Good news for direct purchase of insurance, though at the expense of agents!
Premium Rebates for Purchasing Insurance Covers Directly from Insurers
As part of the Government’s efforts to enhance productivity, efficiency and access to financial products and services, the financial sector has over the years developed more cost-efficient delivery channels. This is also to enhance the ability of consumers to have 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 provide consumers with the options that will best suit their needs. Policy owners who purchase insurance cover directly will receive premium savings in arranging their own insurance through dealings directly with the insurance companies.
Effective 1 July 2009, individuals who purchase general insurance covers directly from insurance companies will be eligible to receive premium rebates. The quantum of the rebates will depend on the type of insurance covers purchased. For motor insurance, individuals will receive 5% premium rebate in the first year of implementation and 10% thereafter. For others including businesses, insurance companies have the flexibility of providing the rebates. The direct purchase includes walk-in, through the internet, direct mailing and the telemarketing channel.
Despite the emergence of direct distribution channels, insurance agents remain an important intermediary in the general insurance sector to provide personalized service 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 insurance products. This, together with the higher value-added services provide greater scope for agents to widen their services to include financial advisory to their clients. Becoming a financial advisor is an important potential area that has tremendous growth opportunities.
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. Among the initiatives undertaken by Bank Negara Malaysia and the insurance sector include putting in place appropriate training programmes and requiring agency training expenses be part of the minimum training expenditure required for the insurance company.
With increased liberalization and globalization of the financial sector landscape, it is important that financial industry players evolve to remain competitive in this more challenging environment.