Deputy Finance Minister Datuk Donald Lim Siang Chai told Sin Chew Daily the government had proposed that insurance companies absorb the additional costs incurred for providing higher commission to insurance agents, saying insurers enjoy high profit margins and definitely have the ability to afford higher commission payouts without having to pass them on to new policyholders.
The National Association of Malaysian Life Insurance Fieldforce and Advisers (Namlifa) has asked for the commission for agents to be increased to 221% from 177% currently, whereas the General Insurance Agents Association of Malaysia (Perwakim) is seeking a 5% increase to 15%.
Lim disclosed that Bank Negara Malaysia deputy governor and representatives from the finance ministry and the two associations had met to review the cost guidelines regulating life insurance agents, and to discuss agents' requests to increase their commission rates.
He said the central bank will submit a report on the matter to Prime Minister Datuk Seri Najib Abdul Razak next week.
Asked if insurance companies would increase insurance premiums as a result of increased costs arising from higher commission rates, Lim said there are 14 insurance companies in Malaysia, and suggested that consumers shop around to get the best deal.
Namlifa president Sethu Karuppan told Sin Chew he was confident that insurance companies would absorb the extra costs and not increase the premiums on new policies.
He said it was time the commission rates, which have not been revised for more than 10 years, be increased.
Perwakim president Athi Rao also believed insurance companies would not burden new policyholders as the association asked only for a small increase of 5% in commission.
As living and operating costs have been going up, he said the increase sought by the association is very important to its 35,000 members as there had been no increase in commission over the past 20 years.
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