Regulator issues draft to support digital innovation

Bank Negara Malaysia has issued a draft on Licensing Framework for Digital Insurers and Takaful Operators. The discussion paper outlines the proposed framework for licensing new digital insurers and takaful operators (DITOs) to encourage digital innovation in the insurance and takaful sector.

DITOs are expected to contribute to a more inclusive, competitive, efficient insurance and 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,” said Bank Negara Malaysia governor Tan Sri Datuk Nor Shamsiah Mohd Yunus.

The framework will adopt a balanced approach. The focus is to encourage more significant innovation, whilst 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 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. The Bank invites written feedback on the Discussion Paper by 28 February 2022.