Flexibilities for certain stakeholders in the insurance industry in CPTPP Contracting States Gazetted

Background
 
On 8 March 2018, Malaysia entered into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) with 10 other countries, namely Australia, Brunei Darussalam, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Viet Nam (“CPTPP Contracting State”)1. The CPTTP entered into force for Malaysia on 29 November 2022.2
 
Flexibilities for certain insurance industry stakeholders in CPTTP Contracting States
 
The following subsidiary legislation were gazetted by the Malaysian Government on 16 October 2024: 
  1. Financial Services (Approved Marine, Aviation and Transit Insurers) (Amendment of Schedule) Regulations 2024 (“P.U.(A) 298/2024”); 

  2. Financial Services (Approved Marine, Aviation and Transit Insurance Brokers) (Amendment of Schedule) Regulations 2024 (“P.U.(A) 299/2024”); 

  3. Financial Services (Product Liability Insurance and Reinsurance in Accordance with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Order (Exemption) 2024 (“P.U.(A) 300/2024”); and 

  4. Financial Services (Directors and Officers Liability Insurance in Accordance with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) (Exemption) Order 2024 (“P.U.(A) 301/2024”). 
This alert provides a summary of the exemptions and regulatory flexibilities that are accorded by the Malaysian Government under the abovementioned subsidiary legislation to: 
  1. an insurer that is licensed, registered, approved, permitted or regulated to carry on certain classes of insurance business under the law of a CPTPP Contracting State (“CPTPP insurer”); 

  2. a reinsurer that is licensed, registered, approved, permitted or regulated to carry on reinsurance business or retrocession under the law of a CPTPP Contracting State (“CPTPP reinsurer”); and 

  3. an insurance broker that is licensed, approved, registered or otherwise regulated to carry on reinsurance business under the law of a CPTPP Contracting State (“CPTPP insurance broker”) 
P.U.(A) 298/2024 – Marine, Aviation and Transit Insurance
 
Effective date
 
P.U.(A) 298/2024, which amends the Financial Services (Approved Marine, Aviation and Transit Insurers) Regulations 2017 (“P.U.(A) 111/2017”), is deemed to have come into operation on 29 November 2022.
 
Key definitions
 
For the purposes of P.U.(A) 111/2017: 
  1. approved MAT insurer” means a designated insurer approved in writing by Bank Negara Malaysia (“BNM”) under regulation 4 of P.U.(A) 111/2017 to carry on the business of providing MAT insurance, as principal and as an insurer, to persons in Malaysia from outside Malaysia; 

  2. designated country” means any country or territory specified in the Schedule to P.U.(A) 111/20173

  3. designated insurer” means, among others, any person licensed, approved, registered or otherwise regulated under the law of any designated country to carry on insurance broking business in that country; and 

  4. MAT insurance” means the insurance risks relating to:
  1. maritime shipping, commercial aviation, space launching and freight (including satellites), which covers any or all of the following: (i) the goods being transported; and (ii) the vehicle transporting the goods, and any liability arising therefrom; and 

  2. goods in international transit. 
Summary of the amendment
 
P.U.(A) 111/2017, among others, permits a designated insurer to insure risks relating to MAT insurance if the designated insurer: 
  1. is approved by BNM to be an approved MAT insurer under regulation 4(2)(a) of P.U.(A) 111/2017; and 

  2. has no commercial presence in Malaysia for the purpose of carrying on the business of providing MAT insurance. 
P.U.(A) 298/2024 amends the Schedule to P.U.(A) 111/2017 to include the CPTPP Contracting States as designated countries. This means that a CPTPP insurer may seek approval of BNM to carry on the business of providing MAT insurance under P.U.(A) 111/2017 and upon such approval being obtained, to provide MAT insurance to persons in Malaysia from outside Malaysia.
 
P.U.(A) 299/2024 – Marine, Aviation and Transit Insurance Brokers
 
Effective date
 
P.U.(A) 299/2024, which amends the Financial Services (Approved Marine, Aviation and Transit Insurance Brokers) Regulations 2017 (“P.U.(A) 112/2017”), is deemed to have come into operation on 29 November 2022.
 
