Malaysia e-Invoicing Guide For Insurance Industry 

Malaysia’s insurance and takaful industries play a crucial role in the country’s economy, offering vital risk management solutions while contributing significantly to financial stability. Managing diverse policies, processing claims, and ensuring compliance with Sharia principles make invoicing in this sector uniquely complex. To simplify reporting and maintain regulatory compliance, IRBM has released e-invoicing guidelines and industry-specific FAQ clarifications relevant to insurance and takaful companies. In this blog, we will explore how e-invoicing is implemented in these industries and provide practical insights to help companies stay compliant and efficient.

Scope of E-Invoicing in Insurance and Takaful

The implementation of e-invoicing in Malaysia’s insurance and takaful sector covers a wide spectrum of financial transactions, reflecting the complexity of the industry. It applies to both business-to-business (B2B) and business-to-consumer (B2C) interactions, ensuring that all relevant revenue and expenses are accurately documented and compliant with IRBM requirements.

Revenue Sources Requiring E-Invoices

Insurance and takaful companies must issue e-invoices for all primary sources of revenue. This includes policy premiums collected from policyholders, which form the bulk of industry income. Reinsurance agreements also require e-invoicing to maintain transparency between cedants and reinsurers. Claims management fees, underwriting services, and commissions paid to agents and brokers must be documented through e-invoices to comply with regulatory standards. Profit-sharing from takaful pools and administrative fees must be documented according to IRBM e-invoice rules, typically via self-billed e-invoices depending on the arrangement. Ensuring these revenue sources are captured electronically helps companies maintain accurate records, reduce errors, and facilitate audits.

Expenses Covered by E-Invoicing

E-invoicing also applies to key expenses within the insurance and takaful sector. Claims payouts, reinsurance premiums, and commissions must be documented through the appropriate e-invoice or self-billed e-invoice workflow. Regulatory fees and applicable taxes that qualify as business expenses must be documented using e-invoices for IRBM validation. By standardizing expense reporting through e-invoicing, insurance and takaful companies can improve operational efficiency and maintain clear compliance with Malaysia’s tax regulations.

Read: Malaysia E-Invoicing System: What Businesses Need to Know

General E-Invoicing FAQs

1. Can insurance companies issue a single e-invoice for multiple policyholders who don’t need individual e-invoices?

Yes. Insurance and takaful providers can issue consolidated e-invoices for transactions where policyholders do not require separate e-invoices. Regular statements or bills can still be issued for internal records, but these are not needed for IRBM validation. Consolidated e-invoices must be issued within seven calendar days after the end of the relevant month

2. Is it possible to use annual premium statements to create consolidated e-invoices?

Yes. Annual premium statements may be used to prepare consolidated e-invoices for policyholders who do not require individual e-invoices, following e-invoicing effective dates

For instance, if a statement covers January to December 2024 and is available in February or March 2025, the insurer can submit the entire year’s data, including months prior to the e-invoicing rollout.

3. Do insurers need to exclude pre-implementation data when submitting e-invoices?

No. IRBM allows insurers to include pre-implementation periods when preparing annual statement-based consolidated e-invoices.

4. Can policyholders request e-invoices outside the usual statement cycle?

Yes. Policyholders can request e-invoices on an ad-hoc basis. Insurance companies should guide them on how to submit these requests, which are typically processed during the regular premium statement cycle.

5. Can e-invoices be issued for products that don’t qualify for tax relief?

Yes. Policyholders may request e-invoices regardless of tax relief eligibility. Insurance providers must issue the e-invoice upon request, covering all policy types, including life, medical, education, and other products.

Read: Step-by-Step Guide to Create e-Invoices via MyInvois Portal

E-Invoicing for Underwriting and Distribution

E-invoicing for underwriting and distribution in Malaysia requires insurance and takaful companies to provide detailed, accurate information in their invoices. This ensures transparency, regulatory compliance, and proper record-keeping for both insurers and policyholders.

Detailed Breakdown of Premiums

E-invoices must include a full breakdown of premiums paid for each insurance product. This includes Life, Medical, and Other categories, along with the appropriate IRBM classification codes:

• 014: Insurance – Education and medical benefits
• 015: Insurance – Takaful or life insurance
• 022: Others
• 024: Private retirement scheme or deferred annuity scheme

Providing this detailed breakdown allows for better compliance reporting and makes e-invoices more informative for policyholders.

