AIA may waive penalty charges for customers who reinstate policies
By May Wong, Channel NewsAsia | Posted: 17 September 2008 1932 hrs

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SINGAPORE : Customers who terminated their insurance policies with the American International Assurance (AIA) may get to reinstate them without having to pay a penalty.

According to sources, the insurer is currently studying this option.

But hundreds of Singaporeans continued to throng the AIA office at Raffles Place - the business district of Singapore - for the second straight day, with many still terminating their polices, despite knowing that the US Federal Reserve will pump US$85 billion to prevent the American International Group (AIG) - the parent company of AIA - from going bankrupt.

AIG was reported to be hit by the US financial crisis.

The AIA office has seen a constant stream of anxious policyholders, eager to pull out their contracts.

"Even if they pump in 85 billion, it may not be enough to sustain," said one member of the public.

Another agreed: "Things might just get worse and they'll need more money (to be) pumped in. I'm not going to take that risk."

Some, however, are adopting a wait-and-see approach.

"I'm not sure yet. After I've seen them (AIA personnel), and maybe consult whether it's right for us to carry on, and to understand more," said one policyholder.

The company reiterated that it has funds to meet its obligations and it's business as usual.

"Despite the problems faced by AIG in New York, policyholder funds in Singapore are segregated and our policyholders in Singapore should be assured that we have adequate capital to meet our obligations. Our response, and rightfully so, is to focus on serving their needs as they come in, if they want a loan or if they want to surrender. We're going to process it as properly as we can," said Mark O'Dell, executive VP and general manager of AIA.

"Some of the policyholders have been here as early as 7 in the morning. Some of them told me that they saw the news on television and decided to come here personally to make enquiries. And to meet the needs of the customers, AIA says they've redeployed staff from other offices over here. And they say they're coping well, despite the sudden surge in numbers."

Another insurer Great Eastern Life said it has not been badly hit by the US credit crunch.

Said Tan Hak Leh, MD of Great Eastern Life Singapore: "We have not received any increase in phone calls from policyholders, and of those few that we've received; there were some questions on whether we're impacted by the current crisis.

"For each of the life insurance funds, we are required to maintain a capital buffer, and for Great Eastern at the moment, we have a capital buffer in excess of 250 per cent, which is significantly above the regulatory minimum of 120 per cent."

AIA is the largest insurance company in Singapore, with more than 2.5 million policies in force. - CNA /ls