Dealing_with_insurance_290109:Dealing_with_insurance_290109 24/10/09 2:18 G52 Page 2 General Information For more information, log on to www.insuranceinfo.com.my or visit our kiosks at most branches of insurance and takaful companies or contact your agents A consumer education programme by: Dealing with Insurance Intermediaries
Contents About this booklet 01 Who is an insurance intermediary? Qualifications of insurance intermediaries 04 Licensing/Registration requirements 05 Minimum standards of service 08 Basic conduct of insurance intermediaries 10 Tips on dealing with insurance intermediaries 12 How do I lodge a complaint and the redress avenues available 14 Frequently asked questions 17 4
About this booklet This booklet is designed to guide you in your dealings with insurance intermediaries for the purchase of insurance products and services. You can also obtain information from our website at www.insuranceinfo.com.my Who is an insurance intermediary? An insurance intermediary is an individual or a firm that assists in the purchase of insurance. The following are insurance intermediaries: insurance agents insurance brokers financial advisers 1
An insurance agent represents the insurance company (the principal) and performs mainly the following: Explains features of insurance products to the customer; Sells insurance products on behalf of the principal; and Provides services in relation to the issuance, renewal or continuance of a policy. (Note: A life insurance agent sells life products while a general insurance agent sells non-life products) An insurance broker represents the customer and performs mainly the following: Advises the customer on the most suitable and favourable insurance policy coverage and terms offered by various insurance companies; Shops for the best quotation for the customer; and Assists the customer to obtain or renew an insurance cover from an insurance company. An insurance agent represents the insurance company, and an insurance broker represents the customer 2
A financial adviser is an independent party that provides professional financial planning services for products such as insurance, unit trusts, bonds or shares to the customer. (Note: In this booklet, the financial planning services provided by a financial adviser are limited to the context of insurance products). A financial adviser performs mainly the following services: Analyses the financial planning needs of the customer in relation to insurance products; Shops around for the appropriate insurance products that best meet the customer's needs and capacity; and Arranges insurance contracts between the insurance company and the customer. Intermediaries are usually paid commissions (or brokerage fees for brokers) for each policy sold, which is based on a percentage of the premiums paid. 3
Qualifications of insurance intermediaries Insurance intermediaries are required to have the following level of qualifications before being allowed to provide services to customers: Must have all of the following: General Insurance Agent Sijil Pelajaran Malaysia (SPM) /Malaysian Certificate of Education (MCE) Pre-Contract Examination for Insurance Agents (PCEIA) Continuous Professional Development (CPD) programme : 20 hours every year Life Insurance Agent SPM/MCE PCEIA CPD programme : 30 hours every year Certificate Examination in Investment-Linked Life Insurance (CEILLI), if involved in the sale of investment-linked products 4
Insurance Broker SPM/MCE Certificate in Insurance Broking (Basic) Financial Adviser SPM/MCE CPD programme : 30 hours every year Registered Financial Planner (RFP)/Certified Financial Planner Advanced training on life insurance products : 20 hours within six months of appointment Licensing/Registration requirements General insurance agent: must register with Persatuan Insurans Am Malaysia (PIAM). must possess an Agent's Registration Card issued by PIAM containing information, such as, the name of the insurance company that the agent represents and the validity period of the agent's registration. can represent a maximum of two general insurance companies. 5
A financial adviser analyses the financial planning needs of the customer in relation to insurance products 10
must comply with the rules and regulations drawn up by PIAM for general insurance agents. Life insurance agent: must register with the Life Insurance Association of Malaysia (LIAM). must possess an Agent's Registration Card issued by LIAM containing information, such as, the name of the insurance company that the agent represents and the validity period of the agent's registration. can only represent one life insurance company. must comply with the rules and regulations drawn up by LIAM for life insurance agents. Agent who sells both life and general insurance products: must register with LIAM and PIAM and possess the relevant Agent's Registration Card. can represent one life insurance and a maximum of two general insurance companies. must comply with the rules and regulations drawn up by both LIAM and PIAM. Insurance broker: must be licensed by Bank Negara Malaysia. The licence is subject to periodic review of up to two years. must be a member of the Malaysian Insurance and Takaful Brokers Association (MITBA). 7
