Risk Management and Commercial Insurance 1 – Possible risks in Malaysia
2020/01/07Is your company fully protected against risk with insurance?
Do you think commercial insurance is necessary for your company?
Commercial insurance seems to be complicated and time-consuming to choose what insurance is necessary for you. However, you had better choose the right one from a wide range of insurance to protect you from possible risks in Malaysia.
TOYOTA TSUSHO HOKEN AGENCY (M) is the insurance agent specialized in commercial insurance under the TOYOTA TSUSHO group and one of the leading Japanese corporate agents in Malaysia. Mr. Toshiki Takei, Director and Ms. Izumi Bando, Senior Manager explained to us about “Risk that faced by Japanese companies based in Malaysia” and “Commercial insurance as risk management”.
TOYOTA TSUSHO HOKEN AGENCY (M) SDN. BHD.
Director / Chartered Accountant
Mr. Toshiki Takei
Chartered Accountant qualification holder. Had been engaged in a broad range of business including investment/evaluation, claim management, internal control, due diligence, compliance/risk management related development/execution of framework at the leading audit corporation, investment company and real estate company in Japan and Australia. Has been appointed as a Director at TOYOTA TSUSHO HOKEN AGENCY (M) since 2012.
Senior Manager / ACII
Ms. Izumi Bando
After spent 6 and a half years at Tokio Marine & Nichido Fire Insurance Co., Ltd. (former Tokio Marine & Fire Insurance Co., Ltd.), studied in Britain and obtained ACII（Associated Chartered Insurance Institute）. Had worked 3 and a half years at the leading US company, Marsh Insurance Broker Japan（former Johnson & Higgins Insurance Broker）and 6 and a half years at the sales department at TOYOTA TSUSHO HOKEN AGENCY.
Please click below for the company overview
TOYOTA TSUSHO HOKEN AGENCY (M) SDN. BHD
The importance of Commercial Insurance - A piece of insurance paper could save your company
－ Could you please explain to us about commercial insurance?
Mr. Takei (hereinafter T): In a word, it is to transfer all risk related to business operation to an insurance company.
Insurance is a piece of paper but forewarned is forearmed. In the case of incidents happen, insurance can protect your assets and mitigate risks.
“Properties” including factories/warehouses/offices/stock and machinery, “movable properties” including office equipment/cars/furniture/computers, “staff benefits” for staff and executive officers, cyber thread of your data, net profit and fixed costs until your property is restored – all can be covered by insurance.
－Just fire and medical insurance came up in my mind, it is good to know an insurance offers a wide range of coverage.
Ms. Bando (hereinafter B): Customer’s insurance needs change as circumstances in our lives change. For example, basic motor insurance does not cover flood damage and a lot of people did not protect their vehicles from flood damage. However, flood occurs quite frequently due to the climate change nowadays, which leads our customers to add flood coverage on their basic motor insurance.
Cyber insurance provides a safeguard to you against cyber-attacks. There is an increasing number of cyber-attacks in Malaysia like other countries and cyber insurance is getting an attention recently.
In addition, as a society matures and litigation case increases like in the United States, Directors and officers (“D&O”) liability Insurance becomes important to protects who has certain authority in the company against lawsuits from shareholder/employee.
Cases - what insurance coverages are required
－ A lot of risks exist around us so it does not seem to be easy for us to choose the right insurance coverage.
T: That is why you need to ask a professional insurance agent.
We are providing a consulting to various companies but realize many people misunderstand about insurance. Many customers seem not to understand insurance coverages and certain risk is better to be taken by themselves as a risk management. Unfortunately, very few managers know about it.
－Can you explain about “misunderstanding” of insurance?
T: The most misconception on insurance is that any damage or loss is claimable.
For example, Burglary insurance does cover losses caused by the third party but does not cover losses caused by employees.
ー That’s surprising!
T: It is a common misunderstanding about insurance.
ーWhat risk is better to be taken by yourself?
T: For example, company A has outsourced to store stocks on company B. Before outsourcing, company A and company B should make an agreement to define who are responsible in case of damaging to or loss of stock. Company A may not be required to purchase insurance on the stock by this agreement.
Commercial Insurance - 3 tips for finding a reliable insurance agent
－”Commercial Insurance” sounds complicated. We understood that we should seek advice from a specialist but we are not sure which agent is reliable.
B: Here are three tips for finding the right agent.
1. Does the agent have proper insurance knowledge?
2. Does the agent think about your company sincerely?
3. Does the agent handle insurance claim properly and sincerely?
A reliable insurance agent listens and understands your needs. The agent also explains each insurance clearly in order for you to make a sound decision.
