The Central Bank of Malaysia (BNM), which regulates Malaysia’s financial services industry, has announced plans to create a regulatory framework for digital insurers in 2022.
The plans were announced on 24 January as part of the Central Bank’s financial sector blueprint for 2022–6.
The framework, which will cover both secular and Islamic takaful insurance firms, is intended to accelerate the digitisation of the country’s insurance industry, and will allow BNM to oversee plans to increase licensing of new digital and takaful firms from 2023.
BNM’s plans are part of wider initiative to encourage innovation across Malaysia’s financial sector, which the bank says would ‘serve the needs of various segments of the population’ by ‘reducing poverty, improving social and economic development, and enhancing the population’s financial resilience’.
Inclusion, competition, efficiency – a recipe for a digital insurance sector
An outline for the proposed framework was published as part of a discussion paper earlier this month on the bank’s website. Stakeholders are encouraged to submit feedback on the paper by the end of February. The discussion paper outlines three key value propositions, which BNM aims to achieve:
- Inclusion – Improving access to insurance for ordinary Malaysians – BNM notes that the majority of small to medium-sized businesses (SME) and Malaysian households are underinsured, and believes that the improved accessibility of insurtech could improve overall access and uptake
- Competition – BNM says that greater insurtech presence could increase the sector’s competitiveness, forcing firms to offer ‘on-demand, tailored and innovative products and services’ in line with the needs of customers, such as ‘health covers that connect customers to the wider digital healthcare ecosystem’
- Efficiency – BNM says that consumers ‘expect interactions with service providers to be efficient, simple and cost-effective,’ and that encouraging the adoption of digital technologies has the potential to offer faster turnaround times and cost savings for ordinary Malaysians.