8.3 General Agent Registration and Premium Handling

Study Focus

A general agent must meet qualification, fit-and-proper and registration requirements. A registered general agent may represent no more than two general insurers.

Registration and Regulation of General Insurance Agents

General insurance agents collect premiums, issue cover notes and advise the public on motor, fire and other policies, so their conduct directly affects consumer confidence. In Malaysia they are regulated on two levels:

• Bank Negara Malaysia (BNM), through the Financial Services Act 2013 (FSA 2013), its Policy Document on Professionalism of Insurance and Takaful Agents (issued 17 April 2023, effective 1 January 2024), and its Policy Document on Operating Cost Controls for General Insurance and Takaful Business (issued 30 June 2023). These place obligations on insurers, which must ensure their agents comply.
• Persatuan Insurans Am Malaysia (PIAM), the General Insurance Association of Malaysia, through its General Insurance Agents Registration Regulations (GIARR). The GIARR are enforced by a PIAM board and use the definitions of the Inter-Company Agreement on General Insurance Business made by PIAM members on 24 April 1992.

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1. Who Does What

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2. Entry Requirements and Registration

Minimum Requirements

Under BNM's policy document (paragraph 9.7), an insurer may appoint an agent only if the person:

1. Is at least 18 years of age;
2. Has passed the Pre-Contract Examination for Insurance Agents (PCEIA), which for general agents means Parts A and B; and
3. Meets the fit and proper criteria.

The GIARR also require new applicants to hold at least an SPM/MCE qualification or its equivalent (since 1 April 2003). Aii's entry requirement for the PCEIA itself is SPM/MCE with five passes, including Bahasa Malaysia.

Fit and Proper Criteria (Paragraph 10)

The insurer must assess every candidate, and every existing agent, against three criteria:

• Probity, integrity and reputation: no conviction or finding of criminal breach of trust or misappropriation of client money, no offence under sections 28, 29 or 124 of the FSA 2013 or Paragraph 11 of Schedule 9, no dismissal for dishonesty, and no record of unfair or deceitful dealings (including acting as a proxy for another agent).
• Competency and capability: appropriate qualifications, training, skills and satisfactory past performance.
• Financial integrity: able to meet financial obligations, with no unsatisfied judgment debt.

Due Diligence Before Appointment (Paragraph 9.1)

Before appointing an agent, the insurer must obtain the candidate's written consent and:

• Check the candidate's employment and agency history for the past seven years, including other insurers that appointed them;
• Obtain written references, which the former employer or insurer must provide within 15 working days;
• Check with the industry association for any past misconduct; and
• Obtain the candidate's declaration of any conflicts or past convictions.

Registration with PIAM

• An agent must be registered before soliciting business, and the insurer must give the agent an identification document showing the validity period of the appointment (paragraph 9.8).
• PIAM issues a Certificate of Registration, valid for two years and showing the insurer or insurers represented. The agent must display it at their place of business.
• When an agent adds a second principal or changes principal, PIAM may grant provisional registration for up to three months while the new application is processed.
• The insurer must update its register of agents, and notify the association, within five working days of an appointment, change of status or termination (paragraph 9.9).

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3. How Many Principals?

Core Rule: A general insurance agent may represent not more than two general insurers at any one time (GIARR). BNM's policy document (paragraph 9.10) sets the same overall limits across the industry: at most one life insurer, one family takaful operator, two general insurers and two general takaful operators.

Insurers must also monitor their agents to stop collusion, such as agents setting up a company or platform to sell products of several insurers, or acting as a proxy for a suspended or terminated agent by registering business under another agent's name (paragraph 9.11).

The GIARR further prohibit sub-agency: an agent must not engage another person to solicit business on their behalf or pay that person commission. A corporate agency may, however, use its own full-time employees.

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4. Premium Collection and Remittance

All premiums collected by an agent must be paid directly to the principal, or into a bank account designated by the principal in the principal's name. The GIARR set the following time limits:

Agents who repeatedly fail to remit motor premiums on time can be suspended or deregistered under PIAM's Cash Before Cover enforcement framework. The GIARR also set a minimum maintenance requirement: an agent registered from July 2015 must produce gross premiums of at least RM20,000 in the first two years and RM50,000 after the third year to keep the registration.

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