Insurance Price War? We are missing the boat

Posted 13 March, 2016 by Surely
in Opinion

A new battlefront has been opened up.
The warring parties are fighting to give you more data for less money.
We are talking about the telco wars, of course.

What colour will you choose?

What colour will you choose?

According to Straits Times, analysts attribute the price war to the possible entry of a fourth mobile operator.
Possible? Don’t you hate these “so-called” experts who like to understate the obvious?
If not for MyRepublic’s entry into the market, the existing telcos would hum along collectively, juicing us dry.

Contrary to what MyRepublic CEO said, we do not think he is making data plan cheap because the incumbents have become arrogant.
It is normal for a new player to introduce better deals than the existing companies to get a market share.
So Singaporeans, enjoy it while it lasts !

The above showcases how business competition can result in betterment of the consumers.
Does the same apply to insurance market?
Let’s find out !

In the popular economics book Freakonomics, it was reported that the price of term insurance dropped drastically in the late 1990s, with no obvious reason.
Apparently the Internet happened, allowing consumers to be able to compare prices of term insurance.
This should not happen – insurers should be competing on price, with or without the internet.


From this, we may deduce that competition only happens when the alternatives are easily available to the consumers.  
Previously even if there are competitors in the US term insurance market, the consumers are unable to reach out to them with a click of a mouse.
It was truly time-consuming to approach every insurer to get a quotation in the not-so-good old days.

Besides Freakonomic’s example, we also have another real-life example of how competition drives down insurance premium in Canberra, Australia.
NRMA Insurance used to have a monopoly on the state’s Compulsory Third Party (CTP) insurance until 2013.
NRMA had to reduce its premium, in response to a rival insurer’s price drop.

In Singapore, is competition a premium-reducing force?
On one hand, we have detected some insurer changing their premiums over the months.
On the other hand, the changes are not unidirectional.
In fact, if you run a term life insurance comparison, you can see the diverse range of premium for the same sum assured!
Competition does not seem to have an effect on Singapore insurance as a competitive market should have a narrow pricing range.


If you are wondering why, just take a look at the amount of Direct Purchase Insurance (DPI) that the public is buying.
DPI accounts for merely 4% of all insurance premiums in 2015.
If the consumers are not looking at DPI to lower their premiums, why would the insurers be reducing their premiums to attract business that way?
After all, 96% of their business comes from the advisory channels.


To have a truly competitive market, we do not only need easily accessible alternatives but also a participating consumer base.
When Singaporeans shun the DPI channels, there is no incentive for the insurers to compete in that area.
It is rather strange that a discount-driven populace is ignoring such an obvious  opportunity when it comes to insurance.

Things may not be so ominous.
DPI has just been launched so it may just take some time for the public to accept it.
There is a new kid on the block, China Life, so they may be the disruptive force that the industry needs.

Basketball genius, meme superstar. Now insurance salesman

Basketball genius, meme superstar. Now insurance salesman

Nevertheless, we urge you to try learning insurance yourself and buying the appropriate coverage directly.
After all, insurance ain’t rocket science.
You can insure yourself at better value while improving the competitiveness of the insurance industry.
Let’s start a war today. aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

  1. Keith

    Sure, and while we are at it, we should start self medicating and learn how to heal ourselves in times of illnesses so we do not pay exorbitant amounts to the doctors and specialists.
    We should also take ownership of our vehicles and not let car agents do COE bidding so as to drive down vehicle costs.
    Why not learn how to sell our own homes too as these ain’t rocket science too.


  2. Clearly

    Hi Keith, thanks for your comment, but we disagree. We only urge you to learn about insurance yourself so you can buy the appropriate cover directly so as to take advantage of the cheaper prices.

    We can’t comment about the complexity of medical studies, COE bidding or home sales processes as we are not from those industries. Perhaps right now, out there, could be 3 different websites teaching people how to identify and treat common illnesses, teaching people the best way to bid for COEs, and teaching people how to sell their own homes – we won’t know because those are not our domains of expertise.

    However, we are happy to inform you that our expertise lets us set up a site that teaches people about Life Insurance, and it sure isn’t rocket science.

    Thanks for your support! Help us spread the good word please, and have a great day 🙂

  3. Pingback: Pedestrian partially at fault for crossing the road on green ! - Singapore's Life Insurance Blog: Expert and Unbiased Views

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