By leveraging on banks’ existing branch network and customer base, which are well established throughout most markets in Asia, insurers are able to scale up very quickly into geographical areas and customer segments that might not be accessible by existing channels. It is therefore not surprising that bancassurance is the fastest growing global channel for insurance. In China, bancassurance sales increased by 415% within 5 years from 2004 to 2009 11. In Malaysia, bancassurance accounted for 36% 12 of new life insurance business premium and 39% 13 of gross contributions for Takaful business in 2013. At the current penetration level of 5% of the banking population, there remains significant room for growth. Under the LIFE Framework, the Bank has envisaged a bancassurance penetration target of 10% 14 as part of the move towards diversification of insurance distribution channels in Malaysia. Rationalization of incentive structures proposed under the framework are aimed at improving persistency through more widespread adoption of needs-based selling, product strategy reviews and quality post-sales service. These measures are also expected to shift the mix towards protection and savings products from credit-related insurance that currently dominates this channel in particular for bancatakaful 15. Financial advisers on the other hand have the advantage of providing advice to consumers on overall financial planning by growing, managing and protecting personal wealth to meet specific financial goals. With increasing affluence, a growing segment of consumers with more complex financial needs and goals will require the sort of comprehensive service that is delivered by financial advisers.

14  BNM Financial Sector Development Department (FSD) – Based on number of bancassurance/bancatakaful policies with regular premium/contribution to the number of savings account in Malaysia (August 2013). 15  FSD – Annual submission by insurers to the Bank on Bancassurance data. 16  EY- 2014 EY Asia-Pacific Insurance Outlook. BIS central bankers’ speeches  3  banking penetration of 52.2% and 12.7% respectively 17 augurs well for direct insurance models. In fact, in the general insurance and takaful sector, direct channels already have achieved significant market shares of 10% and 14% respectively 18. For the life insurance and family takaful sector, the LIFE Framework envisions greater adoption of direct channels such as internet platform and walk-ins for pure protection products. Safeguarding consumer interests The global ﬁnancial crisis has shown that rapid financial sector innovation without due regard to business conduct can result in large-scale losses to consumers and cause widespread disruption to ﬁnancial institutions and markets. As a result, there has been a renewed focus on consumer protection and market conduct, with new institutional arrangements for conduct regulation being established in some jurisdictions and strengthened enforcement frameworks in others. Of importance in a conduct regulation framework is an emphasis on financial institutions’ having effective oversight arrangements to ensure that business is conducted in a responsible manner. With the Financial Services Act 2013 and Islamic Financial Services Act 2013, which came into force in June 2013, the Bank has a clear mandate to foster fair, responsible and professional business conduct among all financial service providers.