This document discusses regulations and oversight of the insurance and takaful industries in Malaysia. It notes that insurance and takaful operators must be licensed and regulated by the government to protect policyholders. The key regulator is Bank Negara Malaysia, which oversees solvency, governance, and compliance. Takaful operators must also comply with Shariah guidelines and be members of the Malaysian Takaful Association for self-regulation. The document outlines regulations around licensing, funds, investments, examinations and more to promote sound, stable operation of insurance and takaful markets.
This document discusses regulations and oversight of the insurance and takaful industries in Malaysia. It notes that insurance and takaful operators must be licensed and regulated by the government to protect policyholders. The key regulator is Bank Negara Malaysia, which oversees solvency, governance, and compliance. Takaful operators must also comply with Shariah guidelines and be members of the Malaysian Takaful Association for self-regulation. The document outlines regulations around licensing, funds, investments, examinations and more to promote sound, stable operation of insurance and takaful markets.
This document discusses regulations and oversight of the insurance and takaful industries in Malaysia. It notes that insurance and takaful operators must be licensed and regulated by the government to protect policyholders. The key regulator is Bank Negara Malaysia, which oversees solvency, governance, and compliance. Takaful operators must also comply with Shariah guidelines and be members of the Malaysian Takaful Association for self-regulation. The document outlines regulations around licensing, funds, investments, examinations and more to promote sound, stable operation of insurance and takaful markets.
Viewed as a form of governmental consumer protection
They are the trustees of the policyholders premiums and have to pay any loss that the policyholders may incur on the risks that have been transferred. Must be regulated and monitored by the government. The Insurance Act 1996 If not satisfied Licensing Solvency Requirement Insurance Fund and Shareholders Funds Insurance Pricing Section 142 BNM determine the code of good practice with regard to actuarial computation of premium rates. Section 144 General insurer should not adopt a tariff of premium rates and conditions for a description of general policy except with the prior written approval of BNM. Examination of Insurers Requires all licensed insurers to submit an annual account that has been audited, actuarial report and quarterly reports to BNM. Bank Negara has power to elect representative to examine documents of an insurer. BNM has power to examine director of the licensee or policy owner. Self-regulation through Insurance Association Objective: 1. To instill discipline and promote healthy competition in the industry 2. To provide some element of protection to insurance customers.
Insurance association: 1. General Insurance Association of Malaysia (PIAM) 2. Insurance Brokers Association of Malaysia (IBAM) 3. Association of Malaysian Loss Adjusters (AMLA) 4. Life Insurance Association of Malaysia (LIAM) As a regulations relates to takaful business operations. Bank Negara entrusted to administer and enforce provision to ensure orderly growth of industry. Section 68; MOF is authorized to make subsidiary legislations to prescribe detail particulars pursuant to requirement under the act.
Any company may apply to become takaful operators. Section 4(1) Registered takaful operators required to maintained a surplus of assets over liabilities which is not less than RM5 million. Section 4(2)(b) Director general has authority to cancel the registration of takaful operator. Section 11 Registration of Takaful Operators Shariah Framework Shariah Advisory Council via Central Bank of Malaysia Act 2009 is accorded sole authority on matter pertaining to Islamic banking and takaful business. Section 53A(1); any parties involved in takaful transaction namely a takaful operator, agent, broker or adjuster may seek advice from SAC. Operator required to establish its own Shariah committee. Malaysian Takaful Association (MTA) Section 4(2)(b); requires takaful operators to become member of MTA to carry out takaful business. Implement Inter- Takaful Operator Agreement (ITA) among its member. Aims to improve industry self-regulation through uniformity in market practice and promoting higher level of cooperation among players in developing takaful industry. Takaful Fund Section 16; requires takaful operators to establish takaful fund in respect of each class of business. For family takaful business, takaful benefits can only be paid out of fund to the participants with approval of qualified actuary. All contributions attributed to each class of business will paid into the fund. Statutory Asset Requirement Section 17; requires takaful operators to maintain at least 80 percent of each takaful fund in authorized Malaysian assets at least 15 percent of each takaful fund in securities of federal or state government issued in Malaysia. Supervision of Takaful Operators The Insurance Supervision Department and Information System Supervision unit of Bank Negara Malaysia conduct off-site surveillance and on-site examination of insurance companies and takaful operators in regular basis. Aim to support and promote good and orderly development of industry with respect to soundness, solvency, integrity, corporate governance and professionalism. Off-site surveillance focused on ability to meet the prescribed requirement for investment of takaful fund On-site examination carried out to assess their financial conduct. Takaful Guarantee Scheme Fund (TGSF) Section 46(1); Director General may institute investigation into whole or any part of takaful business if there is any evidence that operator is likely unable to meet its obligation. Section 8(7); Operator required to make deposit for each class of business before a license is granted with minimum amount is RM300,000. The Act empowers Director General to establish and maintain TGSF in order to reduce risk of takaful operator experiencing insolvency. The function is to meet the liabilities of any insolvent operator. Imposed on licensed operator including profit or dividend from investment. THE INSURANS AND TAKAFUL MARKET INSURANS MARKET Refer to facilities for buying and selling insurance Consists of insurance buyer, seller and intermediaries.
