With my property insured under a mortgage, is it true that it is compulsory for me to purchase insurance coverage from the bank’s panel of insurers otherwise they might not approve my loan?

No, as a consumer, you have the right to arrange your own insurance. You may refer to the excerpt from BNM Prohibited Business Conduct below.

“As provided under the Product Transparency and Disclosure Guidelines, while the FSP may provide quotations for the insurance or takaful o­ffered by the FSP’s panel, the financial consumer must be allowed to use the service of non-panel insurers or takaful operators if they choose to do so.” (FSP refers to Financial Service Providers)