Bank Negara’s Circulars and Guidelines | Happy New Year 2011

Happy Holiday at the beach?

HAPPY NEW YEAR 2011 Get out and tan yourself on beach....

Here we are at the very doorsteps of 2011 and a public holiday to go along with the celebration. Today’s holiday was declared by the Prime Minister for the nation to celebrate the Malaysian football team’s one of those rare achievements (We are the champion….) in the recent Asean Football Federation (AFF) Suzuki Cup.

Malaysia Insurance Online wishes everyone…. an early HAPPY NEW YEAR 2011.

Catching up with Circulars, Notices and Guidelines

Taking the opportunity here, we are inserting our compilation of those Bank Negara Malaysia’s (BNM) (Central Bank of Malaysia) circulars, official notices and guidelines issued in 2010 – matters of concerns for the insurance and takaful industry – taking effect in the same year or to be implemented in 2011. “CIR” denotes Circular, “NT” denotes Notices and “GL” denotes Guideline.

Hope you have a wonderful time reading the summary and making cross-references with them….

  1. IA Licensees TA Regulated Entities BNM/RH/CIR 010-8
    Bayaran Yuran Lesen Tahunan 2010 – Seksyen 21 Akta Insurans 1996 dan Seksyen 9 Akta Takaful 1984
    General Circulars and Notification Effective date: 7-Jan-2010 Penanggung-penanggung Insurans/Insurans Semula dan Pengendali Takaful/ Takaful Semula. Issued by: Regulation and Supervision Administration.

    This circular is about the payment of annual licensing fee…

  2. IA Licensees TA Regulated Entities BNM/RH/CIR 013-5
    Circular on Measures to Ensure Sustainability in the Residential Property Market
    General Circulars and Notification Effective date: 3-Nov-2010 Insurers and Takaful Operators. Issued by: Financial Surveillance Department

  3. IA Licensees TA Regulated Entities BNM/RH/GL 000-4
    Complaints Handling
    Complaint Management and Redress Mechanism Effective date: 1-Feb-2010 Issued by: Consumer and Market Conduct Department

  4. IA Licensees TA Regulated Entities BNM/RH/GL 018-2Guidelines on Investor Protection Effective date: 20-Dec-2010 Issued by: Consumer and Market Conduct Department

  5. http://www.malaysiainsurance.info/wp-admin/post-new.php

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  6. IA Licensees BNM/RH/GL 003-28
    Guidelines on Financial Reporting for Insurers
    Accounting Policies and Standards Financial Reporting for Licensed / Supervised Institutions. The guidelines are effective for financial years beginning on and after 1 January 2010. All insurers and reinsurers. Issued by: Prudential Financial Policy Department

    The guidelines set out requirements on the application of Financial Reporting Standards and information to be disclosed in the financial statements of insurers. It includes the minimum disclosure requirements, specific accounting treatments and the expectations that must be met by insurers on the use of fair value option to financial instruments.

    Highlights of the update on 22 July 2010
    Insurers are required to make available the interim financial reports prepared on a half-yearly basis in their website no later than 8 weeks after the close of the interim reporting period.

  7. IA Licensees TA Regulated Entities. BNM/RH/GL 013-4
    Guidelines on Internal Audit Function of Licensed Institutions
    Policy Effective date: 1-Jul-2010 Insurers; Takaful operators. Issued by: Financial Conglomerates Supervision Department.

    This Guidelines sets out the broad principles for an effective internal audit function. The internal audit function is an important part of the licensed institution’s system of internal controls as it provides an independent assessment of the effectiveness and adherence to the institution’s organizational and procedural controls. This Guidelines also reiterates the responsibilities of Board and senior management in regard to the establishment of an adequate and effective system of internal control, including an effective internal audit function. The responsibilities of the Audit Committee in the independent oversight of the internal audit function are also highlighted in this Guidelines.

  8. IA Licensees TA Regulated Entities BNM/RH/GL 010-15
    Guidelines on Investment-Linked Insurance/Takaful Business Product Review Framework for Investment-Linked Effective date: 12 November 2010. The guidelines is applicable to all licensed insurers and takaful operators. Issued by: Prudential Financial Policy Department

    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 12 November 2010 updates

    The guidelines will supersede the Guidelines on Investment-Linked Business issued on 15 April 2010. The changes made are:

    • Strengthening of the supervisory expectations on the use of the word ‘capital guaranteed’ for insurance products or other names that carry similar meaning;
    • Prescriptions on the total commissions limit for policies/certificates with premium/contribution-paying term of 5 years and below; and
    • Revised conditions for waiver of asset and counterparty limits for exposure to structured products.

