Chapter 8 - Legal & Regulatory Considerations

Why did BNM replace the Insurance Act 1996 with the Financial Services Act (FSA) 2013?

• To deplete regulatory oversight of insurers

• To distinct Islamic and conventional insurance supervision

• To streamline regulations by repealing the old law

• To lighten Bank Negara Malaysia’s regulatory role

An insurer conducts both life and general insurance businesses under a single license. Which provision under the FSA 2013 is violated?

• Section 5

• Section 9

• Section 16

• Section 24

Which regulatory requirement under Section 24 of the FSA 2013 best promotes transparency in the insurance industry?

• Licensing approval by Bank Negara Malaysia

• Requirement for insurers to be public companies

• Separation of life and general business

• Mandatory disclosure of underwriting guidelines

A policyholder misstated their age at proposal. Under Schedule 8 of the FSA 2013, how should the insurer respond at claim stage?

• Adjust the period of coverage in the next renewal

• Reject the claim due to void policy as a result of non-disclosure

• Adjust the sum insured or benefits proportionately

• Refer the matter to mediator

Which situation demonstrates the legal recognition of insurable interest under Schedule 8 of the FSA 2013?

• Employer owning a group policy without personal interest in employees’ lives

• A stranger purchasing a life policy on another person

• Assignment of policy without documentation to proof insurable interest

• Nominee claiming policy proceeds without proof of title

An insurer fails to ask specific health-related questions during proposal. Later, a claim arises related to that condition. What is the legal consequence under Schedule 9?

• The claim can be denied by the insurer due to non-disclosure

• The policy will not be renewed by the insurer

• The insurer is deemed to have waived the duty of disclosure

• The decision by the insurer needs to be postponed

Which misrepresentation allows an insurer to avoid the insurance contract entirely?

• Innocent misrepresentation

• Careless misrepresentation

• Deliberate misrepresentation

• Negligent misrepresentation

A 15-year-old wishes to purchase a life insurance policy. Under Schedule 8 of the FSA 2013, which condition must be satisfied?

• Approval from Bank Negara Malaysia

• Consent from parents or guardian

• No consent is needed as he/she entitle to purchase life policy

• Appointment of a trustee

Which of the following is TRUE about Schedule 10 - Payment of Policy Moneys?

i. Power to make a nomination has been reduced from 18-years old to 14-years-old;

ii. A nomination must be made at the time the policy is issued or in writing after the policy has been issued;

iii. A nomination is only valid if it was witnessed by a person of sound mind and aged 18 and above;

iv. A nomination is absolute irrevocable.

• i and ii

• ii and iii

• i, iii and iv

• All of the above

What is the correct sequence of money laundering process?

• Layering – Placement – Integration

• Integration – Layering – Placement

• Placement – Integration – Layering

• Placement – Layering – Integration