Objective
The Framework encapsulates initiatives to support a higher level of insurance and takaful penetration in line with Malaysia’s transition to a high-income economy. Under the Framework, life insurers and family takaful operators will be given greater operational flexibility to spur innovation and higher productivity. In addition, wider channels will be developed for the provision of life insurance and family takaful products to the public. At the same time, consumers’ interest will be further promoted through the preservation of policyholders’ value, the intensification of consumer education efforts, higher quality of services provided by intermediaries and enhanced disclosure standards to promote greater consumer empowerment.
Key recommendations
The Framework provides for the partial liberalisation of the commission, management expenses and agency related expenses limits to allow competitive forces to work more effectively, while strengthening incentives for product innovation and high standards of service provided by insurance and takaful intermediaries. Consumers’ interests will continue to be preserved through important safeguards that will be implemented under the Framework, specifically:
1: The introduction of the Minimum Allocation Rate for investment-linked products that will ensure a specific proportion of premiums paid by policyholders/participants will be allocated to the policyholder’s/participant’s unit fund for investment purposes; and
2: Improved disclosures to facilitate comparisons by consumers between products and to help consumers better understand the financial implications of purchasing an insurance or takaful product.
The Framework will accelerate the development of a wider choice of delivery channels. This will be achieved through the rationalisation of incentive structures between channels, while providing options for consumers to purchase pure protection products (term cover, medical and health and critical illness) through cost efficient direct channels, including over-the-counter and online channels.
In addition, the minimum financial and qualification requirements for financial advisers will be reviewed to deepen the pool of financial advisers in the insurance and takaful industry.
Limits on financing facilities provided to agents by insurers and takaful operators will be removed to allow greater flexibility for insurance and takaful firms to support the professional development of agents, in particular new agents. This will be accompanied by requirements for insurers and takaful operators to proactively uplift the professional conduct of intermediaries through an increased emphasis on product suitability, quality of advice and service, and productivity, in the design and implementation of intermediary remuneration schemes.
To facilitate consumers in making informed decisions, a customised online product aggregator will be introduced to assist comparison of pure protection products from various providers. The online insurance account will also be introduced to provide consumers with easy access to the status of their policies. These initiatives will continue to be reinforced by targeted financial education and awareness programs to better equip consumers with the required knowledge, skills and tools to make sound financial decisions.
Feedback from the Public and various stakeholders
Members of the public, industry players, intermediaries and related stakeholders are encouraged to provide written feedback on the concept paper. The concept paper can be downloaded from Bank Negara Malaysia’s website at www.bnm.gov.my. The deadline for the submission of feedback and comments is by 9 December 2013.
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