22 June 2009

Insurance premium rebates implementation on track

I soo agree with this stance of BNM. With all due respect to the insurance agents, not all members of the public depend on the agents for advice on managing their insurance coverage & assistance in claims handling. There are insurers who invested in good & useful claims processing system & the policyholders can make a claim just by calling the insurers directly. Hence, members of the public who can manage their insurance on their own should be given an avenue where they can benefit from acting independently. Those who cannot should then use the services of these supposedly well trained agents (& thus, allowing the agents to earn their commissions).

'No backtrack on insurance premium rebates'
Business Times
Monday, June 22, 2009, 09.24 AM

BANK Negara Malaysia will not backtrack from implementing premium rebates for the direct purchase of general insurance covers from insurers as it is meant to put more money into consumers' pocket.

Thus, come July 1, individuals who purchase general insurance covers directly from insurance companies will be eligible to receive a premium rebate.

The quantum of rebate, however, will depend on the type of insurance purchased.

For motor insurance, individuals will receive a five percent premium rebate in the first year of implementation and 10 per cent thereafter.

"This is something that is fair for consumers. Over time you cannot stop this kind of innovation taking place," Bank Negara's deputy governor Datuk Mohd Razif Abd Kadir said at a Press conference in Kuala Lumpur today.

According to him, there has been "pressure" to withdraw the policy from being implemented.

"But it is aimed at putting more money back into consumers'' pocket, which is in line with the government''s intention of enhancing consumption," he said.

As at end of 2008, the general insurance policy premium amounted to RM4.4 billion, of which half was motor insurance and 15 percent or RM450 million came from direct channel, but without getting any rebate.

"Now, individual consumers will benefit from the rebate," Mohd Razif said.

Bank Negara, he said, has engaged in various discussions with industry players with regard to the implementation of the insurance rebate.

The policy, he added, was also to enhance the ability of consumers in having a wider access to financial products and services.

In line with this, insurance companies have also increasingly introduced direct delivery channels to market their products and services which provided consumers with the options that will best suit their needs, Mohd Razif said.

Thus, the insurance companies are well prepared with the infrastructures that is needed to enable consumers to deal directly, he said.

Despite the emergence of direct distribution channels such as Internet, the 40,000 insurance agents in Malaysia will remain an important intermediary in the general insurance sector to provide personalised services for the convenience of policy owners as well as value-added services such as advice on insurance products and in providing assistance in claims handling.

Customers have the option to use the services of agents to meet their insurance requirements, particularly for complex and sophisticated products.

To facilitate agents to move up the value chain and enter this new area, the government and the insurance industry have and will continue to provide the necessary training and capacity-building opportunities, Mohd Razif said.

Initiatives by Bank Negara and the insurance sector include putting in place appropriate training programmes and requiring agency training expenses to be part of minimum training expenditure, he said.

However, there is no plan to implement such a policy for other insurance products, Mohd Razif said, adding that the idea to increase motor vehicle insurance tariff, which has seen no change since 1978, is still being studied. - Bernama

Till later, live long & prosper.

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