Saturday, November 28, 2015

Army style is bad for SMRT

A SMRT maintenance engineer told me.
E - SMRT cannot solve the breakdown problem by following army style.
TKL - What do you mean?
E - When a helicopter breaks down, it affects only the helicopter. When a train system breaks down, it affects many people.
TKL - What exactly is the army style that caused problem to SMRT?
E - Command and control. They bring in people at the top who gives orders, without knowing what needs to be done. So, the maintenance people said, "Okay, you tell me what to do".
TKL - Oh!

I wonder if things are really that bad, or it is just one unhappy engineer?

Restructure the bus services - express and feeder services

Here is my proposal to restructure the bus services in Singapore.

Current System
We now have 375 bus services in Singapore using 4,621 bus stops located on average 0.4 km apart. A typical bus service has 50 stops. The travelling time between each stop is about 2 minutes. A typical bus journey from terminal to terminal may take about 100 minutes or nearly 2 hours. (Some of the figures are based on my guess).

Proposed System
Under the proposed system, we will convert 900 bus stops to be express stops served by the express services. These express stops are located every 2 km apart. The express services stop at the express stops only. This will reduce the travelling time and can make better use of the dedicated bus lanes.

We will probably need only 80 express services to provide connections to the 900 express stops. Although the remaining 295 service can be feeder services, it is possible to combine them and reduce the number. I guess that 160 feeder services should be sufficient to cater to the needs of commuters.

With a 40% reduction in the number of services, the waiting time to take an express or feeder bus is likely to be reduced by at least 40% as there will be more buses for each service. The waiting time for an express bus can be reduced from 10 minutes to 6 minutes and for a feeder bus from 5 to 3 minutes.

The overall travelling time can probably be reduced by 30% under the new system as the express service will make less stops and the intermediate stops will be served by feeder services. Although this may require 1 or 2 more transfers, the waiting time may not be increased as the buses will arrive more frequently.

Planning the new system
We have the data of the travelling pattern to plan the new system. The data shows the number of people boarding and alighting at each bus stop during each time segment (say, every half hour). If we group the bus stops according to the nearest express stop, we will be able to measure the estimate for each of the express services for different times of the day. The travel time of the buses can be planned accordingly.

The planning can be made dynamic with the travel data for each week used to plan the scheduling for the following week.

Friday, November 27, 2015

Do not look at Uber as a problem, it is the solution

The MRT train keeps breaking down at regular intervals. There is nothing that can be done, as the system is clearly over loaded.

The solution is to bring commuters to other forms of transport. How can this be achieved? The roads are already congested. It will be difficult to add more buses, and it will also be costly.

There is a solution. Guess what it is. It requires the LTA and the government to "think out of the box". Sorry, this solution is not found in the SOP.

We need to make better use of our private cars to provide transport. Most cars now has only a driver. We should encourage car pooling. there is non-clarity now on whether car pooling is or is not allowed (e.g. there is payment of a fee) and if insurance is affected. The LTA must provide the regulation to give clarity.

We should also encourage the use of booking of private cars for transport, i.e. the Uber or Grabcar platform. We should increase the supply of this service to bring down the cost. Many owners of old cars will be willing to provide this service to earn an extra income.

The use of Uber will impact the taxi service. But, the taxi drivers can become Uber drivers, so their livelihood is not affected. The taxi companies will make less profit but they already made sufficient profit it the past.

We need to make better use of our existing roads and vehicles to expand the supply of public transport service.

In short, instead of looking at Uber as a problem, the LTA should look at Uber as the solution!

Thursday, November 26, 2015

Claim for Loss of Use of Car

Dear Mr Tan,

I asked my insurer to help me to make a third party claim for the repair of my car and for loss of use. I get this reply from them.

"We believe there is a slight mis-understanding regards Aviva's role relating to your motor policy. The insurer (Aviva) does not have legal rights over your personal losses. Aviva has legal rights only to recover the repair cost it paid as it was stated under the rights of recovery in your motor policy.
Your motor policy only covers payment to the repairs of your vehicle upon an accident and/or liability against another party as a result of your action arising out of that accident. The recovery of your loss was always out of goodwill to our insured."

I am not legal trained but I do have a fair understanding of the law as a layman.

If the insurer has no legal binding contract with the third party regarding my loss of use, then why does the insurer meddle or dictate the amount of loss of use? How can the insurer say for a certain capacity of vehicle, such and such is the loss of use? Is this an agreed amount throughout the industry?

If it is, then why do taxi drivers have added privilege with regard to loss of use? Taxi drivers' loss includes rental of vehicle plus personal losses. If I were to become an uber driver, would my loss of use be increased since I function like a taxi driver? I hope you can advise me accordingly.

Under the policy, Aviva is contractually obliged to repair your car. They have the legal right, called subrogation, to sue the other parties to recover the amount that they have paid for the repair of your car.

The policy does not provide for loss of use, so Aviva cannot pay you for loss of use and recover it from the other party.

You have to take action on your own to make this claim on the other party.

