Life Agency Force – References and Guidelines.

Guidelines On Minimum Qualitative Criteria For The Life Agency Force

1. Recruitment of Agent

  • The agent must be at least 18 years old.
  • The agent must pass the Pre-Contract Examination administered by the MII and must be registered with LIAM.If the agent is transacting investment-linked Life business, he/she must pass the Certificate Examination (CEILLI) administered by the MII
  • The agent must complete SPM/MCE or 11 years of formal education or complete LCE/SRP with 10 years working experience or at least 10 years working experience if the person is above 45 years old.
  • The agent must complete 20 hours of training (by MII or in-house as approved by LIAM) within 6 months of appointment.
  • The agent must not be an undischarged bankrupt. He should not have been involved in criminal acts and acts of dishonesty. He should confirm these facts before appointment. Any non-disclosure on past conduct would be sufficient ground for termination.

2. Appointment of Career Agent

  • There shall be no direct appointment of Career Agent. However, an insurer may appoint a Career Agent who was working in an equivalent position with another insurer subject to the following conditions:- (a) he must have met the minimum performance criteria for the maintenance of contract as Career Agent with the preceding insurer prior to appointment.
  • (b) The preceding insurer should give a clean discharge with respect to financial obligations of the person.
  • (c) No direct or indirect monetary incentives shall be given to encourage the movement. .

3. Appointment of Agency Leaders

  • There shall be no direct appointment of Agency Leaders. However, an insurer may appoint an Agency Leader who was working in an equivalent position with another insurer subject to the following conditions:- (a) he must have met the minimum performance criteria for the maintenance of contract as Agency Leader of equivalent rank with the preceding insurer prior to appointment.
  • (b) The preceding insurer should give a clean discharge with respect to financial obligations of the person.
  • (c) No direct or indirect monetary incentives shall be given to encourage the movement. Staff or life insurance companies may be given direct appointment as agency leaders subject to the following conditions:- (a) only clerical staff and above with three continuous years of service in the life insurance industry immediately prior to the appointment can be given direct appointment to the agency supervisor.
  • (b) only executive staff and above with five years of continuous service in the life insurance industry immediately prior to the appointment can be given direct appointment as agency manager; and
  • (c) staff who are appointed as leaders would not receive any special financing or subsidy other than those given to ordinary agents/agency leaders.
  • (d) the requirement for continuous years of service refers to total years of service with one or more life insurance companies.

3A. Direct Appointment of Non-Insurance Personnel as Agency Leaders

Conditions for Direct Appointment

  • (1) Persons eligible for direct appointment should be those who have not been contracted as an agent of any life insurance company.
  • (2) Persons who have been contracted as agents/agency leaders but have resigned from the life industry (have not joined any life insurance company since the last company) for a minimum period of one year are eligible to apply for direct appointment. (3) Academic Qualifications / Work Experience

Supervisor/Career Agent

  • Diploma or degree holders with 3 years working experience after graduation at supervisory level in the field of marketing and/or financial services.
  • SPM or STPM holders with working experience at the supervisory level for not less than 5 years in the marketing services.
  • Pass PCE and CEILLI (if required) prior to appointment.
  • Must attend a minimum of 20 hours of training within 6 months of appointment.
  • Pass the Basic Management Course (BAMC) examination within 6 months of appointment for Supervisor.
  • Recruit a minimum of 3 agents within 12 months of appointment for Supervisor Direct leader unit will be subject to the same.
  • Minimum Qualitative Criteria for Supervisors.

Manager

  • University graduates or those with professional qualifications with 8 years working experience after graduation at supervisory level in the fields of marketing and/ or financial services etc.
  • Must be a full time manager with no salaried job or income from elsewhere.
  • Pass PCE and CEILLI (if required) prior to appointment.
  • Must attend a minimum of 20 hours of training within 6 months of appointment.
  • Pass the Basic Agency Management Course (BAMC) within 6 months of appointment.
  • Recruit a minimum of 8 agents (including supervisors in his unit) within 12 months of appointment.
  • Direct leader unit will be subject to the same Minimum Qualitative Criteria for Managers.

4. Promotion Criteria – as Career Agents

  • The agent must have a persistency of 80% on premium count over 2 consecutive years prior to promotion.
  • With effect from 1 January 2007, the first year persistency will be raised to 85%.
    The agent must have sold at least 24 policies per annum over 2 years prior to promotion.
  • The agent must achieve an aggregate personal production of RM80,000 FYAP for 2 years prior to promotion, with a minimum of RM30,000 in the first year.
  • or the agent must achieved a sales volume of at least RM50,000 FYAP and RM80,000 FYAP in the first and second year respectively (without the need for minimum number of policies).

