2011 Bank Negara Malaysia’s Guidelines & Circulars | Malaysia Insurance News

Auld Lang Syne 2011 and Happy New Year 2012!

We are arriving at the doorsteps of 2012, so Malaysia Insurance Online wishes to thank you guys for faithfully arriving at our site in 2011 and hope you guys would be likewise doing so faithfully for the new year 2012. But, please do it with zest and be active commenting on the blogposting…. as we need feedbacks for further improvement.

Taking this opportunity we have some GUIDELINES, CIRCULARS & some CONCEPT PAPERS issued (or amended) by Central Bank of Malaysia (BNM) in 2011 posted here for your reading pleasure. Hopefully you will find them useful, especially for agents and independent insurance practitioners…. We cannot post any of the BNM’s attachments here for reasons you already knew, however, if you seriously require them do register your interest below or email us directly.

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Guidelines to Responsible Financing
Effective Date
  • The Guidelines : 1 January 2012
  • Paragraph 6.18 : 18 November 2011
  • Paragraphs 8.2, 8.3 & 8.4 : To both new and existing customers by 1 July 2012
  • Paragraph 8.6 : Payment allocation requirement for financing products other than credit card facilities : 1 July 2012
Applicability

Applicable to the following financial service providers (FSPs):

  • Banking institutions licensed under the Banking and Financial Institutions Act 1989 (BAFIA);
  • Islamic banking institutions licensed under the Islamic Banking Act 1983;
  • Life insurers licensed under the Insurance Act 1996 (IA);
  • Takaful operators registered under the Takaful Act 1984 (TA);
  • Development financial institutions prescribed under the Development Financial Institutions Act 2002 (DFIA); and
  • Designated payment instrument issuers approved under the Payment Systems Act 2003 (PSA).
Summary

These Guidelines outline supervisory expectations on retail financing practices in order to inculcate responsible lending conduct by FSPs in their dealings with retail customers in the current competitive and dynamic environment.

Issuing Department

Consumer and Market Conduct Department

Electronic Submission of Actuarial Certificates, Addendums and Supporting Documents
Effective Date

01 November 2011

Applicability

All Insurance Companies and Takaful Operators

Summary

This circular is to inform all insurance companies and takaful operators to submit actuarial certificates and the relevant supporting documents to the Bank in electronic format.

Issuing Department

Jabatan Penyeliaan Insurans dan Takaful

 

Concept Paper – Guidelines on Internal Capital Adequacy Assessment Process (ICAAP) for Insurers
Effective Date

The consultation period of this concept paper ends on 7 October 2011

Applicability

All licensed insurers

Summary

Insurers are required to have in place an Internal Capital Adequacy Assessment Process (ICAAP) to ensure that it maintains adequate capital on an ongoing basis. The Guidelines describe key elements required of an ICAAP, including the determination of an Individual Target Capital Level (ITCL) that is commensurate with an insurer’s risk profile and control environment, as well as sound capital management to ensure that insurers operate at levels above the ITCL at all times.

These Guidelines are issued as a concept paper for insurers’ feedback and comments. Insurers are required to provide constructive comments and feedback to Bank Negara Malaysia latest by 7 October 2011 addressed to:

Pengarah
Jabatan Penyeliaan Insurans dan Takaful
Bank Negara Malaysia
Jalan Dato’ Onn
50480 Kuala Lumpur

Issuing Department

Jabatan Penyeliaan Insurans dan Takaful

 

Guidelines on Takaful Operational Framework
Effective Date

1 January 2012

Applicability

All takaful operators registered under the Takaful Act 1984

Summary

The Guidelines serves as guidance for takaful operators in conducting their operations, to ensure business activities and innovations are within their risk management capacity and do not compromise prudence, as it outlines parameters within which takaful operations shall take place. The Guidelines emphasizes on the need for takaful operators to put in place comprehensive internal procedures and safeguards to ensure long-term sustainability of the business and that interests of the stakeholders are safeguarded.

Highlights of 5 September 2011 Updates
The Guidelines is updated to incorporate the following:
a) clarification on the definition of deficit which requires qard in takaful fund and consequential refinement on deficit rectification management; and
b) latest Shariah Advisory Council’s decision on inward retakaful business from, and outward retakaful business to, conventional insurance and reinsurance companies.
Selected FAQs have also been removed from the Attachment 1, in view of the above updates.