It is a different matter when the other insurer negotiate with you on the amount for the loss of use. Usually, they will recognize the actual loss that you have incurred, e.g. rental of a car, taxi fare, etc. If you make a reasonable amount of claim, they are likely to agree with you.

I hope that this explains the position clearly.

Wednesday, November 25, 2015

De-privatizing the public transport system

Singapore has been operating a privatized public transport system for the past 30 years. It has been unsuccessful,. The transport operators, i.e. SMRT and SBS, were profit-oriented. They increased their profit by reducing maintenance expenses, leading to frequent breakdowns in the train system. They are reluctant to operate bus routes that are unprofitable.

The public are unhappy with the decline in service and deterioration in the public transport system. They are now in favor of the government taking back ownership of the system. Someone has coined the term "de-privatization" to describe this action.

The government has already started to de-privatize the public transport system. The recent award of the Loyang bus services to the UK operator, Go-Transport, is the first step in this complicated exercise.

Under the de-privatized model, the operator collects the fares and pass them to the government agency, i.e. the Land Transport Authority. The LTA sub-contracts the operation of the transport services to the operator for a fixed fee under a term contract of say 5 years.

The contractor has to meet the operating and service standards specified in the contract and receive the agreed fees. By operating efficiently, they aim to make a profit. But they are not affected by the actual revenue, the setting of the fares or the planning of the routes. These activities remain under the control of LTA.

Contracting model
Singapore organizations has a wealth of experience with the contracting model. The building of HDB flats and MRT stations are carried out under the contracting model. The contractor tenders a price based on the performance standards of the contract. The contract is awarded by the principal to the successful tenderer.

The principal has the ability to monitor the performance of the contract. The contractors are also experienced in handling their part of the contract. There is also an established mechanism for handling disputes in the contracts.

Is this the right strategy?
The contracting model that is being implemented now has operated successfully in the case of London Transport. I believe that it is the right model for Singapore as well.

We should not expect everything to operate smoothly in the initial years. But it should operate better than the current privatized model. We can expect problems to arise with the new contracting model, but they can be sorted out and improved with experience.

We can look forward to a better public transport system. Of course, we need the Land Transport Authority to be competent in managing the new model. We hope that they have the right people to manage the change and to run the new model.

Tuesday, November 24, 2015

What's Wrong #16 - Lodging a police report

Many years ago, it was possible for the public to lodge a police report at any police station on any crime or offence.

This procedure seemed to have changed in recent years. If the public goes to lodge a police report about some traffic matters, they are told to go to the Land Transport Authority. If the matter concerns the environment, they have to report to another agency.

I read a newspaper report that someone reported to the police about car racing in the early hours of the morning. The police directed him to the Land Transport Authority that is in charge of traffic matters. The LTA directed him to the environment agency as it is noise pollution. 

What's wrong?
Many people find this new practice to be confusing. They do not know where to make the report. I have heard anecdotes about people being directed from one place to another.

Most of the responsible agencies do not have a network of stations where the public can go to make a report. 

How to put it right
The police station should be the place to make the report. The report can be referred to the responsible agency for follow up. 

There is an added advantage. Under the law, a person will be committing an offence if he lodges a false report to the police. This law will make the public mindful about lodging a genuine report. This law may not be available to the other agencies. 

Unfair for insurer to reject a claim due to non-reporting by their insured policyholder

Dear Mr Tan,
I am writing to request your expert advice on motor insurance terms and conditions, since you were previously NTUC's CEO.

I met with an accident this May. The third party was at fault. The entire incident was captured on video and the video together with my report was filed to claim from the insurer of the third party, which was NTUC.

NTUC claimed that their insured had not reported the accident to date and that makes them not liable for the claim from me. They have repudiated the claim. Based on this, I made a claim against my own policy and my insurer has managed to counter claim from the third party directly on my behalf, except for my loss of use, which my insurer will pursue.

I would like your expert advice on this clause which allows the insurer to repudiate the claim despite the aggrieved party having sufficient proof to make a rightful claim. This may be an industry practice for insurers to repudiate non-reported claims, but is this fair to motorists? Motorists are made to buy insurance for the very purpose it serves, but if that purpose can simply be negated by a simple and fraudulent technicality such as 'non-reporting', then motorists will beg the question, 'Why bother buying insurance in the first place?'

I am going to write in to the current CEO of NTUC. I hope to get some advice from you first before doing so. What can be done for the industry to acknowledge legitimate claims despite the insurer's own client failing to comply with the insurer's own terms and conditions? The industry practice has to change in my opinion.

I agree with your view.

When I was CEO of NTUC, I instructed the claims manager that it is not fair for them to repudiate a claim due to non-reporting by the insured policyholder, unless there are justifiable reasons. 

There is the possibility that the accident never occurred, or a case of mistaken identity, or the insured policyholder rejects liability for the accdient. In these cases, the insurance company could rightly reject the claim for non-reporting. 

In your case, you were able to provide evidence to identify the car concerned. It is not fair for the insurer to repudiate the claim and cause problem to the third party claimant. 

