Roles of Insurance Agents | Rules and Regulations Perspectives

Are you an insurance agent? Do you know what your roles are in as far as the governing laws are concerned? This may be of interest to you.

Insurance agents must take their role as contracted personnel of an insurer and that someone who solicits and connects a policyholder with the insurer. Therefore the agent has a contractual responsibility to both insurer and policyholder and their representation has heavy legal weightage.

The Malaysian Insurance Act 1996 prescribed an “insurance agent” to mean a person who does all or any of the following:

(a)  solicits or obtains a proposal for insurance on behalf of an insurer;

(b)  offers or assumes to act on behalf of an insurer in negotiating a policy; or

(c)  does any other act on behalf of an insurer in relation to the issuance, renewal, or continuance, of a policy


The Insurance Act in respect to the formation of an insurance contract, in particular section 151 (1), (2) & (3) on Knowledge of, and Statement by, Insurance Agent, clearly stipulates that the role of an agent is binding by law. Thus, it is imperative agents make it their business to learn and understand what’s being prescribed in that relevant section of the Act, much so the following:

  1. An agent is deemed to be an agent of the insurance company,
  2. The knowledge of an agent is the knowledge of the insurance company and this also includes inputed knowledge,
  3. A statement made by the insurance agent shall be deemed to be a statement made by the insurance company, and
  4. An act done by the agent shall be deemed to be a statement made or act done by the insurance company.


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The said Act further regulates that no insurance company or insurance agent induces a person to enter into or offer to enter into a contract of insurance with the company or through him:

  1. Shall make a statement which is misleading, false or deceptive, whether fraudulently or otherwise,
  2. Shall fraudulently conceal material fact,
  3. In the case of an insurance agent, use a sales brochure or sales illustration not authorised by the insurer.


Any of these breaches can attract a penalty of up to RM1 million as is prescribed in section 150 (4) of the Act.

In addition to the Act there are also other areas of compliance and adherence, such as BNM’s guidelines on transparency and disclosure of insurance products, and the duties of an agent bound by the agency contract and fiduciary duties.


I hope you find this article easy to read and understand, especially for those operating as an insurance agent.

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