Issuing Department

Islamic Banking and Takaful Department

 

Guidelines on Data Management and MIS Framework
Effective Date

22 October 2008. This document was last updated on 29 August 2011

Applicability

These guidelines are applicable to all institutions licensed under the Banking and Financial Institutions Act 1989 (BAFIA), Islamic Banking Act 1983 (IBA), Insurance Act 1996 (IA) and Takaful Act 1984 (TA). Other institutions which are part of a financial group are also encouraged to adopt the principles contained in these guidelines, where appropriate.

Summary

These guidelines set out the guiding principles and the Bank’s supervisory expectations on sound data management and management information system (MIS) practices that financial institutions should consider when developing their internal data management capabilities.

The attached implementation guidance serves to provide further clarification on operational and implementation issues raised by the banking and insurance industry on the concept paper issued in January 2008.

Highlights of the latest update

The guidelines are being updated to encourage financial institutions to obtain a MS ISO/IEC 27001:2007 Information Security Management Systems (ISMS) certification for critical systems, particularly the payment and settlement systems.

Issuing Department

Prudential Financial Policy Department

 

Guidelines on Investment-Linked Insurance/Takaful Business
Effective Date

18 July 2011

Applicability

All licensed insurers and takaful operators.

Summary

The guidelines set the minimum standards for the management and administration of investment-linked insurance/takaful business. It provides flexibility in the management of investment-linked insurance/takaful business, while strengthening expectations on the fair treatment of customers, including enhanced disclosures and internal oversight arrangements for the management and control of investment-linked business.

Highlights of the 18 July 2011 updates

The guidelines will supersede the Guidelines on Investment-Linked Business issued on 12 November 2010. The changes made are:

  • Revised investment limits on foreign assets with specific treatment for foreign currency-denominated and Ringgit-denominated investment-linked funds.
Issuing Department

Jabatan Dasar Kewangan Pruden

 

Amendments to the Circular JPl: 23/2004 for the Submission of Information and Statistics to Bank Negara Malaysia
Effective Date

21-January-2011

Applicability

This circular is applicable to all insurers and reinsurers

Summary

This circular informs all licensed insurers and reinsurers that the submission of the Annual Remuneration Statement for Directors/Chief Executive Officers (CEOs) of Insurers (ARS) via the online Financial Institutions Corporate Profile System (FICPS) is no longer required

Issuing Department

Jabatan Dasar Kewangan Pruden

 

Temporary Measure on the Capital Requirements for the Malaysian Motor Insurance Pool (MMIP) Liabilities under the Risk Based Capital Framework for Insurers
Effective Date

1 May 2011

Applicability

All general insurers and reinsurers licensed under the Insurance Act 1996

Summary

The circular sets out the temporary measure to exclude the motor insurance liabilities, underwritten and accounted for under the MMIP, from the general insurance risk capital charges computation.

Any queries on the framework may be directed to rbc@bnm.gov.my or the address below:

Pengarah
Jabatan Dasar Kewangan Pruden
Tingkat 10, Blok B,
Bank Negara Malaysia
Jalan Dato’ Onn
50480 Kuala Lumpur

Issuing Department

Jabatan Dasar Kewangan Pruden

 

Submission of Reporting Forms under the Risk Based Capital Framework for Insurers
Effective Date

9 June 2011

Applicability

All insurers and reinsurers licensed under the Insurance Act 1996

Summary

The circular sets out the reporting requirements corresponding to the Risk Based Capital Framework for Insurers (Revised Version 2.0) issued on 10 May 2011.

