By GENEVIEVE CUA

SINGAPORE consumers generally trust insurance companies more than their global counterparts, a study by IBM has found. But they are unwilling to pay higher premiums for attributes that they value.

A survey by IBM's Institute for Business Value (Insurance) has found that 71 per cent of Singapore respondents agree with the statement that insurance companies can be completely trusted, in contrast to the global average response of 66 per cent.

On trust in banks, 76 per cent of Singaporeans agree that banks can be trusted, compared to 77 per cent globally.

David Notestein, business executive of IBM's Institute for Business Value (Insurance), said that the challenge is to seek to understand the proportion that do not trust insurers and banks. In Singapore, this came to 29 and 24 per cent, respectively.

Yet another challenge is Singaporeans' expectation that insurers should possess key attributes. IBM's study lists nine, including transparency, reputation, 'green' factors and best in class. But when asked if they would be willing to pay 15 per cent more in premiums for the attributes, a significantly lower proportion of Singaporeans were willing, compared to their global counterparts.

For instance, on green factors, only 4 per cent of Singaporeans were willing to pay more premiums for this, compared to 11 per cent globally. On the attributes of client service, best in class and tailored products, only 7 per cent were willing to pay more, compared to between 11 and 13 per cent of global respondents.

Said Mr Notestein: 'Companies have to provide the attributes as part of their basic product offering . . . Providers may overestimate customers' willingness to pay for extra value.'

IBM and the Singapore Insurance Institute last week hosted industry executives to a discussion on how insurance is perceived and 'mega-trends' that are likely to impact their businesses.

Speaking to journalists after the event, Mr Notestein said: 'Multinationals often have a fairly singular view of what consumers look like, but the psycho demographics differ by country.'

Singaporeans, he said, appear to be a younger demographic and are users of social networking tools.

'It's an educated, professional and adroit population but a challenge (for insurers) to compete in . . . They ask more difficult questions and are quite willing to move if they don't obtain what they look for.'

There is space, for instance, for channels that can aggregate competitive information on relatively simpler insurance such as term life plans to make price and benefit comparisons more accessible. This should also make pricing more competitive.

Paul Robinson, IBM's insurance industry leader (growth market), said that insurers in the Asia-Pacific are questioning for the first time their predominant distribution channel of agents - referred to as 'feet on the street'.

'The question is how to optimise their 'feet on the street'. . . I'm not suggesting they're necessarily taking action. But that model is being questioned by many national insurers who have been successful with the agency distribution method.

'They say - 'I believe I can grow my business by 30 per cent . . . Can I afford to add 30 per cent more feet on the street? I should be looking at other channels'.'

Bancassurance, however, is a threat. 'There is the risk of disintermediation as bancassurance places consumer knowledge in the hands of the banks. That potentially is not the best way forward.'

This article was first published in The Business Times.