Insurance Better Service

Bank Negara wants to see common complaints and grouses against the insurance industry, including delays in claim settlement and mis-selling practices by agents, to be either reduced significantly or eliminated completely.

Deputy governor Datuk Muhammad Ibrahim said the regulator had a low level of tolerance for misconduct in the industry, as evidenced by its enforcement measures so far.

Through its supervisory interventions, more than RM30mil in premiums were refunded to the affected insurance policyholders due to mis-selling practices in the sale of insurance products.

He said the central bank had also directed insurers to refund the premiums in more than 700,000 cases involving the forced purchase of personal accident policies.

“In addition, insurers have been directed to modify or withdraw misleading advertisements, make call backs to consumers to confirm the products purchased without adhering to proper disclosure practices, as well as strengthen internal controls over sales and marketing practices with respect to bancassurance products,” Muhammad said in his keynote address at the 5th Malaysia Insurance Summit.

On major developments in Malaysia, he cited the introduction of the Life Insurance and Family Takaful Framework and the upcoming liberalisation of fire and motor tariffs.

“Both these initiatives will allow the industry greater operational flexibility to innovate, while ensuring that consumers’ interests remain adequately protected,” he said.

He urged the industry to take the long-term view to build the foundations for operating in a more diverse and mature market, providing consumers with stronger value propositions.

According to him, it was never the intent that the Malaysia Motor Insurance Pool - set up in 1992 by the local insurance companies as an insurer of last resort for high motor risks - to become the 9th largest general insurer in Malaysia.

“Let’s revert to its original mandate as a mechanism to insure the highest-risks motor vehicles,” he said. 

On Asia-Pacific developments, Muhammad said the region was expected to be a strong driver of world insurance growth, with its share of the global insurance market likely to rise to 40% in the next five years.

He expects that in the medium term, the region will benefit from the deeper regional financial integration agreed by the leaders of Asean and the conclusion of Trans-Pacific Partnership negotiation.

“These agreements would result in a more efficient allocation of regional savings to meet the region’s large investment needs which will support growth and consequently financial well-being and soundness,” he said.

“The improved income arising from the economic developments will spur greater demand for insurance services in the region and present immense growth opportunities for the insurance and takaful industry.”