Any queries on the framework may be directed to rbc@bnm.gov.my or the address below:

Pengarah
Jabatan Dasar Kewangan Pruden
Tingkat 10, Blok B,
Bank Negara Malaysia
Jalan Dato’ Onn
50480 Kuala Lumpur

Issuing Department

Jabatan Dasar Kewangan Pruden

 

Guidelines on Business Continuity Management (Revised)
Effective Date

3-Jun-2011

Applicability
  • Banking and Financial Institutions Act 1989;
  • Islamic Banking Act 1983;
  • Development Financial Institutions Act 2002;
  • Insurance Act 1996; and
  • Takaful Act 1984
Summary

The Guidelines on Business Continuity Management issued in December 2007 have been revised to incorporate changes to the report submission requirements. A summary of the revision is as follows:

(i) LIs are no longer required to submit the following reports to Bank Negara Malaysia (the Bank);

a. Appendix 1 – Level of Disruption
b. Appendix 3 – BCP and DRP Test Matrix
c. Appendix 4 – BCP and DRP Post-Test Analysis Report

(ii) Despite changes in the submission requirement, LIs are still required to prepare and maintain Appendices 1, 3 and 4 and to make these reports readily available for review, when requested;

(iii) The internal auditors of the LIs are required to undertake periodic review on the BCP and DRP Post-Test Analysis Report (Appendix 4) and provide their assessment to the Bank quarterly; and

(iv) LIs are still required to submit the Executive Summary of BCP and DRP Audit Report to the Bank within two months after being formally endorsed by the Audit Committee.

Issuing Department

Financial Conglomerates Supervision Department

 

Payment of Commission for Products with Paid-up Option
Effective Date

13-August-2011

Applicability

All direct insurers carrying on life insurance business under the Insurance Act 1996.

Summary
  • The circular specifies the requirement on commission payment for products with paid-up option.
  • In ensuring that consumers’ interests are safeguarded, commission level payable during the minimum premium payment term shall be pro-rated based on the minimum premium payment term. As an example, for a 20-year premium payment term product with option to cease payment of premium in 10th policy year, the commission payment shall be based on a 10-year pro-rated commission scale instead of a 20-year commission scale during the minimum premium payment term.
Issuing Department

Financial Sector Development Department

 

Request for Valuation Result, Allocation and Movement of Surplus for each Calendar Year End
Effective Date

11-Jan-2011

Applicability

Licensed life and composite insurers and licensed life and composite reinsurers.

Summary

The circular sets out the requirements for the companies stated to submit their Form Form E3 – Valuation Result, Allocation and Movement of Surplus, for Calendar Year ending 31 December for each year, for example 31 December 2010 and 31 December 2011.

Please submit the above statistics in soft copy and hard copy by the last working day of January the following year. For example, Results for Calendar Year ending 31 December 2010 should be submitted by 31 January 2011.

Should you require further clarification, please contact Mr. Saiful Adli Aziz at 22635000 ext 2765.

Issuing Department

Jabatan Penyeliaan Insurans dan Takaful

 

Removal of temporary flexibility for life insurers under the Risk-Based Capital (RBC) Framework for Insurers
Effective Date

1-Jan-2011

Applicability

All life insurers and reinsurers

Summary

The circular set outs the removal of the temporary flexibility on the use of the risk-free discount rates to be used for valuation and capital charges computation purposes under the RBC Framework for insurers.

Any queries on the framework may be directed to rbc@bnm.gov.my or the address below:

Pengarah
Jabatan Dasar Kewangan Pruden
Tingkat 10, Blok B,
Bank Negara Malaysia
Jalan Dato’ Onn
50480 Kuala Lumpur

Issuing Department

Jabatan Dasar Kewangan Pruden

 

Guidelines on Product Transparency and Disclosure
Effective Date
  • The Guidelines : 1 January 2010
  • Disclosure requirements on Negotiable Instruments of Deposit and Islamic Negotiable Instruments : 18 May 2009
  • Commission disclosure for investment-linked insurance products and investment-linked takaful products including any riders attached to the policies / certificates : 15 April 2010
  • Commission disclosure for general insurance / takaful, standalone medical and health insurance / takaful and group medical and health insurance / takaful and group medical and health insurance / takaful : 15 April 2010
  • Legal documents to be made available in Bahasa Malaysia : 1 January 2011
  • Contracts, agreements and policy documents to be presented in plain language : 1 January 2011
  • Commission disclosure for ordinary life insurance products and ordinary family takaful products including any riders attached to the policies / certificates : 1 June 2011
Applicability
  • Banking institutions;
  • Islamic banking institutions;
  • Life insurers and general insurers;
  • Takaful operators;
  • Development financial institutions; and
  • Designated payment instrument issuers and remittance service providers.
Summary

These Guidelines establish a consistent and comprehensive disclosure regime aimed at improving information disclosure on products and services offered by financial service providers.

