BNM: Covid-19 affected Insurance & Takaful participants can defer premium/contribution payments

27 Mar 2020 / 20:03 H.

KUALA LUMPUR: Life insurers and family takaful operators will allow Covid-19 affected policyholders and takaful participants the option to defer the regular premium or contribution payments due under life insurance policies and family takaful certificates for three months without affecting the policy coverage, says Bank Negara Malaysia (BNM).

In a statement today, the central bank said this flexibility may be provided by life insurers and family takaful operators through a no-lapse guarantee, an extension of grace period or any other means that maintains the policy or certificate intact during the deferment period.

“This option will be available from April 1, 2020 until Dec 31, 2020,“ it said.

Additionally, the central bank said life insurers and family takaful operators will also provide the following assistance to affected policyholders and takaful participants until Dec 31, 2020.

“That includes extending the period during which a policyholder and takaful participant can reinstate a policy or certificate that has lapsed, as well as providing options to enable policyholders and takaful participants to continue to meet their premium or contribution payments and maintain their policies or certificates, which may include changes in the sum assured or covered, adjustments to the premium or contribution structure and conversion into a paid up policy,“ it said.

Other assistance provided by life insurers and family takaful operators includes waiver of fees and charges imposed for changes made to policies or certificates, and waiver of any penalties or consequences for late payments of premiums or contributions, particularly where policyholders or takaful participants are unable to access electronic payment channels during the Movement Control Order (MCO).

BNM said flexibility would also be given to meet general insurance premiums and general takaful contributions.

It said general insurers and general takaful operators will facilitate requests for flexibilities by affected policyholders and takaful participants to meet their premiums or contributions due during this period to ensure continued risk protection for their properties and businesses.

“This may include working with policyholders or takaful participants to restructure their policies/certificates so as to reduce the amount of premiums or contributions payable,“ it said.

BNM said all insurers and takaful operators will expedite and facilitate claims processes related to Covid-19, with priority to be given to the issuance of guarantee letters, waivers of applicable waiting periods and processing of claims payments.

Policyholders and takaful participants are advised to contact their insurers and takaful operators to avail of these flexibilities provided to manage their policies and certificates.

BNM said it would be reducing the interest rate (IRCC) and profit rate (PRCC) stress factor caps applied under the Risk-Based Capital Framework for Insurers and Risk-Based Capital Framework for Takaful Operators (Frameworks), respectively.

The IRCC and PRCC caps will be reduced to 30 per cent from 40 per cent, with effect from March 31, 2020, to better reflect the changes in the prevailing market conditions since the stress factors were first set in 2009.

In addition, the central bank will consider submissions from insurers and takaful operators to adopt alternative methodologies for calculating the interest rate and profit rate risk charges.

“These changes are in line with planned enhancements to improve the risk capture and overall consistency of the frameworks,“ it said.

The bank will also be extending the timeline for all ongoing consultations on published discussion papers and exposure drafts to June 30, 2020.

“Flexibilities will also be provided for insurers and takaful operators to meet timelines for regulatory submissions to take into account the efforts being undertaken by the government to contain the spread of Covid-19,“ it added. — Bernama

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