Already Have Insurance or Takaful? BNM's New Proposal Targets Poor-Fit Advice

For many consumers, the problem is not that they have no insurance or takaful.

It is that several years later, they realise:

the plan they bought does not actually fit them very well.

Bank Negara Malaysia published an Exposure Draft on 30 September 2026 proposing stronger requirements around advice practices in insurance and takaful.

The most important caveat is:

this is a proposal under consultation, not a final rule that should be described as already fully in force.

What is BNM trying to improve?

The direction is not simply about selling more protection.

It is about making the advice process better able to show:

why a particular product is suitable for a particular customer.

The proposed framework includes areas such as:

• Customer Fact-Find
• suitability and affordability assessment
• Record of Advice
• telemarketing conduct
• clearer documentation of recommendations

For consumers, the principle is straightforward:

a recommendation should not stop at “this is a good product”.

There should be a clearer explanation of why it fits you.

Customer Fact-Find should be more than income

A meaningful fact-find may need to understand matters such as:

• existing insurance or takaful coverage;
• medical protection already in place;
• long-term premium or contribution affordability;
• dependants;
• debts;
• whether the goal is medical, protection, savings or something else;
• the customer's understanding of the commitment.

Without that information, personalised advice is difficult.

Affordability is a long-term issue

Many protection products do not become difficult in year one.

The pressure can emerge years later.

If a plan is too expensive from the start, the consumer may eventually face lapses, downgrades or the difficult choice between keeping coverage and managing household cash flow.

Affordability is therefore not only:

“Can you pay this today?”

It is also:

Can you reasonably sustain this commitment?

Why a Record of Advice matters

Many disputes eventually become:

“That is not what I was told.”

A clearer advice record can document what the customer disclosed, what was recommended, why it was recommended, and what limitations or trade-offs were explained.

That creates a more traceable basis for both sides.

Telemarketing is also part of the discussion

Telephone sales can compress a complex decision into a short interaction.

The important issue is not only whether a sales call can be made.

It is whether the consumer receives enough information and space to understand the product before committing.

If you already have a plan, there is no need to panic

Because this is still an Exposure Draft, consumers should not read headlines and immediately cancel or replace policies.

A better response is to review what you already own:

• What exactly did I buy?
• Why did I buy it?
• Can I still afford it comfortably?
• Are there obvious overlaps or gaps?
• If I were buying today, would I still choose the same structure?

Five questions worth asking an agent

1. Why does this plan fit me specifically?
2. What would you change if my budget were 20% lower?
3. What cost changes could matter five or ten years from now?
4. What do people commonly assume is covered when it may not be?
5. If I already have a similar policy, what exact gap does this one solve?

The real value is better suitability, not more products

Insurance and takaful are complex long-term products.

Complexity itself is not the problem.

The important question is whether the customer has enough information to understand why a recommendation suits their needs and budget.

That is why the BNM proposal is worth watching.

Until a final policy is issued, however, the details should continue to be described accurately as proposed Exposure Draft requirements.

Official reference:

• Bank Negara Malaysia