Insurance agents are upset with Bank Negara's latest move to implement premium rebates for general insurance as it will deprive them of at least 10 percent commission and discourage consumers from employing their services.

Chan Chee Kong, an insurance agent, said Bank Negara should do away with the whole rebate system.

"Walk in customers should pay the full price of the premium as the rebates will kill insurance agents," he said.

Another insurance agent, Yong Kiat Kong, wondered whether more rebates are in the pipeline.

"It's general insurance now, next, it might be life insurance. Why cut people's income during these hard times?" he asked.

'Agents have the right contacts'

Donald Rozario, managing director of an insurance company, was also not in favour of the new system which bypasses the agents in application and submission procedures.

"It is troublesome for customers as they will have to self-service when submitting claims. Most of the time, agents have the right contacts within the claims department to expedite the process," he said.

On June 19, Bank Negara announced that customers who purchase general insurance directly from insurance companies are eligible to receive premium rebates.

The rebates vary, depending on the type of insurance purchased. For example, those who purchase motor insurance will receive a five percent premium rebate in the first year and 10 percent thereafter.

There are around 39,000 registered general insurance agents nationwide. Presently, they account for about 60 percent of all general insurance business generated.

Insurance brokers and other intermediaries account for another 20 percent of business and the remaining 20 percent of business is derived through direct channels.

Diversify distribution channel

Meanwhile, Persatuan Insurans Am Malaysia executive director CF Lim endorsed the premium rebates for general insurance as it benefits customers who deal directly with the companies.

He added that the industry should diversify its distribution channel, through internet, telemarketing, direct mailing or direct sales, to reach more customers.

"The industry cannot be left behind and continue to be overly-dependent on an agency-centric system of distribution," he said.

He assured agents that their services are still very much in need and encouraged them to improve their service standards.

"The concern of some agents that there will be a mass exodus of their customers to direct purchases is highly speculative and unwarranted," he said.

However, General Insurance Agents Association Malaysia (Perwakim) president Liza Lau was against the rebates, saying that agents stand to lose a big portion of their income.

“Even now the 10 percent is liable to be forfeited if the proposal goes through that consumers get a discount should they buy directly from insurance companies, bypassing the agents.

“Agents earn no more than their 10 percent and any reduction in this percentage may be likened to a reduction in salary. Staff of smaller agencies will likely be retrenched with little and no compensation,” she was reported as saying in Bernama .