Once again we are on the subject of detariffication of the Malaysian insurance market, i.e., the Motor and Fire insurance portfolio…. let me recap what we managed to post onto our FB fanpage recently….
The industry engagement irt the concept paper on detariffication and liberalisation roadmap with BNM is currently live…. we try to capture as much pointers as possible here. Pointers as we see it….
(1). Policies that qualify under this roadmap should be based on inception date. Any new add on should only be for such policies with inception date after the commencement date of this roadmap.
(2). 1st July 2016 is definitely the commencement of this roadmap.
(3). New products are categorised into 3 forms;
(a) new add-on to existing standalone products,
(b) packaged product…. where all the components within the packaged are sold as a whole with no selection. BNM treats this as a new standalone product and requires BNM’s approval. You need to provide the product with a new name and brand for the product. BNM would view negatively…. if such packaging was adopted with intention to circumvent the tariff….
(c) bundled product… means standalone tariff product plus other standalone products (tariff or otherwise) as a scheme or under a single policy number (or master policy) or even sold on a single IT portal giving a wrong perception to the policyholder that both products were one. Examples are the motor policy plus auto PA sold through the same IT PoS system…. and HHHO plus personal liability…. or plus E&O for management corporation, sold as a scheme or as a single policy or a master policy; one setback even if these so-called side-bundles were existing before 1st July 2016, these product must be submitted to BNM before continuing into this detariffication roadmap…. More like an (schematic) cross selling of standalone products. Unlike (b) these bundled products are detachable.
To put it simply….BNM is not exactly sure how to deal with those queries put forth by the audience. We were not sure if those queries confuse BNM or BNM’s replies having confused the audience; ultimately they think going back to cardinal rule#1, just submit to BNM for us to eye-ball and we shall tell you if those products that were being mentioned were indeed have no infringement of the tariff and the spirit behind this roadmap….
(4). Commission remains the same as per the OCC guidelines. If there is a package or add-on, the commission of the main, core or dominant product shall apply.
(5). BNM is adapting to a simple objective that new products introduced must not create a price wars and circumvent the intention of an orderly and phased detariffication roadmap.
(6). Any product that is deemed as an advance innovation like the use of GPS and telematics on PAYD would be closely scrutinised the extent of its operational…. before approval.
(7). Accordingly if an insurer wants to follow an approved new product (of another insurer), the insurer must still compile all documentation and its own pricing structure for submission to BNM for an approval. There is no such thing called outright copy-catting!
(8). …. on the submission process for new products, where all wordings require PIAM special committee to approve before the full submission to BNM for approval. Such wordings approval is more on the issue of standardising terminology usage and on coverage wordings that the public could understand better and able to articulate the same message across the vast section of the buying public.
(9). Some details of how the price/coverage was arrived including governance aspects…. must be provided to BNM in the BNM submission process. As initial steps, all scrutiny by BNM are to be in full approval basis, not on launch-and-file or file-and-use. BNM just needs to ensure that pricing/cover affects are done on the correct technical level, not necessarily actuarial driven. Also BNM would look at the new product from its perspective of how the product is to be operationalised by the applicant. If this aspect is difficult to achieve then BNM may likely not provide the approval.
We tend to come to a simple conclusion that BNM intended the approval-submission to be on a FULL approval basis…. at least that’s for the start. Please don’t ask too many unnecessary questions.
(10). (Session on AGGREGATORS….) looks like BNM wants to look at aggregators as a new form of distribution channel…. but from a fresh perspective, that is to provide advisory in terms of products differentiation and pricing comparison….(with advisory services provided), this is so unassuming of BNM! This is so, soo… different from the aggregators concept of the western developed markets…. A NEW GROUP of intermediaries capable of providing advisory over on the online space 😂😂😂😂
Having reported what was being discussed during the dialogue on a off-the-cuff basis…. we may had inadvertently left out other important aspects of the discussion; if that’s being the case we hope to review the above write-up again in our next blog. I believe the next write-up should be much more clearer with the release of BNM’s presentation document.