Verity journal

• In 2014, the Star reported that an insurance agent was sentenced to 11 years in jail plus six strokes of the rotan for cheating his friend’s mother of RM800,000 in insurance premium
• In 2015, the Borneo Post reported that about 10 persons were reported to have been cheated by an insurance agent for hundreds of thousands of ringgit
• Also in 2015, 163 victims allegedly lost a total of about RM4.5mil to an insurance investment scam by a husband and wife team who had used three insurance companies to deceive the victims of fake insurance policies such as life, medical-card and investment schemes

These are very scary stories, however one should not simply shy away from getting an insurance policy as it can be a massive life-saver when tragedy happens. But, who can you trust?

These days, anyone can be an insurance agent. It is a known fact that insurance companies aggressively recruit new agents all the time. For anyone from a fresh grad, a housewife, or even a retiree, becoming an freelance insurance agent has never been easier.

Which begs the question, are these people qualified and can they be trusted?

For the most part, freelance or part-time insurance agents help financial institutions increase its insurance salesforce to ensure that they have wider market coverage. But at the same time, hiring them comes with risks.

To become an insurance agent you are firstly required to undergo training and become certified. However, these test only assess skills and not their integrity as these traits can only be evaluated through a background screening process. An individual with a bad record or has previously been involved in fraud could easily slip through the cracks. Which is to say, if you can pass the test, anyone can be an insurance agent.

Due to the nature of the job, an insurance agent can gain access to very sensitive data when they engage with clients, no matter if he or she is freelance, part-time or full-time. With access to confidential customer information, company data, facilities and overall sensitive information being shared with insurance agents – willingly or unwillingly, it is essential that all insurance agents are effectively screened before they are hired for the job or join the company.

Another risk is that some people take on insurance selling for a short duration or are casually committed to the company in order to supplement their actual income, and thus, might not be seriously committed to the job. However, even if the agent’s commitment aren’t strong, an insurance agency’s screening policy should still be strict in order to avoid overlooking any redflags in an insurance agent’s past for the benefit of its customers and company interests.

Noting the aforementioned risks while ensuring due diligence amongst financial institutions and insurance agencies, Bank Negara Malaysia added a policy in September 2017 named as the “Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) – Insurance and Takaful”, which clearly states that it is important for insurance agencies to apply screen procedures upon hiring the employee and throughout the course of employment. Thus, background screening for agents isn’t just a risk mitigation tool but also a matter of law.

Conducting due diligence by screening employees – part time, freelance or full-time – before hiring them, would ensure that they are verified to have the right skills, qualities and characteristics for the job at hand. Furthermore, the low cost for background screening makes the argument for screening even more compelling.

Due diligence is already accepted as common practice in developed countries, would greatly benefit local financial institutions as it becomes common practice under Bank Negara’s new policies.

To uphold and maintain the integrity of employees all over Malaysia, Verity Intelligence works very closely with about 700 companies out of which 70 are financial institutions, to provide background screening support, to help ensure their hiring process complies with our national laws and policies.

To know more, visit www.verityintel.com.