To avoid this trouble, it is best for you to leave the claim to your insurance company. A good insurance company will allow you to keep the No Claim Discount, if the accident is clearly not your fault.

What's Wrong #15 - Police did not investigate

A few years ago, I lodged a report with the Commercial Affairs Department jointly with another person. We made a complaint against a person who was alleged to be cheating the public by offering forex training courses at high fees. We submitted documents to show that the representations made by him in his advertisements were fraudulent.

We followed up closely with the investigating officer over several months. We asked him for updates into the investigations. His reply was "still under investigation". He was not able to give any concrete information to us.

After six months or so, we received a reply that the matter had been closed, due to lack of evidence.

We insisted on meeting the investigating officer. I asked him, "Did you call up the person mentioned in our complaint for questioning? He said, "no". I asked him again, "You mean that you investigated for six months without even meeting this person to ask for his explanation to our allegations?". He said. "Yes". I know for a fact that he did not call me or my co-complainant for further clarification on our complaint.

One year later, I helped a group of people to lodge another complaint another person who allegedly cheated them on some investment. The outcome of the case was the same. The investigating officer reported after six months or so, that there was "no case".

In both cases, I strongly suspected that the investigating officer just prepare the paper reports and did the paper research. They probably did not call the complainants for further clarification or the persons complained against for their explanation.

What's wrong?
The police did not do the basic steps needed to investigate the complaint.

After a while, the parties who are committing fraud to cheat the public will get the impression that no action will be taken. They will continue to perpetuate one fraud after another.

They will close down one company who has a bad record of complaints and set up a new company to continue their fraudulent activities. Some of these fraudsters had continued their operations for more than a decade.

How to put it right
The investigating officer should call up the parties complained against to get their explanations on the allegations against them. He should also keep in regular touch with the complainants to get further clarification from them and to give them the assurance that their complaints are getting the required attention.

Monday, November 23, 2015

P2P Lending Platform

About Kelvin Teo, Chief Executive and Co-founder of Funding Societies

Kelvin Teo started Funding Societies while he was completing his MBA at Harvard Business School. Prior to starting Funding Societies, Kelvin graduated as the valedictorian of the Business School at National University of Singapore (NUS). Since college, he has been passionate about entrepreneurship, studying technopreneurship in University of Pennsylvania.

Under his leadership, Funding Societies has raised funds, recruited a team, launched the platform, originated S$1million in loans and introduced the first escrow Trustee arrangement in Singapore for platform fund handling within 6 months. His vision is to build a world-class marketplace with best practices observed in US and customized for the societies of Southeast Asia.

The Most Overlooked Principle of Investment in a Weak Economy
In my years as a consultant, I have advised and been mentored by many brilliant individuals including the CEO of major corporations and household names. Risk / return ratio was always the centrepiece of major decisions. While regulators and financial institutions are taking up more responsibility in the post-crisis world with Dodd-Frank and Basel III, we as individual investors should view investment return with a risk lens too, for risk is the shadow of return, the two sides of the same coin.

Many are attracted by the idea of “guaranteed investment return” or “maximum return minimum investment.” A Google search of these keywords gives us 3.2 million and 216 million results respectively.

However, these pursuits are inspirational but not aspirational. In financial markets and many commercial activities, if one wants to achieve higher returns on average, one often has to assume more risk. The key question is then not “How can I make the most return?” but rather “How can I make the most return at a risk I’m comfortable with?”

Four Common Approaches in Risk Management
In the practice of risk management, there are 4 common approaches towards risk i.e., avoid, transfer,
mitigate and keep. Most would inadvertently take the approach of avoid or keep i.e., avoid investment risk and not invest at all, or invest and face the full risk. In fact, based on an internal survey Funding Societies has conducted with 500 members of the public, 50% of the respondents across all segments keep their funds in saving accounts and do not invest. 19% of respondents consider returns but not safety of capital as critical investment criteria. Avoid and keep are common not because of ignorance, but because of convenience.

Importance of Diversification
Investing has to be deliberate. For most, we believe the right approach is to mitigate risk by systematically diversifying investment. While a focus strategy may be suitable for experts who dedicate hours into analyzing and monitoring investments, diversification is tremendously valuable for regular investors who prefer to “invest and forget”. Effective diversification is not only about making more investments, but also investing in areas less correlated with each other by geography, industry and asset class etc. This is especially true in a weak economic environment that is fraught with uncertainty.

I have personally invested in equity, investment fund, real estate and alternative investment, with of
course always 6 months of savings as contingency. I began with Asia equity and bond investment funds to achieve diversification even with limited capital. As I accumulated more capital, I ventured into US equity and Singapore real estate for further diversification. Diversification has helped me through many financial crises. By strategically allocating funds into a portfolio suitable for me, I only have to check my investments once a month and still enjoy reasonable returns.

