Malaysia’s rule change to hit insurers in January

October 10 2018 by InsuranceAsia News Staff

The implementation of the minimum allocation rate (MAR) by Bank Negara Malaysia is likely to affect insurers if commission rates paid to agents remain at their existing levels.

In a statement, Allianz Malaysia noted that the MAR will take effect starting January 2019.

The minimum allocation rate will bring a higher proportion of new business premiums that may have to be allocated to customers’ funds in the earlier part of a new policy than under the existing practices.

Allianz said insurers may have to face a much greater new business strain in the first few years unless commission rates are reduced accordingly.

Maybank Investment Bank Research has factored this into its earnings for Allianz and maintained its forecast; it maintained the business as a buy with an unchanged target price of RM16.05 (US$3.86).