    The guidelines is to be read together with the letter sent to LIAM and MTA dated 12 November 2010 to communicate on the issuance of this guidelines.

  9. IA Licensees TA Regulated Entities BNM/RH/GL 000 – 3 Guidelines on Product Transparency and Disclosure – New Product and Services Approval or Review / Product Lines, Services and Charges New Product Approval Requirements Product Transparency and Disclosure Requirements. The following are the datelines:

    • The Guidelines : 1 January 2010
    • 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

    Issued by: Consumer and Market Conduct Department.
    These Guidelines establish a consistent and comprehensive disclosure regime aimed at improving information disclosure on products and services offered by financial service providers.

  10. IA Licensees BNM/RH/GL 003-1
    Minimum Standards for Prudential Management of Insurers (Consolidated)
    Prudential Standards Effective date: 24-Dec-2010 The Guidelines are applicable to licensed insurers and reinsurers. Issued by: Prudential Financial Policy Department

    The Guidelines set out the requirements on duties and responsibilities of the board and CEO, matters concerning their appointment, board composition and committees, minimum qualification, training requirements for directors and relevant disclosures. The requirements of the Guidelines should be read together with the principles outlined in BNM/RH GL-003-2: Prudential Framework of Corporate Governance for Insurers.

    Highlights of the revisions to the Guidelines
    The Guidelines has been updated with revisions to the following:
    (i) Enhancements to paragraph 6.5.1 which emphasises on the independence of the Chairman;

    (ii) Additional paragraph 8.3A was introduced to emphasise on the importance of effective separation between oversight and management in cases where directors consists of executives from the parent or related entities; and

    (iii) Enhancements to the Form BNM/JP3/APP2 which provides guidance to the Nominating Committee in preparing assessments on candidates for the position of Director, Chairman or Chief Executive Officer (refer Attachment 1). With this enhancement, the circular BNM/RH/CIR 010-2 entitled Amendments to the Application Forms BNM/JPI/APP1, BNM/JPI/APP2, BNM/APP/TO and BNM/DIR/TO for the Appointment/ Reappointment of Chairman, Directors and Chief Executive Officers has been withdrawn to avoid duplication.

  11. IA Licensees TA Regulated Entities BNM/RH/NT 013-2
    Permohonan Pegawai Penyelaras Bahasa Kebangsaan Sektor Perkhidmatan Kewangan
    General Circulars and Notification Effective date: 29-Mar-2010 penanggung-penanggung insurans / insurans semula dan operator takaful/ takaful semula. Issued by: Corporate Services Department
    Tujuan notifikasi adalah untuk melantik Pegawai Penyelaras Bahasa Kebangsaan Sektor Perkhidmatan Kewangan.

  12. 52 TA Regulated Entities cir_004_44Circular on Submission of Retakaful Arrangement by Takaful Operators via REINS System Reinsurance/Retakaful and Retention Effective date: 2 August 2010 All takaful operators All retakaful operators Islamic Banking and Takaful Department

  13. IA Licensees TA Regulated Entities BNM/RH/CIR 013-4 Prior Notification by Licensed Institutions for External System Interfaces General Circulars and Notification Effective date: 22-Nov-2010, Insurance Act 1996 and Takaful Act 1984, Issued by: Financial Conglomerates Supervision Department

    The circular sets out the requirements for the LIs which plan to implement connectivity between LIs’ systems with external parties’ systems to inform the Bank before the implementation. LIs should provide information on the proposed safeguards to be or had been implemented to mitigate the risks that may emanate arising from the new network connection.

  14. TA Regulated Entities BNM/RH/CIR 021-1
    Pekeliling Mengenai Jadual Mesyuarat Majlis Penasihat Syariah Bank Negara Malaysia bagi Tahun 2010 General Circulars and Notification Effective date: 3-Feb-2010 Operator takaful / takaful semula Issued by: Islamic Banking and Takaful Department

  15. TA Regulated Entities nt_012_1
    Resolutions of the Shariah Advisory Council of Bank Negara Malaysia on Application of Waâd (promise) in Forward Currency Transaction; and Takaful Benefits Payable from Participants’ Risk Fund – Effective date: 25 August 2010, Issued by: Islamic banking and Takaful Department
  16. IA Licensees BNM/RH/CIR 003-29
    Removal of temporary flexibility for life insurers under the Risk-Based Capital (RBC) Framework for Insurers Insurance Act (IA) and its subsidiary legislations Effective date: 1-Jan-2011 All life insurers and reinsurers Issued by: Jabatan Dasar Kewangan Pruden 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.

