Property agents and stock brokers are among the most unloved people in the world. They feign sincerity in looking after your interests when it's the commission they get for closing a deal that most interests them. Even so, we usually know how much they charge for services rendered. Not so when it comes to insurance agents. This is a worldwide anomaly and it should be corrected. Continuing talks between the insurance industry and the government include a proposal to require insurance agents to disclose to clients the amount of commission they earn from selling a policy or an insurance-related product. The discussion is still at an early stage but it deserves to be kick-started and taken seriously. It will enhance transparency and help lower costs by enabling potential clients to shop for the best products and prices. A similar proposal was shot down in Britain late last year, though regulators have the option to revive it later this year. The practice of making an insurance client pay for the total sum without a detailed breakdown of items being charged is common not only in Hong Kong but around the world. It appears to be a legacy from past practices. Its continuation is driven by vested interests within the insurance industry and inertia among regulators. For example, the commission that whole-life insurance can generate for an agent is astonishing. It is a type of life insurance, usually with a savings component, that requires regular large payments over years, even decades, before the money is returned. Provided they are in good health and in their prime, most people would do well buying a one-year term-life insurance, instead. A term-life requires only a one-off payment but can usually be pursued every year with a slight added-on premium until middle age. Yet, agents routinely proffer whole-life insurance products - called by any number of enticing names - for obvious reasons. Here, the conflict of interests is clear. The insurance industry has been hit hard during the financial crisis. It, too, should support the proposal to improve transparency, enhance trust and promote business.
