BEGINNING Thursday, insurance agents will have to ensure that their prospects need, and can afford, the products they recommend.
Under a new Bank Negara guideline, the country's 80,000 insurance agents will have to spend at least half an hour with new clients – filling up between six and seven pages of questions – to help them understand insurance products and buy such products based on need.
The need-based analysis will require insurance agents to ask questions about a person's annual expenditure, financial obligations, and even funeral expenses.
The questions will cover more ground than proposal forms currently in use.
The new guideline is part of Bank Negara's moves to improve insurer, intermediary and consumer relations, while strengthening consumer protection and public confidence in the industry.
The industry does not expect the public to react negatively to the new guideline because the procedure benefits consumers, although it can mean more work for the agency force.
“I expect some high net worth individuals will avoid filling up those forms. But most people will, because they will get better products and services by doing so,” said MCIS-Zurich Insurance Sdn Bhd chief executive officer Datuk L. Meyyappan.
He added that the answers to these questions would help the public buy the right insurance products.
He said the questionnaire would have legal standing and the information received would be treated in confidence and be used only for recommending insurance products.
To prepare for the new procedure, most insurance companies had already conducted courses for their agency force, Meyyappan said.
An insurance agency manager said the questionnaire would be a step closer to providing full financial planning services to consumers. The questions would help insurance agents build relationships with their clients, and eventually enhance professionalism in the industry.
“No questions are difficult, but the answers require some preparation,” he said. The answers will enable agents to analyse and understand their clients' financial standing, and to recommend plans to safeguard that financial well-being.
As for the security of the information, Meyyappan said the company would keep the original, and a copy would be given to the client.
“Normally, we will scan the document electronically and store it in a secure area,” he said, adding that except for the policyholder and agent, no other person would have access to the document, not even the spouse, so there would be no way for the information to be used by a third party.
Under the new guideline, Bank Negara also requires insurance agents to give prospects a booklet covering basic questions and answers on insurance. These booklets have been published since August last year.