P2P Lending Platform – A New Way to Diversify Your Investments
The recent rise in alternative investments such as peer-to-peer (P2P) lending in US, UK, Australia and China provides a new, proven opportunity for higher return and diversification. While higher return clearly comes with higher risk, it is at a level suitable for working professionals like me, especially given the shorter term and hassle-free nature of P2P lending. Investing on P2P lending has become my new favorite. A few P2P lending platforms have since launched in Singapore. An example is Funding Societies that focuses on small-medium enterprise (SME) loans.

Of course, diversification takes capital, cost and effort. Undue diversification could spread us too thin
across investments. The key is to select uncorrelated investments. The less correlated the investments
are, the better the diversification effect. One may ask: how do we know whether the investments are
correlated? Without going into a statistical model or correlation matrix, basic intuition is a good start.

As risk guru Michel Crouhy aptly summarized, “The future cannot be predicted. However, the financial risk that arises from uncertainty can be managed.” We need to be deliberate in our risk / return decisions and be diligent in diversification because if we don’t decide them for ourselves, the market will decide for us.

How the investors were enticed

Mary (who was cheated in the argawood investment) told me that she was approached by a telemarketer. She attended a seminar. She made her own investigation before investing. There was another argawood company that showed profit for the investment.
I told her that this was their mode of operation. The promoter set up a company on a small scale and allowed the initial investors to make a profit. After that, they were able to attract many investors for their bigger scale operations. Even the initial investors who made a profit put more money into the later operations. The later investors got stuck with non yielding trees. 

This is similar to the land banking plots. The earlier investors were able to sell their plots for a small profit (probably to buyers who were connected with the promoters). They were excited and made bigger investments. They also get their friends to come in.
It is the same story with the gold investments. The earlier investors were paid an attractive return. They came back to make bigger investments. The pattern is the same for all of these types of "scams".

Investment in Agarwood

Mary (not her real name) called me. She was caught in an investment in agarwood. Together with other investors, they had lodged a report with the police that they have been cheated. After 9 months, the police did not take any action. There was no progress. 

One of the person involved in the agarwood company was previously the sales manager of a gold investment company that was also closed down. He had since moved to this new investment company. 

Due to this bad experience, Mary is now convinced the people involved in the agarwood company are professional cheats. They know that they can carry out these activities and the police will not stop them.

Some of the investors came from outside Singapore. They thought that it was safe to invest in Singapore, due to government control, but they are now disappointed. Our reputation is going down the drain.

Hassle of booking an appointment

I called the Singapore National Eye Center to book an appointment. I still had to press 3 buttons before I talk to somebody.

For English, press 1
To book, change or cancel an appointment, press 1
To change or cancel an appointment, press 1 to book a new appointment press 2.

After getting through, I get a message ... "You are the first on the waiting list". Still I have to wait for a while before somebody answers.

I get the impression that the people who designed the IVR system wants to make the public go through many barriers.

It should have been quite easy to have the same staff handle booking, change and cancellation in 2 languages.

Gloomy forecast for property market

Here is a gloomy forecast for the property market in Singapore. I agree with this view, and has been stating a similar view for several years.
Fortunately, the government has the means to reduce the impact of a bursting of the bubble. Their measures so far, have stopping the bubble from getting bigger, but have not brought down the prices yet.
The government thinks that they can hold the market until the global market recovers. But this will take several years. My guess is that they cannot hold the market for that long.
So, the government will have to look for new ways to handle the looming crisis. Good luck to them.

Sunday, November 22, 2015

Fight against global terrorism

When the terrorist attacked the World Trade Center in 2001, it was the American President who wanted to fight global terrorism.
Now it is Russia's turn to lead the fight against global terrorism.…
Looks like musical chairs.

Encash the participating bonus

Dear Mr Tan,
Thank you very much for your constant contribution to the insurance community.  Certainly, your perspective on a lot of the issues discussed provided many with good guidance on how one should approach insurance.

I noticed there is one topic that is seldom discussed and that is the idea of encashing one’s participating policy’s declared bonuses.  I was recently introduced to the idea and after a lot of thinking through, realised that this option provides a policy holder the ability to enjoy the benefit of a ‘partial claim’ without the need to fulfil a claim condition.  I am also unable to find a downside to this approach except for the possibility that the final terminal bonus may be adversely affected.  However, as terminal bonus are never guaranteed,  there is really no way one can verify that.

I would like to seek your insight and wisdom as to what you think are the possible downside of such an approach as compared to initiating a partial surrender, APL or terminating a policy in order to managed one’s obligation to pay the policy premium.  The way I see it, using this bonus encashment method would mean that one could continue to keep his whole life policy alive as it become self-funding as long as the bonus declared are sufficient to cover the premiums.  This is possible when a policy has been held for 20 plus years and has grown substantially in terms of its bonus.

Appreciate if you could enlighten me if my views above are in error.  If my above analyses is correct, then effectively, all participating policies (when the insurance company is honourable enough to declare fair bonus like those declared in the 1990s by NTUC)  would become self-funding after some time and that is a good basis for one to keep their participating insurance policies for lifetime cover.