Unfortunately, some agents simply sell insurance package
We are an insurance agent but provide a service like an insurance broker from the customer’s point of view such as consulting and risk prevention survey. Those services cannot be provided if we do not have proper insurance knowledge.
It is the most important to handle
－I see. Your company strengthens both insurance consulting and claim handling
B: Yes! Trustful
ー I would like to know further about “the risk prevention survey”.
T: If you are a manufacturer, we will conduct a risk survey
We may advise you to improve your sprinkler system and CCTV system in order to reduce fire risk and theft risk to enjoy lower premium rate. However, this improvement involves high costs. So, we will advise how much the expected premium discount is to compare the improvement cost. We give our best advice to you.
－ Please share with us the consulting service that you provide
B: We try to understand what business and business flow your company has and identify potential risks
In the case of Japanese IT companies and accounting firms, we always ask them about risk management for server.
If your photocopy machine is on the lease, we advise you to check the lease agreement which shows who is responsible to purchase the insurance covering this leased photocopy machine. You may double insure your leased photocopy machine. This means you pay a double premium but will not receive the double claim payment.
－Your consulting service includes the review of the lease agreement!
T: Potential risks vary by business types and scales. Our professional team reviews and audits your policies to advise the proper coverage.
Things you have to know! The benefits of insurance Additional Clauses
T: In addition to the above, our strength is we customize your policy by adding varying types of clauses.
－Please share types of clause to us?
B: “Technical Advance Clause” is the clause that offers additional coverage to your movable properties like PC. If you add on this clause, you can replace your PC with the latest brand-new one.
Professional Support is given by Two Specialists
－Mr. Takei is a Chartered Accountant qualification holder and Ms. Bando is ACII holder. Two professionals with specialized knowledge have worked for the insurance agent in Malaysia!
T: Ms. Bando has a solid career at the Japanese insurance company and the leading insurance broker. Daniel, our local staff, had worked for 19 years at Tokyo Marine. Our strength is our professionals are knowledgeable and provide advice based on the principle of insurance.
B: Another strength is we have a USA chartered accountant within the team.
In case of consequential loss insurance to cover net profit and fixed cost (called as Gross Profit), we will assist you with calculating the gross profit properly because the calculation is complicated
T: Please ask us anything about insurance, we are confident to answer you.
One case happened recently. PIC of a company
Please feel free to contact us anytime about insurance. We will listen to you and find out what you need before recommending any insurance.
Possible Management Risks and the Special Exposures in Malaysia
―Both of you have long experience in Malaysia. What type of risks exists in Malaysia?
T: Fraud or dishonesty committed by any of your employees is often found in Malaysia.
The main example used to be a forged signature on a cheque. Nowadays, all payments are made through a back transfer. The recent case is that one of your staffs pretends your supplier and send an email stating that their banking details have changed, and asking you to make future payments to the new account. This is a change of Supplier Bank Details' Scam.
Fidelity Guarantee Insurance protects yourself/your company against financial loss caused by any fraudulent or dishonest acts committed by your employees. We advise you to purchase this insurance in Malaysia to protect yourself and your business from employee fraud.
B: In Malaysia, workers are well protected under the labor law. It is not easy for the employers to carry out dismissal, demotion, relegation and reduction in pay. If employees are not satisfied with the company’s decision, they will sue the company. It is a high possibility the company would lose a court case if it does not document in order.
In that case, we advise you to purchase Directors and Officers Liability insurance (D & O Liability insurance). D & O Liability insurance could protect all with certain authority such as directors, officers and managers of companies against personal liability that they might incur in respect of amounts which they are liable for, in respect of claims made against them arising out of the performance of their duties.
T: Malaysian workers tend to change jobs frequently, and, to avoid it, some companies offer attractive group medical insurance or group life insurance to employees.
― I’ve already made the agreement with another agent. Could I ask you to review my insurance policy?
T: Of course. We review your insurance policies even if you bought the insurance from the other agent.
Many companies keep a policy in a file drawer and they may have even forgotten.
It is important to review an insurance policy on a periodic basis.
A new additional office is rented, a factory is expanded and renovated or a new machine is purchased. You are not fully covered by the current insurance unless the sum insured of your insurance is increased and new assess are included accordingly.
We review and audit your policies to advise the proper coverage.
If you establish a factory or work on a new project, we offer you the right insurance coverage after review your business and the policy.
Please contact us anytime for a free quote on your commercial insurance policies.
・ Risk Management in Commercial Insurance 2 - 3 case studies of Japanese companies in Malaysia
・Service Overview of TOYOTA TSUSHO HOKEN AGENCY (M) SDN. BHD.