1) BUYER Include individuals, business organization, association industries and public enterprise 2) SELLER Known as insurance company Classified into different type according to products they sell, their license and their legal form of ownership. Divided into two classification: a) Private insurers o Life insurers- sell life insurance, sell personal accident and health insurance o General insurers sell property and liability insurance o Composite insurer- sell life and general insurance product
b) State insurers o Social Securities Organisation (SOCSO) provide social securities protection to workers , Employment injury insurance scheme, Invalidity pension scheme
3) REINSURANCE Shifting part or all risk exposure covered by one insurer to another insurer. There has emerged need to share the risk with other insurer.
4) INTERMEDIARIES Many insurance sell to client through intermediaries Consist of Bank, Agents and Brokers. a) Agents- person who represents insurer - before register with approved insurers association, required to pass a pre-contract examination. b) Brokers person who represent the clients - find most suitable insurance for client at least premium cost. - assist client to understand benefits insurance and claim. - prepared document to insurer. 4) BANCASSURANCE Collaboration banks and insurers to distribute insurance product to bank customer. Maybank is first bank that start bancassurance in Malaysia. Todays, bancassurance predominant distribution channel for life insurance
TAKAFUL MARKET one of the fastest-growing segment of local islamic financial market. First takaful in Malaysia is Syarikat Takaful Malaysia Berhad incorporated 1984 and listed on Bursa Malaysia in July 1996. Major shareholder is Bank Islam Malaysia Holdings Takaful Malaysia is only takaful operator in MAS adopt pure mudharabah Second takaful is MNI Takaful. Takaful Ikhlas subsidiary of Malaysia National Reinsurance Holdings Bhd. 2005, Mayban Fortis acquire Malaysia National Insurance BHD and Takaful Nasional Berhad. Effact: rebranding company and new name Takaful group is Etiqa RE-TAKAFUL OPERATION Offer coverage for takaful companies against the risk, and loss of their capital and their reserve. Must be undertaken parallel to shariah priciple Limitation insufficient number of re-takaful operators. Only 3 re-takaful companies in Malaysia 1) MNRB Retakaful Berhad 2) Munich Re Retakaful 3) ACR Retakaful SEA Berhad. CHANNEL OF DISTRIBUTION To make efficient and cost effective and to reach a large segment of population. Consists of direct marketing, agents, brokers and bancatakaful 1) Direct marketing Insurance or takaful product purchased by insured arranged by representatives of the insurer or takaful operator Representatives refer to employees that responsible for the promotion and sales. 2) Agent and broker In takaful agents will called wakil Brokers are individuals who arranged and services takaful policies on behalf of the insured Brokers also representatives of the insured to make sure customer get best takaful needs. 3) Bancatakaful Delivery bankable protection, long term saving and pension product. Strategic alliance between takaful operator and banking institution where takaful product market through bank channels. Help takaful operator to increase the customers.