5. Promotion Criteria – as Supervisor

  • The agent must have a persistency of 80% on premium count over 2 consecutive years prior to promotion.
  • With effect from 1 January 2007, the first year persistency will be raised to 85%.
    The agent must have sold at least 24 policies per annum over 2 years prior to promotion.
  • The agent must have achieved an aggregate personal production of RM80,000 FYAP for 2 years prior to promotion, with a minimum of RM30,000 in the first year.
  • The agent must introduce 3 potential agents to his agency leader prior to promotion. Upon promotion, the agents shall be transferred to the supervisor.
  • The agent must have completed a minimum of 30 hours agency management course or equivalent (by MII or in-house as approved by LIAM) prior to promotion.
  • The agent must pass the Basic Agency Management Course (BAMC) examination administered by MII prior to promotion.

6. Promotion Criteria – as Manager

  • The Agency Leader must not hold a salaried job elsewhere.
  • The Agency Leader must have completed a minimum of 30 hours agency management course or equivalent (by MII or in-house as approved by LIAM) prior to promotion.
  • The Agency Leader must have a minimum of 36 months of service as Supervisor with the same insurer.
  • The Agency Leader must have achieved an aggregate group production of RM600,000 FYAP with a minimum FYAP as follows:-
    (a) 1st year – RM150,000 2nd year – RM200,000 3rd year – RM250,000. All the specified limit of production in the 3 years should be met consecutively. Failure to meet the specific production in any one of the years will disqualify the supervisor for promotion. Aggregate group production refers to a supervisor’s direct unit (own agents) and supervisors parallel to him (those agents previously under him and have been promoted to supervisors)
  • or Fast Track promotion within 2 years with a direct FYAP of RM1,000,000. This will include the supervisor’s production and that of his agents. The production of supervisors parallel to him shall not be included.
  • The Agency Leader must have an overall first year persistency of 80% for his direct unit over 2 consecutive years prior to promotion. With effect from 1 January 2007, the first year persistency will be raised to 85%.
    The Agency Leader must have at least 6 qualifying agents in his unit.

7. Maintenance of contract – Agent

  • The agent must comply with LIAM’s Code of Ethics.
  • The agent must comply with JPI/GPI 29 – Guidelines on Proper Advice Practices for Life Insurance Business.
  • The agent must achieve a minimum First Year Annual Premium of RM6,000 per annum or 12 policies.
  • The agent must have a minimum first year persistency of 80%. With effect from 1 January 2007, the first year persistency rate will be raised to 85%.
  • An agent’s contract will be terminated if he failed to meet the annual requirements of maintenance of contract for two (2) consecutive years.
  • Companies may re-appoint the agent on the following conditions:- (a) the agent must sign a new contract with a new appointment date; (b) the agent must undergo the 20-hour training within 6 months of appointment; (c) the company may credit previous businesses brought in by the agent into his account but such credit will be done upon fulfilling conditions (a) and (b) above.
  • The agent must meet the requirements of Continuing Professional Development every year after his first year of contract.

8. Maintenance of Contract – Supervisor

  • The agent must comply with LIAM’s Code of Ethics.
  • The career agent must comply with JPI/GPI 29 – Guidelines on Proper Advice Practices for Life Insurance Business
  • The agent must achieve a minimum RM40,000 FYAP per annum, involving at least 24 policies OR The agent must achieve a minimum RM60,000 FYAP per annum (without minimum number of policies)
  • The agent must achieve a minimum first year persistency of 80%.
    With effect from 1 January 2007, the first year persistency will be raised to 85%.
  • A career agent who has been demoted for failure to meet maintenance of contract requirements for two (2) consecutive years, may only be reappointed by the insurer and reregistered with LIAM after a waiting period of one year. However, if the career agent has achieved a minimum RM40,000 FYAP in the current year of demotion, he may be reinstated immediately.
  • A period of not more than 1 year to meet up the production requirement before demotion.
  • The company may waive the maintenance of production requirement for those career agents:- (i) Aged 55 years or more and with over 15 years service with one or more insurer; or (ii) With over 20 years service. However, they must have a minimum first year persistency of 80%. With effect from 1 January 2007, the first year persistency will be raised to 85%
  • Total waiver of the requirement in cases of critical illness/total permanent disability up to a maximum of 5 years.
  • A career agent must meet the requirements of Continuing Professional Development every year.

