Direct Distribution Channels for Pure Protection Products

On 23 November 2015, the Bank issued the Life Insurance and Family Takaful Framework (the Framework) to support the long-term development of the life insurance and family takaful industry. Pillar Two of the Framework sets out initiatives for the diversification of distribution channels to promote greater accessibility and wider outreach of life insurance and family takaful products. One such initiative is for a licensed person to offer commission-free standalone pure protection products through at least one direct distribution channel.

With improvements in financial literacy and technological advancements, the growth of direct distribution channels is expected to complement agency channels in reducing the protection gap and contributing towards greater financial inclusion.

The requirements in this policy document for licensed persons to offer pure protection products via direct distribution channels aim to:
(a) increase access for consumers to pure protection products;
(b) ensure the availability of simple pure protection products to the public;
(c) safeguard consumers’ interests through proper disclosure and enhanced transparency; and
(d) promote competition and innovation.

This policy document sets out the following:
(a) specific requirements for pure protection products offered through direct distribution channels; and
(b) business conduct, infrastructure, and operational requirements for direct distribution channels.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking