Following the release of the discussion paper earlier this year. Bank Negara Malaysia (BNM) today released the exposure draft on the licensing and regulatory framework. For digital insurers and takaful operators (DITOs) for written feedback. The central bank stated in a statement that the proposed framework for facilitating the entry of DITOs in Malaysia. That can provide compelling value propositions to realize inclusiveness, competition, and efficiency was highlighted in the exposure draft.”
The exposure document contains precise rules on the acceptable business models and distribution methods for DITOs. As well as licensing and application processes. This aims to benefit policyholders while promoting sustainable business practices. The Financial Services Act of 2013 or the Islamic Financial Services Act of 2013 will have rules that DITOs must abide by. According to Bank Negara Malaysia, DITOs will conduct their insurance or takaful business entirely through digital or electronic means.
As a result, new types of businesses and operational models are anticipated to emerge in order to better serve the demands of a wide range of consumers. The central bank keeps focus on good risk management and consumer protection while promoting these technologies.
Up to five licenses may be granted to applicants who meet all standards, according to Bank Negara Malaysia, which stated that it intended to finalize the policy paper and invite license applications in 2023. Alternative suggestions as well as clarifications or elaborations can be provided in response to the exposure draft.