by TMR / pic by MUHD AMIN NAHARUL
BANK Negara Malaysia (BNM) issued a discussion paper on licensing framework for digital insurers and takaful operators yesterday, which outlines the proposed framework for licensing new digital insurers and takaful operators (DITOs) to encourage digital innovation in the insurance and takaful sector.
It also complements the central bank’s initiative on digital banks and digitalisation of the financial sector.
“DITOs are expected to contribute to a more inclusive, competitive, efficient insurance and the takaful sector in line with evolving needs of consumers.
“The proposed framework aims to attract new digital players that can offer innovative solutions to address critical protection gaps among the unserved and underserved market segments, as well as enhance customer experience and elevate trust,” BNM governor Tan Sri Nor Shamsiah Mohd Yunus stated in the release yesterday.
She added the framework will adopt a balanced approach.
The focus is to encourage more significant innovation while promoting financial stability and protecting consumer interests.
“The Discussion Paper covers the requirements for entry, such as criteria in assessing an application and capital requirement, and explores new business models such as risk-sharing,” the governor added.
The central bank aims to issue an Exposure Draft upon obtaining feedback from the Discussion Paper.
This will be followed by a Policy Document on prudential and business conduct requirements for DITOs in 2022.
The applications for a DITO licence will be open at a later date with the initial paid-up capital could be set at about RM40 million, the central bank statement noted.
Written feedback on the Discussion Paper is due by Feb 28, 2022.
The central bank is expected to issue four to five digital bank licenses this year.