must be a corporate body with a minimum shareholders' fund of RM500,000. must carry a professional indemnity insurance policy with a minimum cover of RM500,000. Financial adviser: must be licensed by Bank Negara Malaysia. The licence is subject to annual review by Bank Negara Malaysia. must be a member of the Malaysian Financial Planning Council (MFPC). must be a corporate body with a minimum shareholders' fund of RM100,000. must carry a professional indemnity insurance policy with a minimum cover of RM200,000. Minimum standards of service Insurance intermediaries are required to comply with specified minimum standards set by Bank Negara Malaysia as well as those set by LIAM, PIAM, MITBA and MFPC. This is to ensure that the insurance intermediaries conduct their business with a high degree of responsibility and professionalism. General insurance agents: are governed by the Code of Practice drawn up by PIAM. 8
must adhere to the minimum standards of disclosure requirements issued by Bank Negara Malaysia which require agents to give explanation to potential customers on the main features of the product to be purchased, full details of costs charged, and claims and complaint procedures, at the point of sale. Life insurance agents: are governed by the Code of Ethics and Conduct drawn up by LIAM. must comply with the minimum standards for proper advice issued by Bank Negara Malaysia which require agents to first obtain adequate information about potential customers before giving insurance advice. Insurance brokers: are governed by the Client's Charter on Code of Good Business Practice, and Code of Ethics and Conduct drawn up by MITBA. must adhere to the various rules and regulations specified in the Insurance Act 1996. must comply with the 'fit and proper' criteria for senior management and board of directors as required by the Insurance Act 1996. Financial advisers: must comply with the circulars and guidelines issued by Bank Negara Malaysia and MFPC. 9
must comply with the 'fit and proper' criteria as required by the Insurance Act 1996. must adhere to the minimum standards for proper advice issued by Bank Negara Malaysia which require financial advisers to first obtain adequate information about potential customers before giving insurance advice. Basic conduct of insurance intermediaries When dealing with insurance intermediaries, you can expect certain standards in their conduct in handling your insurance needs. For instance, the intermediary is expected to: present his/her Agent's Registration Card to you when requested (applicable only for insurance agents). exhibit good knowledge of the products and services offered by the insurance company (in addition, insurance brokers and financial advisers are expected to exhibit good knowledge of products available in the market). make an effort to understand your insurance needs and assist you in the choice of insurance products and services. explain to you clearly the nature of information required in the proposal form and also the importance of disclosing material facts. 10
explain clearly the main terms and conditions of the proposed insurance contract so as to help you understand what you are buying. draw attention to any restrictions and exclusions applicable under the proposed insurance contract. follow up and provide continuous service to you, such as renewal of policy and provide updates on relevant new products. provide assistance when you are making claims against the insurance company. This table summarises the significant differences between the three categor ies of intermediaries: Insurance Insurance Financial Agent Broker Advisor Represents: Insurance Customer Customer company Licensed/ PIAM Bank Bank Registered by: (general Negara Negara agent) Malaysia Malaysia or LIAM (life agent) 11
Tips on dealing with insurance intermediaries Deal with an agent, broker or financial adviser with the following characteristics: Good knowledge of insurance products. Understands your needs and interests. Ensures you understand what you are buying. Does not over-promise or over-sell. Factual, not pushy or intimidating. Delivers quality and timely service. Insurance intermediaries should clearly explain to you the main terms and conditions of the proposed insurance contract 12
Protect your interests and rights: Deal only with registered/licensed intermediaries. Deal with intermediaries with proven track record or those with good referral from friends and relatives. Be truthful about yourself and declare material facts. Never be persuaded to sign on blank forms or anything you don't understand. Never be persuaded to lapse an existing policy to buy a new life policy. Ensure that you understand the products you are buying. Read the policy benefits and terms carefully, and compare them with other similar products. Shop around to get value for money. Buy only what you need and what you can afford. Ask for sales materials, for example, the sales illustrations, product pamphlets or customer fact find form (for life products only), and keep these documents safely. When in doubt, always ask for more information from the intermediaries or seek clarification from the insurance company that offers the insurance products. Ask for a receipt as the proof of premium payment and keep it safely. 13
