Rebates for direct insurance

car owners who buy motor insurance directly from insurance companies without using the services of an agent will qualify for mandatory rebates, a move that could render agents redundant. The move would see new customers being given a 5% rebate on their insurance if they buy it via channels such as the Internet, telemarketing, direct mailing or by walking into the insurance company. These customers would also get a 10% rebate for renewals in the second year.

In a circular sent to the General Insurance Association of Malaysia (PIAM) dated April 17, Bank Negara said the rebates would only apply to actual owners of the vehicles. The circular added that Bank Negara had "no objections" to PIAM's proposal for the mandatory rebates. This is understood to mean that the move would more likely be implemented than not. Veteran insurance agent Hardyal Singh hit out at PIAM, saying the association did not take the views of 40,000 agents (15,000 of them full-time) into consideration.

In the circular, the central bank said the rationale for mandatory rebates was to "promote the promulgation of alternative channels of distribution so as to increase the penetration of insurance to the masses". An industry source said the industry was heavily regulated, especially towards the ability of insurance companies to reward agents, and that PIAM's proposals were for Bank Negara to allow some self-regulation.

Consumer apostle Billy Toh said he was acerb adjoin the move as he acquainted that agents could still comedy a role by answer the allowance action capacity to customers. However, Federation of Malaysian Consumers Affiliation secretary-general Muhammad Sha'ani Abdullah said "the move would abate the befalling for agents who try to get barter to shop for added types of allowance calm with motor insurance."