Key definitions
 
For the purposes of P.U.(A) 112/2017: 
  1. approved MAT insurance broker” means, among others, a designated insurance broker approved in writing by BNM under regulation 4 of P.U.(A) 112/2017 to carry on the business of providing MAT insurance as an insurance broker to persons in Malaysia from outside Malaysia; 

  2. designated country” has the same meaning assigned to it under P.U.(A) 111/2017; 

  3. designated insurance broker” means a person licensed, approved, registered or otherwise regulated under the law of any designated country to carry on insurance broking business in that country; and 

  4. MAT insurance” has the same meaning assigned to it under P.U.(A) 111/2017. 
Summary of the amendment
 
P.U.(A) 112/2017, among others, permits a designated insurance broker to carry on the business of providing MAT insurance as an insurance broker to persons within Malaysia from outside Malaysia if the designated insurance broker: 
  1. is approved by BNM to be an approved MAT insurance broker under regulation 4(2)(a) of P.U.(A) 112/2017; and 

  2. has no commercial presence in Malaysia for the purpose of carrying on the business of providing MAT insurance brokerage services. 
P.U.(A) 299/2024 amends the Schedule to P.U.(A) 112/2017 to include the CPTPP Contracting States as designated countries. This means that a CPTPP insurance broker may seek approval of BNM to carry on the business of providing MAT insurance as an insurance broker under P.U.(A) 111/2017 and upon such approval being obtained, to provide such insurance brokerage service to persons in Malaysia from outside Malaysia.
 
P.U.(A) 300/2024 – Product Liability Insurance / Reinsurance
 
P.U.(A) 300/2024 which is deemed to have come into operation on 29 November 2022, exempts: 
  1. a CPTTP insurer which carries on general insurance relating to product liability under the law of a CPTPP Contracting State from the requirement to obtain a licence under paragraph 8(1)(a) of the Financial Services Act 2013 (“FSA”) to carry on general insurance business; 

  2. a CPTTP reinsurer which carries on reinsurance business or retrocession under the law of a CPTPP Contracting State from the requirement to obtain a licence under paragraph 8(1)(a) of the FSA to carry on reinsurance business; or 

  3. any person who enters into or causes to be entered into any contract of general insurance in respect of product liability insurance from the requirement to obtain the prior written approval of BNM under subsection 127(1) of the FSA for such purpose. 
The exemption under P.U.(A) 300/2024 is subject to the condition that the CPTPP insurer or CPTTP reinsurer has no commercial presence in Malaysia.
 
P.U.(A) 301/2024 – Directors and Officers Liability Insurance
 
P.U.(A) 301/2024, which comes into operation on 29 November 2027, will exempt: 
  1. a CPTTP insurer which carries on general insurance relating to directors and officers liability under the law of a CPTPP Contracting State from the requirement to obtain a licence under paragraph 8(1)(a) of the FSA to carry on general insurance business; or 

  2. any person who enters into or causes to be entered into any contract of general insurance in respect of directors and officers liability with a CPTPP insurer from the requirement to obtain the prior written approval of BNM under subsection 127(1) of the FSA for such purpose. 
The exemption under P.U.(A) 300/2024 is subject to the condition that the CPTPP insurer has no commercial presence in Malaysia.
 
Alert by Kok Chee Kheong (Partner) of the Corporate Practice of Skrine.
 

1 The United Kingdom signed the UK Accession Protocol to join the CPTPP on 16 July 2023 and is working towards completing their domestic processes to bring the Accession Protocol into force.
2 The CPTTP has also come into force in respect of the other 10 original signatories on various dates between 30 December 2018 to 12 July 2023.
3 Prior to the amendment under P.U.(A) 298/2024 and P.U.(A) 299/2024, the Schedule to P.U.(A) 111/2017 and P.U.(A) 112/2017 provide that a “designated country” refers to a Member State of the Association of Southeast Asian Nations (“ASEAN”) which is a signatory to the Protocol to Implement the Seventh Package of Commitments on Financial Services under the ASEAN Framework Agreement on Services dated 23 June 2016.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.