An expert’s advice : He is a coach and consultant, Steve Tan has been coaching insurance planning and agency management for over 3 decades. We are blessed to have him on a special interview series to share on proper insurance planning.
He’ll cover these questions in Part 1 of this series
- What’s Risk Management?
- How to get about it?
- How to increase awareness on Risk Management?
For those who love reading, here’s subtitles for you to read through if you don’t want to go through the whole video.
Hi! Everyone, welcome back to Finposts.com. Today we have a very special program because we have invited someone from the insurance industry. A respectable, notable senior consultant and coach from Singapore. He is also the first to bring “Need Based Selling” to Malaysia. He is also known as Shifu (guru), let’s welcome our Shifu Steve Tan!
What’s risk management?
Q: We are very honoured today to have Shifu on our show. Thank you Shifu! Today’s information sharing is on the topic of insurance. A lot of people still do not have a good understanding on insurance. Clear information about insurance as well as the industry We are very grateful to have Shifu to advise and clear our doubts. Insurance is said to be a risk management. How do we define risk management?
A:There are 2 major parts of risk management. 1 is business risk management. That includes investment and etc. The other part is personal and family risk management.
Business management is about doing business and investing. Therefore, we must reduce the risk. What is Business risk management? To reduce the risk to the minimum as possible. Ensuring that when there is loss of business funds, it can be quickly compensated.
Today we will focus more on personal risk management because there are many misunderstanding. Personal risk management is very important. Let’s start with why it is important? Most people perceive that risk should only be managed when risk occurs. However it is often too late.
How to get about it?
A: There are 4 major ways of risk management So how do we manage risk? Firstly, we must avoid risk We can choose to avoid risk, known as Risk Avoidance.
The other way is the prevention of risk. It is often said, prevention is better than cure. For example, when we ride a motorbike, we might meet into an accident. Which will cause injury, so we’ll stay at home instead, this is how we can prevent risk.
As for risk mitigation, we buy a helmet to protect ourselves. By using the helmet, the risk is reduced.
Buying a helmet is not expensive. However, if risk occur it will cause us a huge financial burden. To the point that we can’t afford to manage it, we should transfer the risk.
Transfer of risk is the most common way and we all know it. It is to transfer it to insurance company. That’s when a big pool of fund where everyone contributes. For example, when everyone contributes RM 1 and 1 million people contributes, we will have RM 1 million of fund. We know that it is impossible for 1 million people to die together. So when any contributor meet with risk, funds will be allocated from the pool as insurance payout to them This is how to effectively use small money to create big money to help one another.
How to increase awareness on Risk Management?
Q: There are 2 groups of people. People with knowledge in risk management and people who don’t really understand what is risk management. There’s very low awareness. Is there any way? That we can increase its awareness to the public.
A: You’d asked a very good question! Its spot on! Its exactly as you have said, many people are still with little to no knowledge of insurance. After all, they are not from the insurance industry so it’s normal.
Therefore, it depends on the quality of our professional insurance agents. That’s why the relevant authority party which is Bank Negara’s insurance department had introduced and implemented many regulations for insurance company to adhere.
For example, in terms of professionalism, we have many requirements for the Agents. Firstly, the requirement of 30 hours a year of CPD (training) hour. Secondly, there are many courses to attend too, making it difficult for agents to be unproductive. Lastly it also depends on the nature of the agent.
Agents now are very knowledgeable but If he or her wants to mislead the customer with the intent to deceive, it is necessary to let the law handle him or her. So I hope to educate the public through professional agents In hopes to increase the awareness of insurance.
Risk is all around us, it’s intangible and unpredictable. Transferring it to another entity such as insurance company is our best bet at keeping our hard earn money safe. Another thing to take note is, always choose the most professional agent you can find.
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