Bancassurance and bancatakaful has evolved into a significant distribution channel for insurance and takaful businesses, particularly for life insurance and family takaful products. Diversification of distribution channels has widened consumers’ accessibility to a wider range of insurance and takaful products to suit their diverse needs based on individual needs, risk appetites, financial goals and levels of financial capability. This in turn has contributed towards the broader objective of reducing the protection gap in Malaysia.
The requirements in this policy document are intended to:
(a) ensure bancassurance/bancatakaful remains as a viable channel that is widely accessible for consumers to purchase insurance and takaful products;
(b) promote sound market conduct practices that safeguard consumers’ interest through needs-based sales, disclosure and enhanced transparency; and
(c) promote market competitiveness and preserve consumer choice.
Towards this end, the policy document serves to enhance the bancassurance/bancatakaful channel and further strengthen safeguards in place to ensure the delivery of better consumer outcomes.
Making financial decisions can be a complex process and it may be difficult for consumers to appropriately weigh and consider their options when faced with a wide array of bancassurance/bancatakaful products, in particular, savings and investment-linked products. The tendency to focus more on the short-term returns, while not fully understanding the longer-term downside risks associated with more complex products, are among the key challenges faced by consumers. To mitigate this, transparency and disclosure requirements have been enhanced to help consumers make more informed financial decisions when considering the purchase of such products through the bancassurance/bancatakaful 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