When you encash your bonus, the insurance company pays you a discounted value. For example, if your bonus is $5,000 and the maturity date is 10 years away, and the discount rate is 5% p.a., you will get only $3,069. You have to decide if it is better to get $3,069 in cash now, or wait and get $5,000 in 10 years time. 

If you encash your bonus, it may reduce your terminal bonus on the maturity date, as the terminal bonus may be calculated on your accumulated bonus. It will not affect your terminal bonus, if it is calculated on the face value of the policy. It depends on the practice of each company. It also depends on the type of policy that you have taken, as the practice may differ with different policies of the same company.

The answer to your question is that it depends on the terms that you are offered for encashing your bonus. It is not possible to rely on a general statement.

Thursday, November 19, 2015

More companies report losses than profits

For every 1 company that makes a profit in Singapore, there are 2 companies reporting losses. Something is wrong with our economic system in Singapore. This proportion does not seem right.

It shows that the cost of doing business is too high,and the difficulty of earning revenue in a highly competitive environment.

Some companies have to resort to questionable methods to earn revenue to report a profit.

Where do I get the figures? From our IRAS.

Express bus service

Should we have express bus service in Singapore?
cast your vote in this website:

Reduction in travel time on bus

I have calculated the reduction in travelling time by adopting the system of feeder and express bus, instead of the current system.
The average reduction is 20%. I think that this is under-estimated and the actual reduction could be higher at 30%.

What's Wrong #14 - Long travelling time for a bus

Passengers find that a journey by bus takes a long time. It discourages them from taking the bus.

What's wrong?

Our bus has to stop at each bus stop every 400 meters.  A journey of 20 km will require the bus to stop at 50 bus stops. (I checked with service 163). Each stop will take an additional 1 minute for the bus to slow down, to wait for passengers to board and alight and to take off.

If the bus has to make many stops, it causes the journey to be jerky. It does not make good use of the dedicated bus lanes.

How to put it right
We can convert many of the bus services to be an express service that serves a limited number of major stops, e.g. every 2 km and to have feeder buses to serve the intermediate stops. A passenger can take a feeder bus to the next major stop and board an express service.

As the boarding and alighting is at the same stop, it should be quite convenient for the passenger to make this transfer. It is easier to transfer from a feeder bus to an express bus, compared to transfer to a MRT train.

Although the passenger has to wait for the feeder bus and the express bus and perhaps another feeder bus, the total travelling time should be reduced significantly using the new system.

As an experiment, we can transfer from of the buses that run a particular service to be an express service. For example, half of the buses that run service 163 (say) can be converted to 163E that will make a limited number of stops. 

Passengers can wait for the normal service 163 or take a feeder bus to the next major stop to take the express service 163E. We can gauge the preference of the public for this service.

Wednesday, November 18, 2015

What's Wrong #13 - Display in the bus to show the next bus stop

Our buses do not have a display to show the name of the next bus stop. 

The passengers may not be familiar with the bus stops. They do not know where to get off the bus. They can ask other passengers, but some of them don't know either. Some prefer not to be disturbed.

The bus driver may be unable to help the passenger, due to language barrier or if the bus driver is a foreigner who has only recently arrived into Singapore. In a crowded bus, the passenger cannot move to the front to talk to the bus driver.

Even if the passenger is familiar with the bus stops, they may still miss their bus stop when it is dark at night or it is raining heavily or when the bus is packed.

What's wrong?
This will discourage passengers from taking the bus, as they do not know where to get off to change to another bus or when reaching the destination. They will take the MRT trains even when it is not the best mode of transport. It also lead to over crowding of the train.

How to put it right
Have a display in the bus to show the name of the next bus stop and the KM reading of that bus stop.

This information is already available in the fare meter at the exit of the bus. It is relatively inexpensive to have a large display to show the information that is already available in the fare meters.

It is important to show the KM of the bus stop, together with the name of the bus stop. The passenger can take note of the KM of the desired bus stop. By watching the KM of the next bus stop, the passenger knows the remaining distance to the desired stop and also know if he or she had missed the bus stop.

How to calculate the yield for a limited payment policy

Hi Mr. Tan
I know how to use the "Rate" function in Excel to calculate the yield for an insurance policy where the premium is payable throughout the term.
A popular policy that is sold today have premium payable for 5 years, but the maturity benefit is payable after 10 or 15 years.
How can the yield be calculated for this type of policy?

You have to use the IRR function in Excel. It allows you to indicate the cash flow for each year over a certain period. In the above example, you are paying a premium for 5 years, so this has to be entered in 5 rows. There is a gap of 10 years for which there is no premium payment, so you enter 0 for the next 10 rows. After 15 years (i.e the beginning of year 16), you have a cash payment back to you.

See this article for an explanation and example of how to use the IRR function.

What's Wrong #12 - Badly designed business processes

Many companies and government agencies have business processes that are badly designed. They put all their forms and instructions in a poorly designed website that is difficult for their customers to navigate. It is also painful for customers to submit online forms. They need help and have to call the helpdesk anyway.

What's wrong?
The organizations try to save a few minutes of their staff's time. In the process, they require the customer to spend one hour or more to submit an online request. 

Often the customers need help, and have to contact the help desk. The organization have to provide staff to man the helpdesks. The total saving in staff time to the organization is negligible. They could be spending more staff's time in answering enquiries from their customers.

How to put it right
Have help desk staff that can help the customers to do the following:

a) Submit an online form. The staff is familiar with the requirements, as they handle the forms daily. The customer is not clear about the requirements and usually need someone to explain what needs to be done.

b) Help customers to locate an instruction PDF or an online form. Send a link by email to the customer. This is easier than helping the customer to navigate through a complicated website going through many webpages and links.

c) Where the front line staff is unable to handle a difficult enquiry, they can refer the case to an expert or specialist to call back the customer.

d) Provide a personal email or mobile phone number for an expert or specialist to provide support to the customer. The direct contact will be more efficient. 

What's Wrong #11 - Too much trouble to reach a person

I called Singapore Power Services to get help due to a bug in their website that disallowed me to submit an online application to open an account.

I have to go through a tiresome process to pass through six barriers in their interactive voice response (IVR) system.

List to 1 minute announcement on something that does not concern me.
Press 1 to select English language.
Press 2 to open or close a new account 
Press 1 to open or close a new residential account
Press 1 to open a new residential account 
Press 2 to open an account now.

As I had to contact SP Services a few times due to several problems with the process, I had to suffer the tiresome process each time.

What's wrong?
There is no need to require the caller to listen to  IVR  messages and press some many buttons. 

SP Services should simplify the process and avoid wasting so much time of the customer. They should be considerate in the design of their IVR system.

How to put it right
If there is really a need to segregate the handling of residential and commercial accounts, the customer should only be required to select the language and the type of account, i.e. 2 button presses instead of 6 presses.

It should be quite easy for the same team of staff to handle the opening, closing and general enquiry on an account. There is no need to segregate the work down to such a detailed level.

What's Wrong #10 - Too much trouble to open a utilities account

SP Services requires the owner or tenant to open an utilities account on each occasion where there is a change of tenancy. They have a complicated process to open an account. It includes providing documents to verify identity of the person who is paying the bills. The online website has bugs, even today. They also have a troublesome process to read the meters.

What's wrong?
The process is troublesome for the person for the owner and tenant. It took me more than one hour to handle the simple formality of opening the account and providing the information. This is more troublesome for the owner who has to make a special visit to complete the paperwork and to arrange the meter reading.

How to put it right
Just allow a change of name and billing address of the person who is paying the bills. This can be done by a simple online request or by a request sent by fax. 

If there is any issue about the ability to pay the bills, ask the payer to send a deposit. They are already required to pay the deposit anyway.

There is no risk that an unauthorized person who apply for utilities to the premise. Who wants to do such a thing? There is no need to check that it is the owner or the tenant who is applying for the supply. If this check is removed, the process can be simplified.

It is easy for the existing or new account owner to take a photograph of the meter reading and send to SP Services. There is no need to make a visit. Both the old and new account payers will probably not mind any small difference in the bill.

It is possible for SP Services to simplify this process for a transfer of name. There is no need to open or close an account, and to do it in a very troublesome way.

Tuesday, November 17, 2015

Singapore Power's IVR system beat them all!

Singapore Power's interactive voice response system beats all other companies for being tiresome.

After calling 1800 2222333, I get the following:

1 minute announcement on something that does not concern me.

For English press 1, for Chinese 2, etc
For billing enquiry press 1 for opening a new account press 2
For opening a new residential account, press 1 for opening a new commercial account, press 2
Open residential account press 1, close residential account press 2
To listen to procedure, press 1 to open an account now, press 2

Congrats to Singapore Power. They managed to ask the caller to go through 5 options just to talk to somebody.

1 - 2 - 1 - 1 2

As I have to call them 5 times today, due to problems with their website and other issue, it can be very frustrating to waste so much time.

When will Singapore Power think about the convenience of their customers?

How to make things difficult for the consumer

It is very common for simple matters to take a lot of time. I have another terrible experience, this time with Singapore Power. My tenant is moving out of my house. I have to submit an application to transfer the account to my name.

After a lot of trouble calling their call center, I was told that the easiest way was to fill up an online application form. They have to direct me to find that form, because it was hidden in their website "maze".

In filing up the form, I have to provide them with the date of issue of my NRIC (luckily I carried it with me) and also with the postal code of my tenanted home (which I had to take a lot of trouble to find this 6 digit code).

On submitting my application, I got this strange message, which must be a bug.

Inline image 1

I could not submit the application. I had to waste one hour today calling your hotline
(which is another terrible experience). 

Finally, I have to fill up a paper form and send over to Singapore Power. It was difficult because they print the application form on two pages, and I have to find a fax machine that can handle two pages. 

Why does Singapore Power make it so difficult for the consumer?

