GREAT Eastern Life is doing the decent thing in refunding customers the cost of insurance policies linked to financial products that have lost much of their value. The company will pay $250 million to 18,000 GreatLink Choice policyholders who had invested $594 million. But as 1st-century BC Roman writer Publilius Syrus pointed out: 'A good reputation is more valuable than money.' Great Eastern has sound business reason to protect its image. Unlike financial institutions that have sold investment instruments based on structured notes, it is an insurance company that claims to have provided clients 'with peace of mind and financial security' for more than 100 years.

It does not take much adverse publicity to undermine a business centred on family insurance - against ruinous medical expenses, or children's education and even baby care. All it takes is for policyholders to express disbelief upon discovering that their policies have lost much of the investment sum when these mature. As another oracle, the present-day Oracle of Omaha Warren Buffet, remarked, 'you'll do things differently' when you think that it 'takes 20 years to build a reputation and only five minutes to ruin it'. To its credit, Great Eastern decided to do things differently from what the other financial institutions did - or did not do. The manner in which the banks and brokerages handled the fiasco neither helped them save face completely nor avoid investigations by the Monetary Authority of Singapore, followed by a rebuke.

Great Eastern did not wait for customers to ask, but made a unilateral offer to refund them fully, albeit without admitting liability. Its holding company's bottom line will take a hit, since net profits amounted to only $97.7 million in the second quarter. But for an enterprise with $44 billion in assets as of May this year, that will show up as little more than a kink on the company charts.

Asking its agents to return some $12 million in commissions may present some difficulty to those who have to refund sizeable amounts, but none is known to have demurred. Unflattering light has been shone on banks' sales staff for their hardsell methods and non-disclosure of crucial information. So it again helps Great Eastern that its agents are willing to do the right thing, too. Clients will be impressed. Confidence will take time to return, but the insurance company has made a big-hearted offer that will hasten a return to practices and expectations its public can bank on.

This article was first published in The Straits Times.