How do I lodge a complaint and the redress avenues available If you have any enquiries, feedback or complaints about an insurance agent, broker or financial adviser, refer the matter first to the relevant insurance company, broking company or financial adviser. Alternatively, you can also forward the matter to: For general insurance agents The Registrar Agency Board Persatuan Insurans Am Malaysia 3rd Floor, Wisma PIAM 150, Jalan Tun Sambanthan 50470 Kuala Lumpur Tel: 03-2274 7399 Fax: 03-2274 5910 Website: www.piam.org.my Email: piam_sec@piam.org.my Always ask for more information from the intermediaries when in doubt
For life insurance agents The Registrar Agency Board Life Insurance Association of Malaysia No. 4, Lorong Medan Tuanku Satu Medan Tuanku 50300 Kuala Lumpur Tel: 03-2691 6168 Fax: 03-2691 7978 Website: www.liam.org.my E-mail: liaminfo@liam.org.my For insurance brokers The Chairman Malaysian Insurance and Takaful Brokers Association Unit 303, Block A, Pusat Dagangan Phileo Damansara II No. 15, Jalan 16/11, Off Jalan Damansara 46350 Petaling Jaya Tel: 03-7960 8191/ 7960 9475 Fax: 03-7954 3954 Website: www.mitba.org.my E-mail: mitba@streamyx.com 15
For financial advisers The Chairman Ethics and Compliance Board Malaysian Financial Planning Council No. 4, Lorong Medan Tuanku Satu Medan Tuanku 50300 Kuala Lumpur Tel: 03-2693 1900 Fax: 03-2693 1700 Website: www.mfpc.org.my E-mail: mfpc@mfpc.org.my If you are still not satisfied with the complaint resolution, you can write to: BNMTELELINK Corporate Communications Department Bank Negara Malaysia P. O. Box 10922 50929 Kuala Lumpur Tel: 1-300-88-5465 Fax: 03-2174 1515 E-mail: bnmtelelink@bnm.gov.my 16
?Frequently Asked Questions
Q. A. Q. A. How can I ensure that the agent I am dealing with is authorised? You may ask to see the Agent's Registration Card which contains information such as the name of the insurance company that the agent represents, and the validity period of the agent's registration. If in doubt, you may contact the relevant insurance company, PIAM or LIAM to verify his/her status. What can I expect an intermediary to do when he/she recommends a life insurance product to me? The intermediary is responsible to do at least the following: Obtain sufficient information about you, such as your personal and financial details. Understand your financial needs in relation to protection, retirement, children's education, savings and investment plans. Ensure that the product he/she recommends is suitable for you, taking into account the information you provide. Explain to you why the product he/she recommends is suitable. Provide you with enough information and assistance to enable you to make an informed decision before making the final commitment to buy a life policy. 18
Q. A. I was advised by an intermediary to cancel my existing life insurance policy and buy a new policy. What should I do before making a decision? Before making a decision about cancelling an existing policy to buy a new one, you should consider the following: Compare the features and benefits of the existing and new policies. Understand the costs involved for the cancellation, such as termination charges of the existing policy, entry charges for the new policy, loss of cash value and any loss of benefits due to the cancellation of the existing policy. Consult the insurance company or agent from whom you bought the existing life insurance policy to review the costs and benefits involved. It may not be in your best interest to cancel an existing life insurance policy and buy a new one. However, should you feel that you can benefit, and in order to ensure that you do not lose out, you can always write to the insurance company you are buying the new policy from and get a written confirmation that the conversion is not disadvantageous to you. 19
Q. A. Q. A. I bought an insurance policy from an intermediary. Who is responsible to deliver policy documents to me? It is the responsibility of the insurance company to directly send the policy documents to you. However, there are insurance companies which send the documents through the intermediary from whom the insurance is purchased. If you do not receive the policy within a month after paying the premiums, you should contact the insurance company. I have been making premium payments through my agent. Is this safe? When making premium payments, avoid paying in cash to the agent. It is advisable that you pay directly to the insurance company, either by cheque, money order, standing order instruction or credit card deduction. Should you decide to pay the premiums through your agent, ensure your cheque or money order is made out in the name of the insurance company, and not that of the agent. Be sure to insist for a receipt immediately as proof of payment. 20
Disclaimer This document is intended for your general information only. It does not contain exhaustive advice or information relating to the subject matter nor should it be used as a substitute for legal advice. Date: 2009 Design Copyright 2009 by Freeform Design Sdn Bhd. All rights reserved.