Bank Negara Malaysia issued the
Policy Document on Professionalism of Insurance and Takaful Agents (‘
Policy Document’) on 17 April 2023.
1 The Policy Document will come into effect on
1 January 2024.
The Policy Document applies to licensed insurers and takaful operators (excluding reinsurers and retakaful operators) (‘
ITO’) and their existing and new insurance and takaful agents (either working on an individual basis or under any Agency Leader Corporation or Corporate Agency or any other arrangements
2) (‘
agents’) who are involved in the distribution of insurance or takaful products to customers.
The objectives of the Policy Document are to:
- require ITOs to ensure that their agents are competent, qualified and act professionally in the best interest of customers at all times; and
- improve public confidence in the integrity of ITOs’ agency workforce as a trusted and reliable channel for distribution of insurance and takaful products.
The requirements imposed on ITOs under the Policy Document to promote high standards of conduct and professionalism of their agents include the following:
- roles and responsibilities of the board and senior management in formulating, establishing, implementing, and reviewing the ITO’s internal governance and control framework (including internal structures, policies and processes) on the appointment, movement (from one ITO to another) and termination of agents;
- requirements relating to the appointment of agents, including the due diligence process, minimum entry requirements, registration of agents, restrictions on the number of principals an agent may represent and additional qualifications for life insurance and family takaful agents;
- assessment of a candidate to be appointed as an agent based on the fit and proper criteria, including probity, integrity and reputation, competency and capability, and financial integrity;
- treatment of agents that fail the fit and proper criteria;
- continuous professional development and training; and
- prohibition on participation or involvement in the sale of insurance/ takaful products, or allowing the sale of such products through multi-level marketing (MLM)-based distribution arrangements3.
When the Policy Document comes into effect, it will supersede the Specification Letters on Referred Listing on Agents issued on 8 July 2020 and 28 December 2021.
Alert prepared by Angela Hii (Associate) of the Corporate Practice of Skrine.
1 The Policy Document is issued after public consultation on an Exposure Draft of the Policy Document issued on 27 April 2022.
2 Excluding approved financial advisers/ Islamic financial advisers, approved insurance/ takaful brokers and bancassurance/ bancatakaful arrangements.
3 ‘Multi-Level Marketing (MLM)-based distribution arrangement’ includes: (a) the sale of insurance or takaful products directly or indirectly by any person who is not an agent registered with an ITO, acting for or on behalf
of a party involved in MLM; (b) the efforts of any person who is not an agent registered with an ITO acting for or on behalf of a party involved in MLM, who seeks or encourages other persons to purchase or obtain benefits of any insurance or takaful products of an ITO; or (c) a member-get-member mode of marketing where the member who recruits a new member(s) is paid or given some form of benefit or commission, whether directly or indirectly, by a party involved in MLM (Paragraph 5.2 of the Policy Document).