongoing efforts to enhance the skills of its insurance representatives, aiming to empower customers to better protect themselves amid rising living and healthcare costs.
The initiative will be rolled out in phases, beginning with updates to the AIA Health Shield Gold Max (AIA HSG) policy materials. Meanwhile, the life insurance sector in Singapore has experienced robust growth in the first half of 2024, with new business weighted premiums reaching S$2.86 billion, a 30.4% increase from the previous year. The sector also saw significant growth in both single-premium and annual premium policies, along with a rise in total sum assured and claims payouts.
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