Beginning next year (2017), insurers must offer pure protection products through a direct channel without commissions under the LIFE Framework – a Bank Negara effort to bring costs down as most Malaysians are under-insured.
With new technologies and new markets, liberalization isn’t something we can stop, shrugs National Association of Malaysian Life Insurance and Family Takaful Advisors (Namlifa). We’ve been conventional for too long. Since the introduction of investment-linked products, there hasn’t been much innovation.
Liberalization will encourage more innovative products which we need if we are to achieve the 75% penetration target. Singapore, Taiwan and Hong Kong are more advanced. On average, per person has five to six policies. In Taiwan, the insured population is 260%. In Singapore, the insured population is almost 100%. We’re divided only by a causeway yet we lag behind with a penetration rate of 55%.
Besides the soon-to-be-introduced direct channel, Bank Negara governor Datuk Muhammad Ibrahim had also urged the industry to adopt untapped channels including banking agents, retail chains, employers and cooperatives, to diversify the delivery of services, StarBiz reported last month.
The potential for growth in the insurance and takaful industry “is significant”, with estimates placing the life and medical insurance protection gap alone in Malaysia at between RM550,000 and RM723,000 per household.
Quoting a global consumer insurance 2012 study, in Malaysia, 93% of respondents were happy with the product they bought and the agents’ service. Members guilty of misconduct are terminated and reported to the Life Insurance Association of Malaysia (Liam) which issues the licence to agents.
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