Page 32 - LIAM Annual Report 2021

Life insurance association of MaLaysia 30

rePort of tHe ManageMent coMMittee

cLiMate cHange and PrinciPLe - i) building capacity through the sharing of knowledge,
Based taXonoMy expertise and best practices in assessing and managing
climate-related risks;
ii) identifying issues, challenges and priorities facing the
The Climate Change and Principle-based Taxonomy (CCPT) financial sector in managing the transition towards a low
issued on 30 April 2021 aims at encouraging financial carbon economy; and
institutions including insurance companies to consider iii) facilitating a collaboration among stakeholders in
environmental, social and governance (ESG) risks and advancing coordinated solutions to address arising
the impact of climate change by playing a pivotal role in challenges and issues.
accelerating customers’ transition towards more sustainable
practices in their business operations.
Four sub-committees were formed, focusing on:
The policy document serves as a guide with the aim of i) risk management;
introducing a principle-based taxonomy for financial ii) governance and disclosure;
institutions to assess and classify their economic activities iii) product and innovation; and
based on the following Guiding Principles (GP) for assessment: iv) engagement and capacity building.

gP1: Climate change mitigation
gP2: Climate change adaptation
gP3: No significant harm to the environment
gP4: Remedial measures to transition
gP5: Prohibited activities

BNM also formed a Joint Committee on Climate Change
(JC3) with the intention to pursue collaborative actions for
building climate resilience within the Malaysian financial
sector. Co-chaired by BNM and the Securities Commission
Malaysia, the JC3 comprises senior officials from Bursa
Malaysia and 19 industry players. The JC3 is guided by three
key mandates:

raising of agency ProfessionaLisM – deVeLoPMent of industry standards/
Best Practices

Following the issuance of the revised policy document on Operating Cost Controls for Life Insurance and Family Takaful Business
on 24 December 2019, in which BNM specified that appropriate procedures, processes and tools are to be established to ensure
effective evaluation and independent review of the quality of the advisory process and recommendations provided to policyholders
– based on the Customer Fact Find (CFF) Forms completed by staff, agents and representatives including bancassurance partners
– the industry embarked on drafting a best practice guide for insurers to
evaluate the appropriateness of product recommendations.

The best practice guide – provided to insurers as a reference and to assist
them in complying with the requirements as set out in the policy document –
includes a framework to evaluate the quality of the completion of CFF forms
by assessing the suitability of product recommendations at the point of sale
and completeness of the CFF to determine customers’ insurable needs and
financial objectives.

Insurers are also encouraged to develop an evaluation tool with a built-in
completeness check of the CFF form as well as a suitability check for products,
where any mismatch in the customer’s priority needs and/or risk profile will be
prompted with a warning.