Why Cannot Buy Life Insurance from the Insurance Company Directly

I read in the paper(The Sun-25/1/2013) that we may have to pay for higher premium for the life and general insurance when the government approved the review of the Operating Cost Control (OCC) guidelines.

The main reason is due to increase the life and general insurance agents’ commission rates.

Operating Cost Control

Instead of paying for the higher premium for the life and general insurance, why can’t the public buy directly from the  insurance companies. Therefore, the  insurance companies can pass the saving in insurance agents’ commission rates, back to the public.

The public should be given a  choice either buy direct or buy thru agent.

With the  increase awareness of the benefit of life insurance, some people don’t required the service of any insurance agent.

The insurance agent may argue say their service still needed especially on servicing and claiming.

For those who are insurance savvy, the claiming process is not as complicated as it though to be. This is because there are a dedicated costumer service department that handle this matter. If the public is not happy with their service or claiming, they can always lodge a complaint to Bank Negara Malaysia(BNM).

The weird thing here is the public are NOT allowed to buy Life Insurance directly form the insurance companies. They must go thru an agent! In this process, the insurance agent earned some commission.

I’m not against any insurance agent. However it’s be good if consumer was given a choice either to buy directly or thru agent.

I hope the Finance Minister can look at this matter seriously.

Even if you buy thru the insurance agent, you may not get the best policy after the consultation. This’s because they  are a sales person and may not have your best interest in mind in order to hit their Sales quotas.

Do you know the underwriting questions in the proposal is very IMPORTANT? How many insurance agent that takes the trouble to ask and clarify  the underwriting questions. Most of them just tick “No” so the policy can be approved and pocket their sales commission fast.

This will result major claiming complication when claim process happen in the future. Who to blame in this case?


Insurance agents’ move may hike premiums

KUALA LUMPUR (Jan 25, 2013): The government is reviewing the Operating Cost Control (OCC) guidelines introduced in 1996, including looking into revising life and general insurance agents’ commission rates, a move that may cause the premiums for new policies to go up.

Deputy Finance Minister Datuk Donald Lim Siang Chai told Sin Chew Daily the government had proposed that insurance companies absorb the additional costs incurred for providing higher commission to insurance agents, saying insurers enjoy high profit margins and definitely have the ability to afford higher commission payouts without having to pass them on to new policyholders.

The National Association of Malaysian Life Insurance Fieldforce and Advisers (Namlifa) has asked for the commission for agents to be increased to 221% from 177% currently, whereas the General Insurance Agents Association of Malaysia (Perwakim) is seeking a 5% increase to 15%.

Lim disclosed that Bank Negara Malaysia deputy governor and representatives from the finance ministry and the two associations had met to review the cost guidelines regulating life insurance agents, and to discuss agents’ requests to increase their commission rates.

He said the central bank will submit a report on the matter to Prime Minister Datuk Seri Najib Abdul Razak next week.

Asked if insurance companies would increase insurance premiums as a result of increased costs arising from higher commission rates, Lim said there are 14 insurance companies in Malaysia, and suggested that consumers shop around to get the best deal.

Namlifa president Sethu Karuppan told Sin Chew he was confident that insurance companies would absorb the extra costs and not increase the premiums on new policies.

He said it was time the commission rates, which have not been revised for more than 10 years, be increased.

Perwakim president Athi Rao also believed insurance companies would not burden new policyholders as the association asked only for a small increase of 5% in commission.

As living and operating costs have been going up, he said the increase sought by the association is very important to its 35,000 members as there had been no increase in commission over the past 20 years.


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