New Year Resolution 2010….. driven by private agenda or on collective bargains?

We are now right into the front door of 2010 – but not forgetting the very uninteresting 2009 despite what happened at the economic front, and the messy implementation of the mandatory direct rebating process! But will 2010 be some interesting year for most of us insurance practitioners and entrepreneurs?

This would very much depends on what the people over at the driving seat resolves to do this year, hopefully not carrying out things according to personal or on company’s agenda but founded more on an industry collective bargain. Private agenda and a collective bargain (a term commonly used in a employee relationship dispute) are two different things, although many still believe that it is unavoidable that private agenda must be clearly reflected into those collective bargains – even if we have to lobby to get our agenda in place! In reality this argument may be true to a larger extent but, this can merely be a trade off rather than pushing them all across….. Simply puts, and without having to take argument to the next level or another form – it is suffice to just list out those main topics that will likely make it into the 2010’s event books.

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Things to look at and How best to handle…..

The Main Topic likely to make it for 2010 discussions
Some points to ponder over……

A different kind of animal - blurring all the way......

The process of detariff is blur - a road never travelled before by members.... The only lesson that could be learned from other countries is underwriting know-hows are always thrown out of the window!

The working process behind DETARIFFICATION – The industry must understand this is no a “Big bang” but rather a process of getting there!

Perhaps more real work and less debate this time around!

We hope to see less micro-management from the Central Bank when this process takes off…..

  1. Talking should be backed up by proper implementation – best to start off by reviewing all those tariff related crumbs – crumbs that had dropped along on the way here
  2. Crumbs can take the forms of restrictions, warranties and conditions which may be deemed unnecessary in the face of globalisation and the best practices of today
  3. Reduce restrictions and not putting in more restrictions as focus should now be more of self discipline among members rather than working towards disciplining the members….
  4. Strengthening and streamlining measurement of Internal Capital Ratios and use them as a basis to derive the minimum underwriting variables for prescribed portfolio underwritten by individual member

BI is simply about information at our finger tips!

Business Intelligence (BI) – is a must if we think our markets are taking the detariffing process – It is about turning whatever database that we have had accumulated all these years into useable statistics and information…. Do we want to ride on some half-baked ISM-KMS BI tool, hoping that our staff would be able to do a great job…. or we expand more investment in making it better?

ISM – KMS system is supposed to be an important source of BI for the industry. With so much data and statistics uploaded into ISM database and the hefty subscription sum paid annually, we are given something that is half-baked…. Something should be done about this – ISM must put in more focus in this area and Stakeholders must put in more investment dollars into getting this half-baked version working full more efficiently and effectively.

Not use of how this works? More training and more training!

Government Service Tax (GST) – This is going to be a reality….as the government is very determined to have the relevant Bill passed this year!

While the Bill will to be presented and debated in Parliament, the industry should start prepraring for implementation in 2011.

So, back to the days of 2008 – with more training and most importantly picking up the relevant concepts all over again. But then, are we working out some training for the agency force as well, bearing in mind they are never represented as far as PIAM is concerned.


No Claim Discount? What? Your premium is due for an increase! Thanks Morris! I didnt know you could draw!)

ISM – NCD and your Point-of-Sales (PoS) front-end system – Sudah SAMBUNG? But do we want to work with KEJARA demerit points system and replace the current legacy NCD practices?

1st July 2010 had been set as the “full point-of-sales” integration date – meaning all the stakeholders (MMIP, Insurance and Takaful players) who are involve in Motor underwriting must have their point-of-sales (front-end system) fully integrated with ISM-NCD system.

If any of those point-of-sales systems owned by any of the stakeholders are not linked or integrated, then those systems cannot be used to transact any Motor insurance business. The Motor tariff would be re-written to cater for this restriction…. and all other stakeholders (MMIP and takaful) must also sign a pact to this. Independent point-of-sales system owned by intermediaries (like EON, Tan Chong and POS) must be integrated as well, otherwise….zap! You no longer able to transact business – if your principal allows you to do so, zap! They must pay the fine for breach!

Catch phrase – “Sudah Sambung? Kalau Belum, mungkin NCB akan Potong!” – that’s for 2010

On the other hand, should the industry reconsider doing away with this legacy NCD practice? Instead should we redesign a more effective system of discounting in line with the current KEJARA system? The current NCD system is ineffective in penalising the Insured because this is only done after an accident, when the Insured or any of his/her authorised drivers are found to be at fault…. which is pretty much historical  (after an accident) rather than preventive in nature. What the industry should focus on is penalising those who have bad driving records and providing discounts for those with unblemished records….. With the KEJARA demerit point system, Insurers can work towards rewarding the better drivers and penalising the bad ones. It is pointless to terminate the Insured’s NCD after an accident had occurred with a million ringgit claims bill to deal with!


Should the Insurance Industry become an integral part of the Community Policing Project?

Dealing with Theft related losses? Why not try Community Policing for a change?

Crime related claims climb above RM3 billions annually but what is the industry doing about it – lamenting the high theft losses, threatening to increase rates and imposing adverse terms or put up some show of force by a collective effort in rejecting certain category of risks? It makes no sense in rejecting certain categories of risks (eg. Motor) which would found their way into the MMIP and thence back to the industry in equal sharing basis…..

Why not the industry look forward and be constructive by putting more bets into Community Policing?


Our non-life insurance industry - more of slave driver? are there rooms for re-examination of our Human Resource base?

