Malaysia Insurance Industry – Governance, Risk and Compliance

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Malaysia Insurance Industry Report Overview

The Malaysia insurance industry is regulated mainly by the Central Bank of Malaysia (Bank Negara Malaysia–BNM). Other bodies that oversee the industry are the IAIS, the General Insurance Association of Malaysia (PIAM), and the Life Insurance Association of Malaysia (LIAM).

The Malaysia insurance industry research report provides a detailed analysis of the insurance regulations for life, property, motor, liability, personal accident, health, marine, aviation, and transit insurance. The report specifies various requirements for the establishment and operation of insurance and reinsurance companies and intermediaries. It also gives insurers access to information on prevailing insurance regulations, and recent and upcoming changes in the regulatory framework, taxation, and legal system in the country. Moreover, it includes the scope of non-admitted insurance in the country.

Key Regulators ·       Central Bank of Malaysia (Bank Negara Malaysia–BNM)

·       International Association of Insurance Supervisors (IAIS)

·       General Insurance Association of Malaysia (PIAM)

·       Life Insurance Association of Malaysia (LIAM)

Compulsory Insurances ·       Motor Third-Party Liability Insurance

·       Marine Liability Insurance

·       Professional Indemnity Insurance

Key Taxes ·       Tax on Insurance Premium

·       Corporate Income Tax

·       Corporate Capital Gains Tax

·       Value Added Tax

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Malaysia Insurance Industry – Key Regulators and Legislation

Central Bank of Malaysia (Bank Negara Malaysia–BNM): The Financial Services Act 2013 enacted by BNM, a legislative government agency established under the regulations of the Central Bank of Malaysia Act 1958, governs the Malaysian insurance industry. BNM (www.bnm.gov.my) is responsible for regulating the activities of domestic insurers and the branches of foreign insurers, reinsurers, and intermediaries. Supervision of the prescribed rules and regulations of the act and promotion of development strategies through several amendments are some of the key responsibilities of the Central Bank of Malaysia (Bank Negara Malaysia–BNM).

International Association of Insurance Supervisors (IAIS): The IAIS represents regulators and supervisors of 190 jurisdictions in more than 140 countries. It formulates and issues various global principles, standards, and guidance provides training and support on issues related to supervision and organizes meetings and seminars for supervisors. The primary objectives of the IAIS are to promote effective and globally consistent supervision of the industry to develop and maintain a fair, safe, and stable market for the benefit and protection of policyholders, and to contribute to global financial stability.

The key laws and regulations in the Malaysia insurance industry are as follows:

  • Insurance Act 1996
  • Islamic Financial Services Act 2013
  • Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Act 613)
  • Financial Services Act 2013
  • Labuan Financial Services and Securities Act 2010

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Malaysia Insurance Industry - Compulsory Insurance

Some of the key compulsory insurance required within the Malaysia insurance industry are:

  • Motor Third-Party Liability Insurance
  • Marine Liability Insurance
  • Professional Indemnity Insurance

Malaysia Insurance Industry Analysis by Compulsory Insurances

Malaysia Insurance Industry Analysis by Compulsory Insurances

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Malaysia Insurance Industry - Company Registration and Operation

A license is required to operate in the Malaysia insurance industry. According to Section 8 of the FSA 2013, insurers and reinsurers should get a license from the Minister of Finance on the recommendation of BNM to carry out business in Malaysia. Intermediaries are also not permitted to operate in the insurance industry without a license from BNM.

Only public limited companies as defined and established under the Companies Act 1965 of Malaysia can carry out insurance business after obtaining a license. For reinsurers, financial advisors, and insurance brokers, BNM may specify the form of an establishment licensing and operation of respective insurance activities. Insurance adjusters must be incorporated to carry out activities.

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Malaysia Insurance Industry - Taxation

The different types of taxes in the Malaysian insurance industry are tax on insurance premiums, corporate income tax, corporate capital gains tax, and value-added tax.

Corporate Income Tax: A company is resident if its management and control are in Malaysia. The new Finance Act of 2021 removed the exemption on foreign source income received by tax-resident corporations. Effective January 1, 2022, all the tax-resident corporations and limited liability partnerships are taxed on the income derived from Malaysia and income received from outside Malaysia (Foreign sources). However, foreign-sourced dividend income received by tax-resident companies and limited liability partnerships are exempt from tax until December 2026, subject to certain conditions. All non-resident companies are exempt from tax on their foreign-sourced income.

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Scope

  • The report covers details of the insurance regulatory framework in Malaysia.
  • The report contains details of the rules and regulations governing insurance products and insurance entities.
  • The report lists and analyzes key trends and developments in the country’s insurance regulatory framework.
  • The report analyzes the rules and regulations about the establishment and operation of insurance businesses in the country.
  • The report provides details of taxation imposed on insurance products and insurance companies.

Key Highlights

  • BNM, under the Ministry of Finance, regulates the Malaysian insurance industry.
  • The provisions of the FSA, which came into force on June 30, 2013, regulate the life and non-life insurance businesses in Malaysia.
  • The Malaysian government permits FDI up to a limit of 70% in the insurance industry.
  • Composite insurance is not permitted in Malaysia.
  • Non-admitted insurers and intermediaries are not permitted in the Malaysian insurance industry.

Reasons to Buy

  • Provides FAQ-style analytical insights comprising 129 knowledge elements on insurance compliance applicable to the country.
  • Gain insights into the insurance regulatory framework in Malaysia.
  • Track the latest regulatory changes and expected changes impacting the Malaysian insurance industry.
  • Gain detailed information about the key regulations governing the establishment and operation of insurance entities in the country.
  • Understand key regulations and market practices about various types of insurance products.

Table of Contents

  • 1. MALAYSIA

    • 1.1. Legislation Overview

      • 1.1.1. Supervision and Control
      • 1.1.2. Legislation

  • 2. Compulsory Insurance

    • 2.1. Non-Admitted Insurance Regulations
    • 2.2. Company Registration and Operation

      • 2.2.1. License
      • 2.2.2. Foreign Direct Investment / Ownership
      • 2.2.3. Minimum Capital Requirements
      • 2.2.4. Solvency Margins
      • 2.2.5. Reserve Requirements
      • 2.2.6. Statutory Return Requirements
      • 2.2.7. Fee Structure

    • 2.3. Taxation

      • 2.3.1. Tax on Insurance Premium
      • 2.3.2. Corporate Income Tax
      • 2.3.3. Corporate Capital Gains Tax
      • 2.3.4. Value Added Tax

    • 2.4. Legal System
    • 2.5. Policy Practice

  • 3. About GlobalData
  • 4. Contact Us

Table

Malaysia – Corporate Tax Rates for the Financial Year 2023

Frequently asked questions

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