Buyer’s Details for Joint Policies and Minors

For joint insurance policies, the principal policyholder should be listed as the Buyer in the e-invoice. If the secondary policyholder requests documentation, a duplicate e-invoice may be issued for the same transaction. When the policyholder is a minor, the Buyer’s details should reflect the parent, guardian, or legally responsible party, ensuring proper documentation.

Handling Collections on Behalf

Insurance companies often collect fees such as stamp duties or third-party charges alongside premiums.

• If such charges are billed to the insurer, they must be included in the e-invoice, although they are not recognized as income.
• If the collection is invoiced directly to the policyholder, there is no need to include it in the insurer’s e-invoice.

This distinction ensures accurate accounting and classification for IRBM reporting purposes.

Insurance Sold via Intermediaries

Insurance sold through intermediaries can be handled in two scenarios:

Scenario 1: Master Policy via Intermediary

• The insurance company issues the e-invoice to the intermediary.
• The intermediary then invoices the end customer.
• If the intermediary does not issue an invoice to the end customer, the insurance company can invoice them directly.
  

Scenario 2: Individual Policy via Intermediary

• The insurance company issues the e-invoice directly to the policyholder, even if premiums pass through an intermediary.
• The intermediary is not considered the Buyer unless they are the policyholder.

Policy Termination and Refunds

When a policy is terminated and a refund is due, insurers must issue a refund note e-invoice. This process excludes payments made in error, overpayments, or returned security deposits. Refund e-invoices must follow existing billing procedures, maintaining transparency for policyholders.

Employer-Collected Contributions and “Cash Before Cover” Policies

For employer-collected contributions, the Buyer remains the employee policyholder, as the employer is only acting as a collection agent.

Existing practices for “cash before cover” policies where premiums are paid before policy issuance remain unchanged. E-invoices can still be issued upon policy issuance or when premiums are due for B2B/group transactions, while annual statements apply for B2C policies.

E-Invoicing For Claims and Benefit Payments

In Malaysia, e-invoicing for insurance claims and benefit payments ensures transparency, accuracy, and compliance with IRBM guidelines. Insurance companies must issue self-billed e-invoices for claims, compensation, and benefit payments when recipients do not issue e-invoices themselves. This applies whether the recipient is an individual or a business, and it allows insurers to consolidate e-invoices for multiple payments to individuals who are not engaged in business.

Self-Billed E-Invoices for Claims and Benefits

Self-billed e-invoices designate the policyholder or beneficiary as the Supplier, even if the claim payment passes through third parties such as hospitals, workshops, or attorneys. This approach ensures proper documentation for both regulatory compliance and internal reporting. Consolidated e-invoices can be used for multiple benefit payments, simplifying recordkeeping and reducing administrative work.

Workshops and Salvage Contractors

When handling damaged assets, the issuance of e-invoices depends on asset ownership:

• If assets are transferred to the insurance company for disposal, the insurer must issue the e-invoice to workshops or salvage contractors.
• If the asset remains under a business policyholder’s ownership, the policyholder issues the e-invoice; if the policyholder is an individual, the workshop issues a self-billed e-invoice
• For individual policyholders not engaged in business, foreign entities, or exempted persons, the workshop or salvage contractor issues a self-billed e-invoice.

This ensures that e-invoicing aligns with asset ownership while maintaining compliance with IRBM requirements.

Knock-for-Knock Accident Arrangements

In Knock-for-Knock arrangements, where two parties are involved in an accident, e-invoicing ensures proper tracking of claims and reimbursements. Insurers issue self-billed e-invoices to policyholders who do not issue e-invoices for accident claims under Knock-for-Knock arrangements. For recoupment transactions between insurers, credit notes or cancellations are applied as required, based on the timing of the initial e-invoice issuance.

Consolidated Self-Billed E-Invoices for Individuals

Insurance companies may issue consolidated self-billed e-invoices for individuals not engaged in business. This approach covers multiple claims or benefit payments in a single e-invoice, simplifying reporting and reducing paperwork. Consolidated e-invoices also ensure that all claims-related payments are accurately documented for regulatory compliance and internal audit purposes.

E-Invoicing for Agents, Dealers, and Distributors

Pass-Through Transactions for Fees

Insurance companies often pay certain fees on behalf of agents, dealers, or distributors, such as:

• Registration fees for licensing
• Examination or certification fees

These payments are pass-through transactions, meaning the insurance company recovers the amount from the agent or distributor.

