When buying car insurance or takaful, you may deal with an agent, broker or financial adviser. However, these intermediaries do not all have the same role or approval requirements.
In Malaysia, Bank Negara Malaysia (BNM) oversees the insurance and takaful industry. However, agents and brokers are regulated through different arrangements.
Understanding these differences can help you check whether the person or company you are dealing with is properly authorised.
Who regulates insurance agents and brokers in Malaysia?
BNM is responsible for regulating the insurance and takaful industry. However, insurance agents are generally appointed by insurers and registered through the relevant industry associations.
On the other hand, insurance and takaful broking companies must be approved by BNM before they can conduct broking business.
Here is a simple comparison:
Intermediary
How they are regulated
General insurance agents
Appointed by insurers and registered through the relevant general insurance industry arrangements.
Life insurance agents
Registered with the Life Insurance Association of Malaysia (LIAM).
Takaful agents
Appointed by takaful operators and registered through the Malaysian Takaful Association (MTA).
Insurance and takaful brokers
Broking companies must be approved by BNM.
Financial advisers
Financial advisory companies must also be approved by BNM.
Therefore, not every insurance agent is directly approved by BNM. However, agents are still subject to industry registration requirements and BNM’s rules on professionalism and conduct.
How are insurance agents regulated?
Insurance agents are appointed by insurance companies to promote and sell their products. They may also help customers understand coverage and submit claims.
In Malaysia, different industry arrangements are used for agent registration.
General insurance agents
General insurance agents are registered through the general insurance industry’s registration arrangements, which are associated with the General Insurance Agents Registration Regulations.
Before an agent can be registered, the relevant qualification and registration requirements must be met.
Customers can also ask an agent to show proof of registration and confirm which insurer they represent.
Life insurance agents
Life insurance agents are registered with the Life Insurance Association of Malaysia (LIAM).
Before registration, agents are required to meet the industry’s examination and qualification requirements. They are also expected to undergo training and continuing professional development.
LIAM provides an online service that allows the public to check whether a person is registered as a life insurance agent.
Takaful agents
Takaful agents are appointed by takaful operators and registered through the Malaysian Takaful Association (MTA).
The Takaful Basic Examination (TBE) is an entry requirement for individuals who intend to become registered takaful agents.
In addition, agents are expected to meet the relevant professionalism and conduct requirements set for the industry.
How are insurance and takaful brokers regulated?
Unlike agents, insurance and takaful brokers operate independently and generally represent the interests of customers when arranging coverage.
For example, a broker may help a customer compare policies from different insurers or takaful operators and find suitable protection.
However, a company cannot simply start offering insurance or takaful broking services. It must first obtain approval from BNM under the relevant financial services laws.
Approved brokers are also required to follow BNM’s rules on professional conduct, business operations and customer protection.
Furthermore, BNM maintains a public directory of approved insurance and takaful brokers. Customers can use this list to check whether a broking company has been approved.
What rules must agents and brokers follow?
Agents and brokers are expected to act professionally and treat customers fairly. However, the requirements may differ depending on their roles.
For insurance and takaful agents, BNM’s Policy Document on Professionalism of Insurance and Takaful Agents sets requirements for insurers and takaful operators when appointing and managing agents.
These include:
Checking an agent’s qualifications and suitability before appointment.
Ensuring that agents receive the required training.
Monitoring agents’ conduct and performance.
Taking appropriate action when misconduct is identified.
For brokers, BNM’s requirements cover areas such as business conduct, professional standards, management responsibilities and financial safeguards.
As a result, customers should be given clear information and should not be misled about the products being offered.
How can you check if an agent or broker is authorised?
Before buying insurance or takaful, it is worth checking the person or company you are dealing with.
The following options can be used:
Intermediary
Where to check
General insurance agent
Ask the insurer to confirm the agent’s appointment and registration status.
If you are unsure about an agent’s status, you can also contact the insurer or takaful operator directly.
What should you do if you deal with an unauthorised agent or broker?
If you suspect that someone is selling insurance or takaful without proper authorisation, avoid making payments until their status has been confirmed.
Instead, take these steps:
Check their details: Ask for their registration or authorisation details and confirm them with the relevant insurer, association or BNM directory.
Contact the provider: Check directly with the insurance company or takaful operator that the person claims to represent.
Keep your records: Save messages, payment receipts, documents and other communication.
Report your concern: Raise the issue with the relevant insurer, takaful operator, industry association or BNM, depending on the type of intermediary and concern.
These steps can help reduce the risk of dealing with unauthorised representatives or fraudulent sellers.
Check who you are dealing with before buying insurance
Insurance agents, takaful agents and brokers play different roles in helping customers obtain protection. Therefore, their registration and approval requirements should not be treated as the same.
Before buying a policy, check whether the person or company is authorised to represent the provider or offer broking services. You should also compare the coverage, exclusions and prices before making a decision.
No. Insurance agents are generally appointed by insurers and registered through the relevant industry arrangements. BNM sets regulatory requirements for insurers and takaful operators, including rules on agent professionalism and conduct.
Are insurance brokers directly approved by BNM?
Yes. Insurance and takaful broking companies must obtain BNM approval before conducting regulated broking business.
Can an insurance agent represent any insurance company?
Not automatically. An agent can only represent insurers that have appointed and authorised them, subject to the relevant registration and agency arrangements.
Are financial advisers the same as insurance brokers?
No. Both are regulated intermediaries, but they have different roles and approval requirements. Financial advisers provide financial advice and recommendations, while brokers arrange insurance or takaful coverage on behalf of customers.
Nabil Farhan· · 5 min read
