www.bt.com.bn- A NEW insurance association, expected to be established this year will group Islamic insurers and work to level the playing field with their conventional counterparts in Brunei, as well as set up a watchdog body and more ground rules to increase the industry's credibility, publisher Oxford Business Group (OBG) said in its latest, annual economic overview on the Sultanate.
Helen Yeo, chairperson of the General Insurance Association Brunei Darussalam (GIAB), said the anticipated Brunei Insurance and Takaful Association (BITA) will address concerns in the industry, which said in the past, was criticised for "disparity" between the two types of insurance providers.
"Previously, the two streams have operated on their own, independent of each other and dialogue has been limited," she told OBG in The Report: Brunei Darussalam 2011. (source)
"As things stand, the only mediating authority is the regulator. This has led to a polarity in the industry that has not been of benefit to anyone," she said.
"Bringing both forms under one roof will bring an end to this issue," Yeo added.
Backed by the Insurance Order 2006 and Takaful Order 2008, the Autoriti Monetari Brunei Darussalam (AMBD) oversaw insurance and takaful business in the Sultanate, issuing a "General Agency Handbook" to regulate the registration and conduct of general insurance agents.
However, she cautioned that there was "yet room for improvement" in regulatory work. Yeo noted that some changes in financial reporting condition imposed by the authority.
Whereas previously, insurers were required to submit quarterly reports and their balance sheets once a year, AMBD has now requested for more frequent, monthly reports.
"It means AMBD has its finger on the pulse of the industry and can encourage greater professionalism among insurers," Yeo said. "AMBD will now be able to accurately monitor each company and see how businesses are growing and where shortfalls exist."
"This really represents a paradigm shift towards an officially regulated industry."
Members to the BITA, the registration of which Yeo said was pending approval, will have to sign an "Inter-Company Agreement", which mean they would agree to the terms of the AMBD-issued handbook.
"The Inter-Company Agreement will bring clarity to the procedures involved in handling agents and the commission insurers are entitled to pay," the GIAB chair said.
Yeo explained that the agreement will set some standards to such procedures and will be complemented with the establishment of a disciplinary committee.
"In the past, insurers have handled agents and paid them in completely different ways. The agreement sets out guidelines for these dealings," she said.
"The most important of these will be the establishment of a disciplinary board to handle all issues between insurers and agents, as well as setting concrete parameters for commissions."
It was hoped that the Inter-Agency Agreement will be introduced alongside the formation of the new association.
"This is a crucial tool for increasing transparency, raising public awareness and building the credibility of the industry as as whole. It will create a stronger public image of the insurance industry in the Sultanate," the GIAB chairperson said.
As only conventional insurers are represented through the GIAB in international industry meetings and conferences, the new association was also hoped to give local takaful insurers a face in the global arena.
"This is extremely fitting given the role that takaful is now taking in the overall sector."
Yeo shared that the takaful sector has grown by 10.6 per cent from 2009 to 2010, while conventional insurers marked a 5.6 per cent decrease in market share. The surplus was taken by the Islamic insurers.
She said that this was "not necessarily a concern" for general insurers, who will just need to compete with more competitive and innovative products. Ubaidillah MasliThe Brunei Times
Source: http://www.bt.com.bn/business-national/2012/04/05/new-insurance-body-be-set-year - April 5, 2012
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