9. Maintenance of Contract – Supervisor

  • The Supervisor must comply with LIAM’s Code of Ethics.
  • The Supervisor must comply with JPI/GPI 29 – Guidelines on Proper Advice Practices for Life Insurance Business.
  • The minimum qualitative criteria for maintenance of contract shall apply to the supervisor only one year after the promotion.
  • The Supervisor must meet the requirements for Continuing Professional Development every year
  • The Supervisor must attend a minimum of 20 hours of training ( by MII or in-house as approved by LIAM) every 3 years.
  • The Supervisor must have a minimum of 80% persistency on premium count for direct unit. With effect from 1 January 2007, the first year persistency will be raised to 85%.
  • The Supervisor must have a minimum of 3 qualifying agents in his unit.
  • The Supervisor must achieve RM75,000 FYAP per annum for his direct unit.
  • The following production credit (for maintenance of contract) may be given to a supervisor on the promotion of his agent:
    (i) 50% of FYAP of the newly appointed supervisor’s unit in his 1st year of promotion; and
    (ii) 25% of FYAP of the newly appointed supervisor’s unit in his 2nd year of promotion.
  • A supervisor who has been demoted for failure to meet maintenance of contract for production, persistency and manpower for two (2) consecutive years may only be reappointed by the insurer and registered with LIAM after a waiting period of one year. However, a Supervisor may be reinstated immediately if :-
    (i) The Supervisor has achieved a personal sales of RM40,000 FYAP in the current year of demotion or
    (ii) The supervisor has achieved a personal sales of RM80,000 FYAP from the preceding and current year of demotion, and
    (iii) The Supervisor has maintained 3 qualifying agents in his unit.
  • A period of not more than 1 year to meet up the production requirement before demotion.
  • The company may waive the maintenance of production and manpower requirement for those supervisors:-
    (i) aged 55 years or more and with over 15 years service with one or more insurers; or
    (ii) with over 20 years service; However, they must have a minimum first year persistency of 80%. With effect from 1 January 2007, the first year persistency will be raised to 85%.
  • Total waiver of the requirement in cases of critical illness/total permanent disability up to a maximum of 5 years.

10. Maintenance of Contract – Manager

  • The Manger must comply with LIAM’s Code of Ethics.
  • The manager must comply with JPI/GPI 29- Guidelines on Proper Advice Practices for Life Insurance Business.
  • The Manager must meet the requirement of Continuing Professional Development every year.
  • The Agency Manager must have a minimum of 8 qualifying agents with FYAP of RM200,000 per annum in his group.
  • The Agency Manager must have a minimum of 75% persistency on premium of group. With effect from 1 January 2007, the first year persistency will be raised to 80%
  • A manager who has been demoted for failure to meet the maintenance of contract for production, persistency and manpower for two (2) consecutive years, shall have to be requalified after a waiting period of one year. However, a manager may be reinstated immediately if he has achieved:-
    • RM200,000 from direct unit and production credit of parallel supervisors, if any in current year of demotion; or
    • RM600,000 from direct unit and production credit of parallel supervisors, if any from last 2 years plus current year; or
    • Production of RM1,000,000 from direct unit from preceding and current year, and
    • Maintained 8 qualifying agents in his unit
  • A period of not more than 1 year to meet up the production requirement before demotion.
  • The company may waive the maintenance of production and manpower requirement for those managers:-
    • Aged 55 years or more and with over 15 years service with one or more insurer; or
    • With over 20 years services
  • However, they must have a minimum first year persistency of 75% . With effect from 1 January 2007, the first year persistency will be raised to 80%.
  • Total waiver of the requirement in cases of critical illness/total permanent disability up to a maximum of 5 years.

11. Transfer of Agents

  • Insurers are not allowed to ‘buy over’ agents from another insurer by any form of inducement over the normal remuneration and fringe benefits package or any form of compensation offer.
  • Insurers are not allowed to appoint any member of the agency force of another insurer by offering him a position at a higher rank.

12. Replacement of Policies

  • An agent or agency leader shall not receive any compensation from the insurer with respect to a policy which replaced another policy within a duration of less than one year before or after the original policy is discontinued.
  • A policy is also deemed to have been replaced under the following circumstances:- (a) If the premiums of the existing policy has been reduced by more than 50% arising from the reduction of sum assured end/or rider or removal of rider.
    (b) If the policy is placed under the Auto Premium Loan Provision and Extended Term Insurance of Paid-up whereby payment of future premium is discontinued. N/B: This clause will apply only in the event where an agent or agency leader has moved to another company and the policies sold by the agent or agency leader concerned in the previous company have been replaced as defined by 2(a) and (b) above and new policies have been takes up with the new company by the same policyholders.
  • Where the policy sold by an agent or agency leader is replaced with a policy from another insurer or twisted by or through the same agent or agency leader within two years of his termination/resignation, the original or initial insurer may lodge a complaint against the subsequent insurer with the Disciplinary and Inter-Company Agreement Sub-Committee.
  • In instances where and agent or agency leader have been or is involved in the replacement of a policy or policies from one company to another, the insurer shall be required to take one or more of the following actions:-
    • (a) All commissions, including overriding commissions and bonuses on all policies replaced and re-booked in the new company will not be paid and if any payment has been made, a refund should be made by the agent to the insurer, together with a warning letter.
    • (b) Deferment of promotion for one year together with a warning letter
    • (c) Demotion and a warning letter
    • (d) Termination
  • Any member company involved in any instances of replacement of policies or failing to take any action to deter replacement would be fined.
  • Any member company having knowledge that the new policy taken up by its policyholder is the result of an act of replacement by an agent or agency leader shall be required to write to the policyholder concerned advising him of the disadvantages of replacing his policy.
  • The member company concerned must then make a full refund of the premiums on the new policy to the policyholder upon request. The previous insurer must then reinstate the policy upon payment of premium due (which has lapsed) to its original form.
  • Each member company shall ensure that this resolution is or becomes part of all agency contracts with any of its agents or agency leaders to ensure strict enforcement of this resolution.
  • Upon receipt of an official complaint by a policyholder or a member company, each member is also required to furnish all information on the policies that have been replaced to facilitate any investigation pursuant to this Resolution.

