Malaysia’s central bank has invited applications for digital insurer and takaful operator licences to be submitted from January 2, 2025 to December 31, 2026.
Bank Negara Malaysia adds that it will issue the licences to any digital insurer and takaful operator that meets its requirements and that it will not limit the number of licences to be issued. Previously, when issuing licences for digital banks, the central bank limited the number of licences to just five.
“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,” the central bank says in a statement on July 10.
Bank Negara says it had further refined several aspects of the entry requirements proposed in earlier consultations based on feedback received and insights gained from various stakeholders.
“Digital insurer and takaful operators will observe a foundational phase over a period between three years and up to seven years to demonstrate their viability and operational soundness. Digital insurer and takaful operators will also be accorded a lower minimum paid-up capital during the foundational phase to be more proportionate to digital insurer and takaful operator’s business operations at their initial stages,” it says.
The central bank also says that it envisions digital insurer and takaful operators 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.
According to a report by Swiss Re, Malaysia’s life insurance penetration rate, as a percentage of the gross domestic product, was 3.7% in 2022. In contrast, South Korea has a penetration rate of 5.4%, with Singapore at 7.4%, and Hong Kong at 16.6%.