Industry wide Human Resource strategy

Our HR operates like a Personnel department and the KPIs were never appropriately measured and performances remunerated…. Can we change all these?

Our Non-Life Insurance industry was a “Drop-Out industryin the 80s and still is in the first decade of this 21st century! “Drop-out” in this sense means the graduates workforce is treating this industry at least as a third option when applying for a job….. thus the industry failed in attracting first-class honour graduates into our fold! At the end of the day, we are left with a pool of second-class lower graduates to pick and choose from…. But who are we to blame when our industry graduate-entry-pay is just too low for their asking!

Thomas P. Flannery, a HR practitioner once asked “What’s the basis for competition in the 21st century? Certainly, it is the ability to think through complex problems, serve the customers better, and be more creative.” All these qualities boil down to the capabilities of company’s best set of people. This “best set” would most probably represents about 20% to 30% of the company workforce. But, significant costs are therefore attributable to this set of quality people – yet truly few company works towards extracting full value or returns from their potential employees.

The industry will have to adopt a different form of strategy – this likely means cutting back on ineffective training programmes for the masses and diverting the funds focusing towards their best set of people.Can MII stands up and take note?

Are we calling this best set the elite group? This is not a choice simply because, the “task-handler” group within our industry is growing by leaps and bounce, but the “thinker-handler” groups are just not growing…. This has resulted in most processes and procedures becoming archaic….(and if any drastic change was made, process became haphazardly worked upon…) and industry appearing sluggish. We need to focus on reaping the full potential of this elite group so that both the industry and its members can take another strategic leap forward! It is pointless and counter- productive to snatch personnel from one another….

While focus would be more on the job training, specialised IT related training for core operational people is becoming a must. A lot of operation staff (especially those under the category of Gen – Baby-Boomers and the more mature category of Gen-X) are not able to comprehend the fuzzy-logics behind IT applications, thus their roles in improving operational processes are mostly hampered…… Full reliance on IT personnel is not going to be tactically correct simply because IT functions can only be ENABLING rather than DRIVING….


The power of Social Media networking and open-blogging finding their footing in insurance eCommerce

What would the industry internet strategy for 2010? Is this going to be something interesting for all or will it be the same old story of putting in more restrictions after restrictions?

Business is social, thus it is not surprising social media sites like Facebook, Friendster, LinkedIn and Twitter found their way into various business networks and channels. The blogging environment has also expanded very fast and blogging sites are quickly picked by advertisers to extend their advertising reach….. and the costs of doing it are much lower than the conventional type of advertisements. Many of the larger companies, especially those in the IT and Consumer sectors are utilising bloggers to write product reviews as well as reviewing some promotional stuff with main objetives to generate more interest.

But currently, almost 100% of insurance companies ban social networking and blogging on company times. Guess… it is appropriate now, but when more business is conducted via social media sites, this may certainly change.


Product Innovator wanted!

Can the industry be more innovative, perhaps, more adventurous in Product Development – at least be part of an effective equation in dealing with the daily problems of Malaysian? An industry award for best insurance innovator? And why not?

Rather than working on “cheap, cheap, cheap and more cheap” for all existing types of products, can we be more proactive in coming up with products that are of beneficial to our community? Have we forgotten that the industry is a organiser of insurance pool or funds for the masses so that the unfortunate participants can be protected in any event an unavoidable loss occurred? Our industry is just sitting back and competing on what’s given by our intermediaries! Thus, competition can only be rates and terms trimming or worst, cutting….

Are we being too conscious of our peers branding or showcase us as a failure in such and such a “innovative” product?

Can we work towards giving industry awards for the best product or process or delivery chain innovations?

These 8 main topics, whether they are to be discussed in parts or whole, littered with private agenda or on some collective bargains or trade-offs….., should be able to keep the industry busy for 2010. But achieving the right outcomes is something we can’t envisage here. Surely, this would require the right process, with ownership of it has to be brought in….  There will be issues and hassles along the way but surely the industry will be able to find its ultimate footing towards the end of 2010.

Patience is therefore advised!

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6 comments for “New Year Resolution 2010….. driven by private agenda or on collective bargains?

  1. catherine
    December 19, 2010 at 22:38

    well said, but little was realised! perhaps try again assessing the 2011 position. And, thank you for that thoughts.

  2. Anonymous
    July 17, 2010 at 21:12

    Well said! I supposed there are many people taking up seats in the committee (you know what I mean) but doing very little, worst still just sit in and talk only. But, nightmare, when you have those who are always absent from the meeting! Bless you.

  3. Anonymous
    February 11, 2010 at 20:44

    Quite like you “Innovator Prescription”. Everytime we have an industry annual gathering, awards are given for some other thing, like karaoke, best dress, blah,blah! Ya, why not for the best innovative product for the year!

  4. ganesh
    January 5, 2010 at 12:48

    Very tidy illustration of how GST works! From supplier to manufacturer, end-consumer pays. But I am not sure if my backstreet teh-tarik guy would charge me the GST at that rate since he would have paid the GST for his supply of teh, sugar, water and electricity! Most likely he be charging me 10% GST lah!

    • January 5, 2010 at 18:54

      Well! that’s how things work, and definitely affect the poor man first as their daily shot of teh-tarik would be more expensive. For the middle income earner like me, I have no choice but to go to the backstreet teh-tarik man for my teh-tarik; at least it is cheaper there! Of course I’ll get stomach ache but gets detox for free!

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