Dear Editor

Larry Haverkamp ('Consumers deserve more clarity on insurance policies', BT, July 1) may have misunderstood some of the points in the letter from the Monetary Authority of Singapore ('Insurance data already available on MAS website', BT, June 22).

Insurance involves the pooling of risks. Consumers who purchase participating ('par') products pool both investment and mortality risks. This is an inherent feature for par products universally. There are other insurance or investment products for consumers who prefer to have their own investment mix.

Information on the yield earned by each par policyholder may not be meaningful on its own. Par products can have significant insurance protection value. Some par products also offer value through high levels of guaranteed benefits.

This is why MAS said that a comparison of insurance products 'should not be done on the basis of price alone as insurance products are not standardised commodities'. Consumers must consider their needs and their desired balance between insurance protection and investment.

MAS has also said that work is already underway on greater disclosure of the protection versus savings components in insurance products. This will help consumers understand how much of their premiums goes into insurance protection versus savings and is more meaningful than looking at price or yield alone.

Additionally, Mr Haverkamp is wrong to state that 'MAS consumer education provides the industry with a platform to disseminate its self-serving views'.

MAS vets MoneySENSE guides and presentation materials to make sure they are objective, and do not push any product nor promote any specific financial institution or other commercial interests. Audits are also conducted at MoneySENSE talks to check that the content is delivered objectively. Speakers at MoneySENSE talks include academics and representatives from investor and consumer associations.

Angelina Fernandez (Ms)
Director (Communications)
Monetary Authority of Singapore