  17. IA Licensees BNM/RH/CIR 003-30 Seksyen 176 Akta Insurans 1996 – Pungutan Levi Kumpulan Wang Skim Jaminan Insurans (KWSJI) 2010 – ———–General Circulars and Notification———– 6 Oktober 2010 Penanggung-penanggung Insurans Am dan Komposit Regulation and Supervision Administration Pekeliling ini memperingatkan penanggung-penanggung insurans am dan komposit akan peruntukan di bawah seksyen 176(2) Akta Insurans 1996. Bank telah menetapkan bahawa jumlah levi yang perlu dibayar oleh penanggung-penanggung insurans am dan komposit bagi tahun 2010 adalah 0.25% daripada pendapatan premium langsung insurans am bagi tahun kewangan berakhir pada tarikh di antara 1 Ogos 2009 dan 31 Julai 2010. Sila pastikan bahawa amaun levi yang dibayar kepada Bank dibundarkan (rounded-up/down) kepada ringgit yang terhampir. Bayaran levi KWSJI bagi tahun 2010 hendaklah dibuat tidak lewat dari 31 Oktober 2010. Issued by: Regulation and Supervision Administration

  18. IA Licensees BNM/RH/CIR 003-27
    Voluntary Cessions to Malaysian Reinsurance Berhad
    – Reinsurance/Retakaful and Retention, Effective date: 1-Jan-2010 All direct insurers carrying on general insurance business, Issued by:Financial Sector Development Department
    The circular specifies the levels of voluntary cession which are required to be ceded to Malaysian Reinsurance Berhad – operative on and after 1 January 2010 until 31 December 2012. Issued by: Financial Sector Development Department


  19. TA Regulated Entities: Guidelines on Valuation Basis for Liabilities of General Takaful Business The Guidelines shall take effect from financial year beginning on and after 1 July 2011 All takaful operators underwriting general takaful business Issued by: Islamic Banking and Takaful Department

  20. TA Regulated Entities: Guidelines on Valuation Basis for Liabilities of Family Takaful Business The Guidelines shall take effect from financial year beginning on and after 1 July 2011 All takaful operators underwriting family takaful business, Issued by: Islamic Banking and Takaful Department

  21. TA Regulated Entities: Guidelines on Takaful Operational Framework Effective date: 1-Oct-2011 All takaful operators, Issued by: Islamic Banking and Takaful Department

  22. TA Regulated Entities: Guidelines on Financial Reporting for Takaful Operators The Guidelines are effective for financial years beginning on and after 1 July 2011 All takaful operators, Issued by: Islamic Banking and Takaful Department

  23. TA Regulated Entities: Guidelines Shariah Governance Framework for Islamic Financial Institutions Effective date: 1 January 2011 All Islamic banks; All takaful operators and retakaful operators; All financial institutions participate in the Islamic Banking Scheme; and All development financial institutions participate in the Islamic Banking Scheme Issued by: Islamic Banking and Takaful Department

  24. TA Regulated Entities: Circular on Issuance of Special Employment Pass for Islamic Finance Expatriates under Malaysia International Islamic Financial Centre (MIFC) Initiative Effective date: 8 September 2010 All takaful operators (including retakaful); Other financial institutions as the MIFC Secretariat may approve, Issued by: Islamic Banking and Takaful Department

  25. TA Regulated Entities BNM/RH/NT 012-2
    Schedule of Shariah Advisory Council Meetings for 2011
    – Date: 1 January 2011 All takaful and retakaful operators, Issued by: Islamic Banking and Takaful Department

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3 comments for “Bank Negara’s Circulars and Guidelines | Happy New Year 2011

  1. January 12, 2011 at 19:54

    Keep posting stuff like this i really like it

  2. January 12, 2011 at 18:22

    GUIDELINES ON PRODUCT TRANSPARENCY AND DISCLOSURE
    -PLAIN LANGUAGE POLICY

    Here are some changes to the above guidelines @ PIAM Members’ Circular No. 85 dated 17th May 2010

    Bank Negara Malaysia has agreed to a further extension of time until 31st March 2011 for the Houseowner/Householder plain language policy to be formulated for use by members.

    For the other personal line products as stated in Members’ Circular No. 85 of 2010, i.e. Private Car and Motorcycle policies, Personal Accident policy and Hospital & Surgical Insurance policy, the Association has been requested to work out the timelines required and submit these for BNM’s approval.

  3. December 31, 2010 at 08:36

    [New Post] Bank Negara’s Circulars and Guidelines | Happy New Year 2011 – via #twitoaster http://www.malaysiainsurance.info/grapev

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