IRBM Requirements Based on Invoicing Flow

The Inland Revenue Board of Malaysia (IRBM) has specific guidance on how these transactions should be handled for e-invoicing:

1. If the third-party body issues the e-invoice to the insurance company:

• The insurance company must include the recovered amount in the e-invoice issued to the agent or distributor.
• The recovered amounts are not treated as income and must be classified using IRBM’s pass-through codes.
• The company should select the appropriate classification code as required by IRBM.

2. If the third-party body issues the e-invoice directly to the agent or distributor:

• The insurance company does not include this amount in its e-invoice to the agent or distributor.

E-Invoicing for Reinsurance Services

Local vs Foreign Reinsurer Invoicing Requirements

Reinsurance transactions involve specific e-invoicing rules depending on the location of the reinsurer:

• Local reinsurer or local branch of a foreign reinsurer: The reinsurance company issues an e-invoice to the cedant (insurance company) for the reinsurance services or expense recoveries.
• Foreign reinsurer operating outside Malaysia: The insurance company (cedant) must issue a self-billed e-invoice to the foreign reinsurer.

These rules ensure compliance with IRBM regulations and proper documentation for audit purposes.

Using Finalized Statements for E-Invoice Purposes

Insurance companies and reinsurers often exchange finalized statements summarizing premiums, claims recoveries, and other reinsurance transactions.

• These finalized statements can be used for e-invoice purposes, simplifying the invoicing process.
• Companies may issue e-invoices based on these statements, rather than creating individual invoices for every single transaction.

This approach reduces administrative burden while maintaining accurate reporting and compliance with IRBM e-invoicing guidelines.

Net-Basis Reporting for Reinsurance Transactions

In some cases, reinsurance transactions can be reported on a net basis:

• Only the net amount due between the cedant and reinsurer is reflected in the e-invoice.
• This is particularly useful for large-volume or recurring transactions, where multiple premiums and claims offset each other.

Net-basis reporting may be used when supported by finalized statements exchanged between the cedant and reinsurer, ensuring alignment with IRBM rules.

Read: How To Submit Consolidated e-Invoice Via MyInvois Portal In Malaysia 

Other Considerations

Interfund Charges (Investment-Linked, Wakalah Fees, Actuarial Surplus)

Most interfund transactions such as qard transfers or actuarial surplus do not require e-invoicing; however, wakalah fees that represent charges to participants may require e-invoicing depending on contractual flow. However, if your insurance or takaful company currently issues invoices to document these internal transfers, you may continue this practice when implementing e-invoicing.

Transitional Issues: Policy Endorsements and Original Invoice References

When policy endorsements are issued after e-invoicing implementation, the IRBM provides specific guidance on referencing original invoices:

• New e-invoice for policy endorsement: No reference to the original invoice is necessary if it was issued before e-invoicing.
• Debit, credit, or refund note e-invoices:
  • For original invoices issued before e-invoicing: Input “NA” in the “Original e-invoice Reference Number” field.
  • For original e-invoices: Input the IRBM unique identifier of the original e-invoice.

Malaysian Motor Insurance Pool (MMIP) E-Invoicing Process

The MMIP has a unique e-invoicing workflow due to its role in motor insurance pooling:

• Premiums from policyholders: MMIP is responsible for issuing e-invoices directly to policyholders.
• Sharing income and expenses: MMIP may continue issuing statements to insurance companies for apportioned income and expenses. These statements can be used for net-basis e-invoicing.
• Insurance company as MMIP agent: When earning commissions, insurance companies receive self-billed e-invoices issued by MMIP.

Read: Xero Malaysia Guide to e-Invoicing and Peppol Compliance

Conclusion

E-invoicing is transforming Malaysia’s insurance and takaful industry by ensuring compliance with IRBM regulations while enhancing operational efficiency. Companies that follow the guidelines can enjoy improved transparency, simplified reporting, and streamlined claims management, reducing administrative errors and accelerating financial workflows. By embracing e-invoicing, insurance and takaful providers not only meet regulatory obligations but also position themselves for greater business efficiency and customer satisfaction.

How FastLane Group Can Help

FastLane Group supports insurance and takaful companies in navigating the complexities of Malaysia’s e-invoicing requirements. Our team offers:

• Guidance on IRBM compliance
• Seamless integration solutions 
• Staff Training and Onboarding
• Technical and Regulatory Support

Partnering with FastLane Group allows your company to streamline invoicing and enhance reporting transparency. Contact us today for a free consultation!