Foreign Workers Related Insurance Schemes | Pay Extra, Gain Competitive Advantages

Foreign Workers’ Insurance – from Foreign Workers Compensation Scheme (FWCS), Foreign Workers Hospitalisation & Surgical Insurance Scheme (or SKHPPA) to Foreign Workers’ Insurance Guarantee (FWIG)  , they provide a really handsome profit for the insurance industry.

 Now, that’s the reason why competition boils over with more “extras” are being offered to agents having sizeable production of such class of business.

 In recent times two main circulars were issued by Persatuan Insuran Am Malaysia (PIAM) to deal with such chronic issue of a never-ending extra remuneration…. the highlighted wordings within the two circulars say it all.

 

31st January 2013 | MEMBERS’ CIRCULAR NO: 16 OF 2013 (in respect of remunerating agency beyond what is allowable)
The Chief Executive Officer Dear Sir,

 

 Foreign Workers Compensation Insurance Scheme and Foreign Workers Hospitalisation & Surgical Insurance Scheme

 We would draw your attention to Members’ Circular No. 19 dated 3rd February 2012 on the above matter, a copy of which is attached.

 It has been brought to the attention of the Management Committee that despite the Association’s advice, there are members who still  continue paying agents the additional RM5.00 for policy printing charges based on per insured foreign worker  basis instead of the allowable RM5.00 on per policy basis. (Item 1 of Members’ Circular 169 of 2008 refers).

 The Management Committee would strongly advise member companies who are involved in such practices to refrain from paying the RM5.00 on per insured basis  and to strictly observe payment of the allowable printing charge of RM5.00 on per policy basis.

 

Thank you.

 

Yours faithfully

BY ORDER OF THE MANAGEMENT COMMITTEE

 

 

3rd February 2012 | MEMBERS’ CIRCULAR NO: 19 OF 2012 (in respect of remunerating agency beyond what is allowable)
The Chief Executive Officer Dear Sir

 

 Foreign Workers Compensation Insurance Scheme and Foreign Workers Hospitalisation & Surgical Insurance Scheme

 It has been brought to the attention of the Non-Tariff Subcommittee of unhealthy practices in the market, which appear to be in breach of the Guidelines to Control Operating Costs of General Insurance Business (OCC Guidelines) and non-compliance of the Stamp Duty Act, as follows:-

 i) offering of   additional payments to agents  ranging from RM2 to RM5 per insured worker  in excess of the commission of 10% for insurance cover issued under the Foreign Workers Compensation Insurance Scheme and the Foreign Workers Hospitalisation & Surgical Insurance Scheme;

ii) paying agents  extra payments   of RM2 to RM5  per certificate   for issuance of certificates to each insured foreign worker  on top of reimbursement of RM5 per policy for policy printing;

iii) issuing of a  master policy to agents (to cover many separate customers) who in turn only issue certificates to insured employers thereby attempting to  circumvent the payment of stamp duties .

 

 The Association would advise member companies who are involved in such practices to stop these unhealthy developments immediately and to comply with the provisions of OCC Guidelines and the Stamp Duty Act.

 

Yours faithfully

BY ORDER OF THE MANAGEMENT COMMITTEE

 

In a nutshell, what we can say is the following:

  1.  Insurer should not compete by remunerating more than RM5 per policy for the purpose of printing costs. “Policy” simply means a standalone policy or a master policy but should not be interpreted to include certificate.  Do note it is payable on a per policy basis and not on any other form like per insured foreign worker basis.
  2. If there is a need to issue a master policy, then this must be solely in respect of a single Insured (or entity), which may be the employment agency but refrain from doing so in the name of the insurance agent or grouping of numerous entities or companies for the very purpose of avoiding stamp duty that is tagged to policy number. 
  3. Don’t be overly creative…. for ultimately you may cause your company to lose the rights to continue in the participation of the foreign workers scheme. That would make you very miserable! 

 

 

 

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