Consumer Education and Protection
INSURANCE IS AN INTANGIBLE ITEM WHICH IS MERELY A PROMISE OF COMPENSATION FOR A SPECIFIC POTENTIAL FUTURE LOSS IN EXCHANGE FOR A PERIOD PAYMENT I.E. THE PREMIUM. INSURANCE IS DESIGNED TO PROTECT THE FINANCIAL WELL-BEING OF AN INDIVIDUAL, A COMPANY OR ANY
In view of the circumstances under which this contract is formalized, it is important for a consumer to be wellinformed of the service he will receive and under what conditions he will be eligible to receive the compensation. Whether the public realises it or not, insurance touches nearly every aspect of their life. When someone buys a car, they are required by law to purchase motor insurance. When someone buys a house and applies for a housing loan, the bank will only approve the loan when there is a valid fire insurance policy. There are also other insurance policies which are purchased daily by the public to cover various risks such as personal accident insurance, medical or health insurance, travel insurance and many more. The Persatuan Insurans Am Malaysia (PIAM) has undertaken several measures and continues to introduce further measures to educate the consumer and protect their interests. PIAM has always stressed in all its educational efforts that being a wellinformed insurance consumer will ensure that the consumer will be able to spend his ringgit wisely and be able to save money in the long run to protect his interests.
PIAM gives educational talks regularly to specific groups of consumers on the class of insurance which they are interested in. Talks have been delivered to small and medium enterprises, property developers and other interested groups. PIAM lately participated in two educational talks on Fire Insurance. The first talk was on Houseowner/Householder insurance which was given at a
Property Expo organized by property developers and the second talk was on educating the consumer on Buying The Right Insurance Cover to Effectively Protect Investments which was given at a Property Launch fair. Participants at these talks are given the basics on the various insurance policies available to them, the risks covered under these policies and how they should decide on which cover will be most suited for them.
MEDIA EDUCATION AND RAPPORT
In addition to educating consumers through talks, publications and articles in the print media, the Association also has a close rapport with the media and educates these stakeholders which comprise of senior media representatives, journalists and editors of insurance related magazines. In order to enhance PIAM’s media relations and also to provide greater insights to journalists on insurance matters, the Association hosts informal gatherings with senior media representatives and focuses on open discussions on current insurance related matters at these gatherings. This gives an opportunity to PIAM to state the industry’s case on current issues which are affecting the public or the economy and enables the media representatives to fully understand the industry’s stand on these issues. The Association also organizes media workshops which are more technical in nature and focus on classes/topics of insurance which have been highlighted frequently in the media. The objective of these workshop is to enable the journalists to have a clearer understanding of the class or topic of insurance, the salient points of the class of insurance and the roles of the insurers and policyholders to secure the appropriate protection and smooth processing of claims. PIAM is confident that well-informed journalists will report accurately on insurance issues.
CONSUMER EDUCATION PROGRAMME (CEP)
The Association and its members also subscribe to the Consumer Education Programme (CEP) which was initiated by Bank Negara Malaysia. This is a joint effort between BNM and the insurance and takaful industry for a long-term programme to provide education and information to enable consumers to make well-informed decisions when purchasing insurance. The programme is called Insurance Info and it aims to provide and disseminate information on insurance products and services, important terms and conditions as well as exclusions of insurance policies, and the rights and responsibilities of consumers, in a clear and simple manner. In addition, the programme also gives useful tips to consider when making decisions on which insurance will suit them best and also the redress mechanisms available in the industry. This information is channelled through a series of simple language booklets which are distributed by insurance companies and can also be accessed online at www.insuranceinfo.com.my.
GUIDELINES ON PRODUCT TRANSPARENCY AND DISCLOSURE
Recognising the importance of adequate and effective disclosure to consumers in particular, and financial service providers generally, BNM had issued the Guidelines on Product Transparency and Disclosure (Guidelines). These Guidelines serve to raise the disclosure standards for financial products and aim to support
Whether the public realises it or not, insurance touches nearly every aspect of their life.
informed decision making by consumers through meaningful and timely disclosures. The Guidelines provide both general and product-specific disclosure principles to be observed by insurance companies. To ensure disclosures are meaningful and facilitate decision making, the Guidelines require insurance companies to disclose important and relevant information, including key terms and conditions in a timely, clear and concise manner. The Guidelines also emphasise the use of plain and intelligible language in the contracts, agreements and policy documents so that information can be communicated in an easy and comprehensible manner for customers to better understand their contractual rights and responsibilities. The project on rewording the policy contracts, agreements and policy documents on general insurance into simple plain language is undertaken by the Association. The insurance classes covered under this review process are Motor, Fire (Houseowner/Householder) and Personal Accident.
PRE-CONTRACT DISCLOSURE AND REPRESENTATIONS
The Financial Services Act, 2013 came into force on 30 June 2013 with the exception of Section 129 and Schedule 9 of the Act which prescribes to pre-contract disclosure and representations and proposes remedies for these misrepresentations. Under this new requirement which will come into effect on 1st January 2015, the duty of disclosure not only rests on the consumer but also on the insurer. The insurer is required to ask all the relevant questions before a contract of insurance is formalized and failure on the part of the insurer to get any pertinent information from the insured, for which the contract can be repudiated, will in essence not result in a repudiation of the contract. This is because the onus is now on the insurance company to gather the relevant/pertinent information from the insured before a contract of insurance is finalized. As the new requirements will entail changes to the processes of insurance companies, PIAM is working closely with insurance companies to review the relevant policy forms and documents to ensure adequate disclosures measures are in place in these documents so that there is no misrepresentations by any party.
INSURANCE REDRESS MECHANISM
In Malaysia there are Consumer Laws which protect the public/insured and there are also redress mechanisms in place where the consumer/insured can refer his grievances on insurance matters for resolution. PIAM has its Complaints Action Bureau which assists in resolving consumer complaints from either the policyholders or third parties against insurance companies. Complaints can be channelled to firstname.lastname@example.org. The other redress body which is an independent body set up to settle disputes between the public and insurance companies is the Financial Media Bureau (FMB). The FMB provides a free, fast, convenient and efficient avenue to refer disputes for resolutions as an alternative to the Courts. Decisions made by the FMB are binding on all insurance companies who are members of the FMB. For complaints, disputes or claims involving financial loss, the amount claimed should not exceed RM200,000 for Motor and Fire insurance, RM100,000 for others and RM5,000 for Third Party Property Damage. Further details on the FMB can be obtained by contacting them at email@example.com.