Yes.
Bancassurance partnerships are generally divided into the following arrangements:
- exclusive arrangements;
- preferred partner arrangements; and
- conventional arrangements (i.e., bank will distribute the insurance products of insurer without preferential treatment).
The salient terms typically relate to:
- exclusivity;
- term and renewal;
- products to be distributed;
- product development arrangements;
- fees and commissions, and timing for such payment;
- rights and obligations of each party; and
- ownership and use of the bank’s customer data.
Yes, insurance companies and banks must be licensed under the Malaysian Financial Services Act 2013 (FSA) to carry on insurance business or banking business (as the case may be) in Malaysia.
There is no regulatory restriction for an insurer to appoint a bank as its exclusive distributor, although there may be limitations on the part of the banks to offer exclusivity.
To the extent that an exclusive arrangement is possible, the length of the exclusivity is a matter of negotiation between the parties. However, note that a long-term exclusive agreement could potentially amount to an infringement of the Malaysian Competition Act unless the parties fall within the prescribed safe harbour or if the parties can rely on the efficiency argument.
Yes, preferential treatment is common in instances where a bank resists an exclusive arrangement. The form of the preferential treatment is a matter of negotiation.
No regulatory approval is necessary but insurance companies are required to notify BNM of the bancassurance arrangement prior to the commencement date.
No statutory or regulatory requirement to submit the agreement(s) although the practice and convention in the manner in which the insurer liaises with BNM could dictate the supporting documents that it would provide to BNM as part of the notification described in Question 7 above.
BNM has broad powers as a regulator and has the right to direct an insurer to modify or unwind a distribution agreement/arangement (as it deems appropriate).
It would be prudent to undertake a competition analysis given that the broad application of, and significant penalties for breach under, the Malaysian Competition Act.
The Malaysian Competition Commission is a relatively young regulator, and it has not, to date, issued any guidelines specific to distribution agreements in the context of a bancassurance arrangement.
However, as noted above, under the general principles of the Malaysian Competition Act, a long-term exclusive agreement could amount to an infringement unless the parties fall within the prescribed safe harbour or if the parties can rely on the efficiency argument.
Yes, provided the bank has obtained the necessary consent of the customers and the sharing of information with the insurance company is within the scope of the consent granted by the customers.
Yes, the bank is subject to the secrecy provisions under the FSA, as well as the provisions of the Personal Data Protection Act (PDPA). The bank may also be subject to contractual confidentiality restriction. Appropriate consent should therefore be obtained from customers, and where relevant, notifications should be issued to customers.
None.
Yes.
There are restrictions relating to the payments and amounts that can be paid by an insurer. Notably, commission rates are regulated.
The sanctions are imposed by BNM and include an order in writing requiring compliance, monetary penalty, and/or a public and private reprimand.
No statutory or regulatory requirement for BNM to request information on compensation arrangements. However, as noted above, the practice and convention in the manner in which the insurer liaises with BNM could dictate the supporting documents/information that it would provide to BNM as part of the notification described in Question 7 above.
No, provided that the classes of insurance products to be offered pursuant to the bancassurance arrangement are in line with the scope of the insurer's licence issued under the but there is an obligation to FSA.
None.
No, although BNM has a right to require an insurer to lodge its proposal form with them.
Yes, insurance companies generally own the IP rights to such policy forms.
No, there is no specific regulatory prohibitions or limitations.
No. However, the bank would generally exercise care regarding level of access to its customer data, and to ensure continued compliance with the FSA, PDPA and any contractual confidentiality obligations.
- There is no statutory requirement for training or oversight responsibility by the insurer. However, it is common for the insurer to provide training to the bank personnel.
- No, the bank would be compensated based on the consideration set out within the distribution agreement.
No. However, the bank would generally exercise care regarding level of access to its customer data, and to ensure continued compliance with the FSA, PDPA and any contractual confidentiality obligations.
Yes. Banks are allowed to lease space to insurance companies.
None.
BNM has recently issued new guidelines that would apply to life insurance products, and which has the effect of liberalising the caps on commission limits for certain products in the coming years.