TO protect consumers from 'twisting' of insurance policies by unscrupulous agents, the Life Insurance Council will implement a new code of practice governing the switching of life policies from December 1.
Under the code, close monitoring will be enforced at the point of sale by requesting that a customer protection declaration, which is in the form of a questionnaire, be completed before the policy-holder decides to buy a new life insurance policy.
Twisting is defined as the making of misleading statements, non-disclosure, misrepresentations and incomplete comparisons to induce a policy-holder to replace existing policies, resulting in disadvantage to the policy-holder.
The questionnaire ensures a checking process for both the client and the life insurance company, assisting them in identifying twisting, and to take necessary action when it occurs.
Market practitioners consider the code as a pre-emptive measure to uphold the professional standard of agents at a time when the industry is expanding at a rapid speed.
'Twisting always exists in the industry but the recent arrival of new entrants has certainly exacerbated the situation,' said K H Chia, a vice-president at American International Assurance, the largest insurer in the territory.