Bank Negara to open licences to digital insurers that meet its requirements

Bank Negara Malaysia will issue licences to any digital insurer and takaful operator that meets its requirements and will not limit the number of licences to just five.

In a statement, the central bank said applications are open starting Jan 2, 2025 to Dec 31, 2026.

“Licences will be issued to successful applicants who can meet the requirements of the framework with strong capacity and capability to achieve the intended policy outcomes.”

Bank Negara said it had issued the policy document on licensing and regulatory framework for digital insurers and takaful operators (DITOs).

“In line with the Financial Sector Blueprint 2022–2026 strategic thrust to advance the digitalisation of the financial sector, this policy document sets out requirements to facilitate the entry of DITOs that can deliver strong and meaningful value propositions of inclusion, competition and efficiency.”

Taking into account the feedback received and insights gained from various stakeholders, Bank Negara said it had further refined several aspects of the entry requirements proposed in earlier consultations.

“DITOs will observe a foundational phase over a period between three years and up to seven years to demonstrate their viability and operational soundness.

“DITOs will also be accorded a lower minimum paid-up capital during the foundational phase to be more proportionate to DITO’s business operations at their initial stages.”

DITOs are characterised by their digital operations, with innovative business models and products to better meet consumer needs. Once in operations, DITOs are envisioned to close critical protection gaps in digitally-focused segments alongside existing insurers and takaful operators and other players in the insurance and takaful value chain.

“Recognising this prospect, Bank Negara will issue licences to applicants who can successfully demonstrate their capacity and capability to achieve the intended policy outcomes, while still preserving a strong focus on risk management and consumer protection.”

Bank Negara said interested applicants are expected to meet the assessment criteria covering areas such as prudential aspects (for example, the character and integrity of applicants, the nature and sufficiency of financial resources, soundness and feasibility of business and technology plans.

Other assessment criteria include business conduct and consumer protection; Shariah (where relevant); anti-money laundering and terrorism financing measures; and meaningful value propositions to serve the best interest of Malaysia.

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