N/B: This Resolution will not apply in instances where the policy/policies which has/have been replaced belonged to that of the agent or his/her spouse and children.

13. Conditions relating to payment of Commission for orphan policies

  • Where an agent is appointment to service an orphan policy, he may be paid the renewal commissions (which would have been payable to the original agent). The consent of the policyholder is not required but the policyholder can object to the appointment if he so wishes.
  • If the policyholder prefers to deal directly with the insurer, then the renewal commissions shall not be payable

14. Continuing Professional Development (CPD)

  • Agents, Career Agents, Supervisors, Managers who have been in the industry for more than one year are subjected to CPD requirement as per circular dated 30 September 2004 issued by LIAM.
  • Insurer reserves the right not to renew the agency contract if the CPD requirements have not been met on a yearly basis.

Explanatory Notes And Implementation Guideline

1. Date of Implementation

The date of implementation is 1st January 1999. However, this will apply to new promotions taking place after this date. In the case of agents (includes agency leaders) who are in the process of promotion, the existing production quota of respective companies’ will be maintained to enable this group of agents to fulfill the promotion requirement. In other words, the new production requirements under the QC will not be introduced for agents who are in the process of being promoted.

2. Appointment of Agency Leaders

In the case of staff life insurance companies being appointed as agency leaders, the requirement of continuous years of service refers to the years of service in one or more than one life insurance company.

3. Promotion Criteria

(a) Career Agent
The aggregate personal production shall be RM80, 000 FYAP for 2 years, with a minimum of RM30, 000 in the first year. If the agent achieved less than RM30, 000 in the first year but the aggregate production of the 2 years is more than RM80, 000, but he is deemed to have failed the production quota and cannot be promoted.

(b) Supervisor
The production requirement is interpreted as above.

(c) The production requirement shall be aggregate group production of RM600,000 FYAP for 3 consecutive years, with a minimum FYAP of:-

1st year – RM150, 000
2nd year – RM 200, 000
3rd year – RM250, 000

All the specified limit of production in the 3 years should be met consecutively. Failure to meet the specified production in any one of the years will disqualify the supervisor for promotion.

Aggregate group production refers to the supervisor’s direct unit (own agents) and supervisors parallel to him (those agents previously under him and have been promoted to supervisors).

In the case of fast track promotion, the supervisor must have a direct FYAP of RM1, 000,000 over 2 years. This will include the supervisor’s production and that of his agents. The production of supervisors parallel to him shall not be included.

4. Maintenance of Contract

(a) Agent/Agency Leaders
If the agent or agency leader fails to maintain the contract for the first year, he will not be terminated/demoted. He will be given another chance in the second year. However, if he fails to maintain the contract for the second time, he will have to be terminated/demoted.

There will be a waiting period of 1 year before he can be contracted again with the same insurer. In the case of agency leaders who have been demoted, they have to meet the promotion criteria again before they are eligible for promotion.

(b) Manager
The 8 qualifying agents refer to the agents in his total group.

5. Definitions

Qualifying Agents
An agent who meets the minimum criteria for maintenance of contract.

Potential Agent
An agent who has passed the PCE examination and has been registered by LIAM.

Agent
An agent will include Career Agent, Agency Supervisor and Manager depending on the context used in the QC.

Agency Leader
An Agency Supervisor or Agency Manager as appropriate in the context of the QC.

Persistency
Premium on new policies (other than single premium policies) sold which remains in force at the end of the policy year. Persistency calculation will be based on the interpretation provided in the Inter-Company Agreement on Operating Costs Control Issued by LIAM.

FYAP
FYAP refers to First Year Annualized Premium or First Year Premium Income. This will include annual premium policies (excluding single premium policies) but excludes premiums from group insurance.