With the incorporation of the requirements on Negotiable Instruments of Deposit (NID) and Islamic Negotiable Instruments (INI) into these Guidelines and the Guidelines on Introduction of New Products, the Guidelines on Negotiable Instruments of Deposit issued on 15 June 2006 and the Guidelines on Islamic Negotiable Instruments issued on 8 September 2000 will no longer be applicable with effect from 18 May 2009. Financial institutions may refer to the “Explanatory Notes on NID and INI”, which can be obtained from the FAST website at https://fast.bnm.gov.my/fastweb, for additional guidance and reference.

Issuing Department

Jabatan Konsumer dan Amalan Pemasaran

 

Market Value of Motor Vehicles
Effective Date

1-Aug-2011

Applicability

General insurers licensed under the Insurance Act 1996 and takaful operators registered under the Takaful Act 1984, and their intermediaries.

Summary

The circular requires insurers / takaful operators and their agents to advise consumers during the pre-contractual stage or renewal of motor insurance / takaful cover on the present market value of motor vehicles, the importance of insuring the vehicle at the appropriate market value and the effect of over-insurance and under-insurance when a claim is made.

Issuing Department

Jabatan Konsumer dan Amalan Pemasaran

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6 comments for “2011 Bank Negara Malaysia’s Guidelines & Circulars | Malaysia Insurance News

  1. MJien
    October 26, 2012 at 16:12

    Do you have any information of the difference between Guidelines to Responsible Financing and the old guidelines?

    • November 9, 2012 at 09:32

      Will check this out, but if I failed to reply to you do remind me again

  2. Helmy
    June 15, 2012 at 10:37

    Hi there, tq for the articles.

    Need your assistance please, appreciate if you could kindly email to me the following guidelines for my review:

    1. BNM Guideline dated 3/1/11
    Guidelines on Revised Fees For Selected Services Under RENTAS, eSPICK and FAST System

    2. BNM Circular dated 25/01/11
    Clarification on Liberalisation of Foreign Exchange Administration Rules

    3. BNM Circular dated 4/03/11
    (A) Payments in Ringgit and Foreign Currency Involving Resident and Non-resident Individuals; and (B) Foreign Currency Accounts of Residents dated 4 March 2011
    (ECM 3)
    (ECM 4)
    (ECM 7)

    4. BNM Guidelines dated 29/4/11
    Implementation of Revised Operational Procedures for Securities Services – Version 1.1

    5. BNM Guidelines dated 29/4/11
    Implementation of Revised Participation and Operation Rules for Payments and Securities Services – Version 1.1

    6. BNM Guidelines dated 29/4/11
    Implementation of Revised Operational Procedures for Sistem Penjelasan Informasi Cek Kebangsaan secara Elektronik (eSPICK) – Version 1.1

    7. BNM Guidelines dated 29/4/11
    Implementation of Guidelines on Dispute Resolution Between Participants of The Payments and Securities Services Provided by MyClear

    8. BNM Guidelines dated 29/4/11
    Implementation of Central Securities Depository and Paying Agency Rules (CSDPAR)

    9. BNM Guidelines dated 05/05/11
    Implementation of Revised Operational Procedures for Real Time Electronic Transfer of Funds and Securities (RENTAS) – Version 1.1.1

    10. BNM Circular dated 31/5/11
    “Liberalisation of Foreign Exchange Administration Rules on –
    (A) Direct Investment Abroad;
    (B) Inter-Company Borrowing; and
    (C) Foreign Currency-Denominated Trade Financing”

    11. BNM Guidelines dated 12/12/11
    Implementation of the Revised Fees for Selected Services under RENTAS and FAST Systems

    12. BNM Circular dated 31/1/12
    Liberalisation of Foreign Exchange Administration Rules

    Thanks & regards,
    Helmy

  3. Akhtar Amin
    June 7, 2012 at 23:45

    Need a general comment for 3 minutes for a phone interview on “Current insurance market and towards 2020” for our segment on Capital.TV channel 127 for business viewers. Call me to discuss further and to set time for interview today Friday, 8 June 2012, before 3pm. Thank You. My number : 016 303 8903.

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