Suggestion: It would be wonderful if I could call a hotline staff who can help me to complete this application. It will probably take the staff 5 minutes and save me one hour of my time.

Managing the property market

This article asks the question, "Will the average Signaporean get burnt if the ABSD is removed"?

He explained that the ABSD (Additional Buyer Stamp Duty) and the restriction on loans were introduced to reduce speculation in the property market. If the ABSD is reduced or removed, the impact on the property market is uncertain and different people would be affected differently..

His argument shows the difficulty of managing a complex market with buyers, sellers and speculators.

In the past, there was a solution to prevent this kind of erratic market. The government acted as a buffer. If there was an over supply, the government absorbed it and waited a few years for the market to reach its new equilibrium. If there was an increase in demand, the government increased the supply (and do not worry about facing a glut later on.

When a government takes on the task of managing the market cycle, it helped to create stability in the market. It worked in the best interest of all parties.

During the past three decades, the government reduced its role in the market. They decided that it is best for the market to take care of supply and demand. In some cases, the government acted as a participant in the market with the same mentality as the speculator!

It is time for the government to get back to play its fundamental role. It should act as a buffer to match changes in supply and demand.

Dispute on paying a third party claim

Mr Tan,
I read the letter in the Straits Times about the motor insurance claim handled by NTUC Income, the company that you were CEO previously.

Do you agree with the manner in which the claim manager handled the claim? He paid the claim (which the policyholder claimed to be fraudulent, based on the photos taken at the time of the accident).. He told the policyholder to dispute the case on his own in court, if he insist on fighting the claim.


It is possible that NTUC had some reason to believe that the photos provided by the policyholder were not sufficient to dispute the claim.

But, if this was not the case, it would have been better for NTUC to pay the claim (if they decide that it was the best way commercially), and still allow the policyholder to keep his No Claim Discount and renew the policy without any loading.

The insurance agent sells a policy that is not affordable

Dear Mr. Tan
I need your advice.

I bought PruFlexiCash policy. The premium that I bought was extremely high for an average salaried worker. 

I thought I was misled into thinking that I can reduce my premium after 2 yrs and the premium difference will still be in my account. But this was not the case even after having repeatedly asked the agent about this issue. 

When I asked at the point of sale, she replied that I could reduce any time I want after 2 yrs. I had also asked about the penalty or implications for doing it, she answered no issues on the reductions.

I have filed a complaint with FIDREC but I sense that I will not succeed in the complaint. Can you advice me on what to do?

You can resubmit your complaint to FIDREC. You can show evidence that the monthly premium is unaffordable based on your monthly income less the regular expenses. The agent has failed in her  duty to ensure that the policy was suitable to you, based on your net monthly income. 

This would support your point that you had the impression that you would not suffer a penalty by paying a higher premium during the initial years, out of your past savings. 

Monday, November 16, 2015

IRR function in Excel

This article shows you how to use the IRR function in Excel to calculate the yield on a life insurance policy that has premiums payable for a limited number of years.

This Prusave policy should not be approved for sale to customers

This Prusave limited payment policy is being actively sold to many bank customers.

The writer of this article asked, "Is it suitable to any customer at all?
My answer is "no". Why should a customer buy this policy which gives such a poor deal? It virtually provides no protection and takes away a large part of the investment return.

My fear is that most customers do not understand the policy and might have bought it due to some mis-representation by the sales person.

But, I agree with the writer that such a "sub-par" policy should never have been approved for sale in the first place. This is a duty that falls on the Monetary Authority of Singapore, which they should not neglect.

Simple tips for Starhub to improve its service

A senior person in Starhub referred me to the person in charge of the Enterprise service. I sent this email to hi.

The problems that I faced (and it has been going on for a few years) are:

1. When I call 1631, the hotline staff does not know about the Argonar service.
2. When an expert calls me back, he does not give me a personal number that I can call him back (if there continues to be trouble).

1. Give a separate number that your customer can call on Argonar. Do not ask your customer to call a general number - 1631.
2. Give a personal number to your experts that have to troubleshoot the issue with the customer.Do not waste the time of your customer in trying to call back an expert. You are a telephone company. Allow your customer to contact your expert directly. Millions of people have personal numbers for their friends to contact. Can Starhub also provide this essential service?

A simple case of mis-selling.

Ugly truth behind investment linked policies.

Sunday, November 15, 2015

Starhub expert does not have a mobile number

Many customers have said that the service provided by Starhub and SingTel are terrible. M1 is supposed to be better, but some customers have also complained about M1.

It is so sad. These companies have the capability of provided better service. But they are obstructed by their SOP that are written by people who lack common sense. The staff follow the SOP blindly, when a more common sense approach would be excellent.

Here is an example. I had some problem with the Starhub cloud service. I called 1631 but most of their hotline staff don't know about this service.

Finally, someone called me back. I asked for his name and mobile number. But he could not give me his mobile number. I asked - "Are you a telephone company?" Millions of people, including a foreign worker has a personal number. You don't have one?

He gave me some suggestion to log into their website to reboot my server. it did not work. I could not contact him back. I spent 1 hour trying to reach him. His colleagues could not locate him also.

So, it is so simple for Starhub to provide a personal number for their expert to help customer solve a complicated problem. They make matters so difficult by not offering this form of communication. And they are a telephone company!

Bad service provided by Starhub

Starhub has a bad way to service their customer.

I had a problem with their cloud service. Their expert do not have any personal telephone number that I can call them. I have to call their general number and go from one person to another to reach the person that I talked to me earlier.

Their expert finally call me and told me to use Internet Explorer, instead of Chrome, to access their cloud service website.

I did. I got another problem and had to return the call. My mobile phone contained his number, 68097000.

When I called, I got an automated message, "Dear Customer. Our attempt to contact you was unsuccessful. We will call you again".

My mobile phone is now black listed. There is no way that I can call them.

Do the people in Starhub use any common sense? Why provide these kind of automation to cut off communication with their customer. My Cloud service is still down.

Saturday, November 14, 2015

Older workers should use initiative

Mr. Tan
I like to share this experience with you and to get your views.

A year ago, I employed an  admin staff who was in her early forties. She had been out of work for many years. I provided training to her and paid her an allowance. She was slow, and lacked initiative, I did not mind, as she was not earning much.

Later, she complained that she was earning less than another younger worker and that her pay did not reflect her working experience. She resigned shortly afterwards.

A few months later, she asked if she could come back and work for me. Should I take her?

If you need her service, you can discuss with her and see if she had changed her attitude. She must have realized that it is not easy to find a job.

Her priority should be to improve her productivity and show initiative, by using her working experience in a positive manner.

Misleading statements

When a sales person tells you that you are investing for 5 years, be careful. You may be paying premium for 5 years but you may have to wait for 10 or 15 years for the policy to mature. If you terminate the policy earlier, you may have to suffer a large loss, maybe up to 50% of what you have invested.

The sales person may tell you that the policy provides a yield of 4.75%. He (or she) might be able to point out this figure in the brochure or benefit illustration. Be careful. This is the yield that is used to illustrate the projected benefit. It is the yield before deducting the charges, also called "the effect of deduction". After the deducting, you net yield may be only 2%.

The sales person may give you convincing explanation verbally. Be careful. The verbal statements are different from what is written in the document that you are asked to sign. And you are signing a statement that you understood what the investment in, and you actually don't understand how it works, because you rely on the verbal explanation. And the verbal explanation is likely to be different from the written statements.

Effect of deduction

Mr. Tan
You explained that a life insurance policy using a yield of 4.75% actually work out to 2% after removing the "effect of deduction". Surely, a 2% yield is satisfactory compared to 1% (or less) paid by bank deposit? The policyholder also get life insurance protection.

If you are investing for 10 or 15 years, a yield of 2% is not satisfactory. You should aim for a yield of 5%. The difference between a yield of 2% and 5% can be a large sum. Here is a way for you to find out.

In the benefit illustration, you can see a page called "Table of Deduction". It shows you the "Value of Premiums Paid to Date", "Effect of Deduction" and "Total Surrender Value".

See the example below.

On the maturity date (i.e. end of 15 years), the value of premiums paid to date is $110,238, the effect of deduction is $29,488 and the total surrender value is $80,750. The total premiums paid is $60,000. The insurance company took your premium and invest them to earn 4.75%, and at the end of 15 years, they take away $29,488 and leave you a net return of $20,750.

If you invest the money on your own, you will get $50,238 on top of the $60,000. Why give away $29,488 to the insurance company when they do not provide any tangible benefit?

IF you invest on your own in the STI ETF, you should be able to get a return of 5% or more, and the risk is not different from the risk that is inherent in the insurance policy, i.e. the surrender value is not guaranteed and is subject to the insurance company earning 4.75% yield.

If you terminate the policy before maturity, you suffer a bigger effect of deduction. Look at the figures for year 5 to 15. You could be losing 50% of your premium.

For this policy, there is virtually no life insurance protection. The death benefit is only 5% more than the total premium paid.

Bad signages

I was confused with the signage in terminal 1 at Changi Airport. On returning from Jakarta last night, I looked for the Arrival Pickup Point.
At the escalator, the sign shown an up arrow. I remembered that the pickup point was at the lower level previously, but it now pointed to the higher level.
I checked and decided that the sign clearly pointed to the next level.
I went up the escalator and found that it was the departure level. There was no arrival pickup sign. I concluded that I was mistaken and went down to the arrival level.
I searched for other signs and found new signs further down the level. I followed them and went out to the road side. There was no pillars to show the pickup point.
After waiting for a few minutes, I decided that there was something wrong. I walked down the road and turned to the side of the building. I found the actual waiting areas with the different sections that are clearly marked.
I was clearly misled by the confusing signs.
I find signages to be generally bad and confusing in many places in Singapore. My earlier impression was that the signages were well designed in Changi Airport, until my experience last night.

Blog Archive