It is anticipated that with close co-operation and commitment by all parties this problem will be resolved.

3.1. Brokers agree to remit all premiums and/or contributions paid by their clients promptly to Insurers and/or takaful operators as required under the “Insurance and Takaful Brokers’ Accounting Standards” but not later than fifteen (15) days from the receipt of such premiums and/or contributions from the clients.

3.2. Brokers as agents for their clients are not liable for the premium and/or contribution to the insurers and/or takaful operators but have agreed to be directly responsible to collect the premium and/or contribution within the Premium Warranty period for the insurers and/or takaful operators, though brokers are not liable for the premium and/or contribution. However, brokers are liable for the premium and/or contribution due on all marine cargo policies and/or certificates only.

3.3. Brokers, Insurers and Takaful Operators agree that the response time shall be five (5) working days unless specifically specified herein.

3.4. Brokers, Insurers and Takaful Operators agree that for Premium Warranty classes of insurance/takaful cover, no partial premium and/or contribution payments will be allowed notwithstanding Item 4.4 below.

3.5. Brokers, Insurers and Takaful Operators agree that enforcement of the Best Practices are relevant to Premium Warranty classes of insurance/takaful cover and Cash-Before-Cover for motor, personal accident and travel insurance will apply to intermediaries brokers, takaful operators as well as insurers’ and takaful operators’ direct clients.

3.6. The Joint Working Committee shall keep Bank Negara Malaysia (BNM) informed on the progress made on periodical basis by submitting copies of the minutes to them.

4.1. Placement of Business
Once the terms are agreed between the broker, insurer and/or takaful operator, the broker will issue a Placement Slip which must carry a serial number together with the details of calculation i.e. gross premium, gross contribution, service tax, stamp duty, percentage of brokerage, administration fee, amount, installment premium and/or contribution plans and/or breach of Premium Warranty conditions, if any, and the net premium and/or contribution to insurer and/or takaful operator. The insurer and/or takaful operator will sign and return the Placement Slip as confirmation. All changes must be made at this stage and once the Placement Slip is signed and returned to the broker, the insurer and/or takaful operator has to issue the Policy/Certificate/Endorsement and Debit Note/Credit Note according to the terms agreed upon within thirty (30) days. After the Placement Slip is agreed and signed by the insurer and/or takaful operator, any subsequent change in the premium and/or contribution computations or terms and conditions must be agreed by the broker, insurer and/or takaful operator before an Endorsement/Debit Note/Credit Note for the differential can be effected.

Brokers, Insurers and Takaful Operators agree to return the confirmed Placement Slips within five (5) working days.

4.2. Accuracy
Brokers are required to indicate in the Placement/Endorsement Slip the premium/contribution calculations i.e. gross premium, gross contribution, service tax, stamp duty, percentage of brokerage, administration fee, amount, installment premium/contribution plans and/or breach of Premium Warranty conditions, if any, and the net premium/contribution payable to the insurer and/or takaful operator and the insurer and/or takaful will have to check and confirm that the details in the Placement Slip including premiums/contributions between the broker, insurer and/or takaful operator are accurate.

4.3. Changes during Policy Terms
All changes to the policy/certificate/endorsement must be agreed between the broker, insurer and/or takaful operator. Where there is premium and/or contribution involved, the amount must be agreed by the parties concerned. For this purpose, it is agreed that insurers and/or takaful operators use the Date of Transaction* rather than the Date of Inception as the basis date when making such endorsement to avoid discrepancies in the Outstanding Premium/Contribution Reports. (* Date of Transaction refers to Effective Date of Endorsement).

4.4. Installment Payments
In cases where insurers/takaful operators agree on installment payments of premium/contribution, (applicable to non-Premium Warranty classes only) the insurer/takaful operator has to issue a Debit Note when premium/contribution is due and all Ageing Reports must reflect the period the premium/contribution is due.

Brokers, Insurers and Takaful Operators agree that unless the instalment payment is due for payment, claims will not be withheld.

4.5. Payments including Payments Made Direct to Insurers and/or Takaful Operators
All payments to insurers and/or takaful operators must be accompanied by the relevant Debit Notes/Credit Notes/Cover Notes/Policy/Certificate information or copy of the signed Placement Slip or insurers’ and/or takaful operators’ current statement of accounts. All payments are to be for specified accounts. Payments made directly to insurers and/or takaful operators by clients must be accounted for under the broker’s account and a copy of the receipt be sent to the broker immediately. In this case insurers and/or takaful operators must remit the brokerage and/or administration fee to the broker within fifteen (15) days from the date of receipt. Insurers and/or takaful operators are not allowed to contra the account unless agreed by the broker.

4.6. Breach of Premium Warranty
The broker having identified any policy/certificate with outstanding premiums/contributions exceeding sixty (60) days should notify the insurer and/or takaful operator that he has failed to collect the premium /contribution from the insured/participant, in order to receive instructions from the insurer and/or takaful operator.

The policy/certificate will automatically be terminated effective from the sixty first (61st) day of cover, and the insurers and/or takaful operators will inform the broker that cover has lapsed as per terms of the Premium Warranty. The broker must in turn notify the insureds/participants copied to the insurers and/or takaful operators, immediately on the cessation of cover.

When payment is subsequently made, the policy/certificate can be reinstated from the date of receipt of premium/contribution by the broker, insurer or takaful operator (which-ever is earlier, subject to no claim). Alternatively, the insurer or takaful operator can issue a fresh policy/certificate.

4.7. Time On Risk Premiums/Contributions
It is the prerogative of the insurers and/or takaful operators to collect the “time on risk” premiums/contributions from the insureds. Brokers will not be liable for the collection of the “time on risk” premiums/contributions resulting from the policyholders’/certificate holders’ failure to comply with the Premium Warranty. However, brokers are required to assist insurers and/or takaful operators in collecting the “time on risk” premiums/contributions.

4.8. Premium Warranty – Suspension of Cover if Payment After Breach
When premium/contribution is paid by the insured/participant after the period or date(s) allowed under the Premium Warranty, cover must be suspended from the date of breach to date of payment. Cover may be reinstated as new policy/certificate from the date of receipt of full payment to the original expiry date. This would serve to encourage the policyholder/certificate holder to remain with the same insurer. No premium/contribution should be charged for the uncovered period.

4.9. Issuance of Monthly Statements of Accounts
Brokers, Insurers and Takaful Operators are required to issue their respective monthly statements within fourteen (14) days after the end of each month.

4.10. Communication
To ensure that the Objective of this exercise is met, all parties are to co-operate with one another and regular communications between insurers, brokers and takaful operators must take place.

4.11. Joint Working Committee
A Joint Working Committee between MITBA, PIAM and MTA shall be established and empowered to manage, oversee and make recommendations to ensure that the Objective is met.