The growth of insurance and takaful sector in Malaysia had hit a plateau in recent years. Life insurance penetration remained stagnant at 55% over the past three years while domestic capacity for larger and more specialised risks appears to be reaching its limits for general insurance, said Datuk Muhammad Bin Ibrahim, Governor of Bank Negara Malaysia (BNM), at the 6th Malaysia Insurance Summit 2016 in Kuala Lumpur in October.
The Governor urged the industry to revitalise itself and stay ahead of the curve through focus on talent development, technology and improving consumers’ trust.
He added that BNM would support the establishment of regional centre of excellence by insurers and takaful operators to serve the regional and international markets.
Financial Technology Regulatory Sandbox Framework
As for technology, Datuk Muhammad said that the industry must leverage on new technology to be more efficient and agile as the removal of tariffs and changes in framework will drive the growth of new products and delivery channels.
Being a catalyst of innovation, BNM issued details of the Financial Technology Regulatory Sandbox Framework, following a one-month consultation on the proposed framework which was released on 29 July. This will enable FinTech solutions to be tried in a controlled live-test environment, subject to appropriate safeguards and regulatory requirements.
Pure protection product without commission via direct channel in 2017
Datuk Muhammad also announced that insurers are required to offer pure protection product thought a direct channel without commissions starting next year. “The high internet and mobile phone penetration in Malaysia suggests that internet or mobile insurance makes good sense,” he said.
Furthermore, the industry must explore the new cost-efficient delivery channels as the industry has not done well in this respect. Microinsurance and microtakaful should be further developed to improve access to the underserved segment of society, he added.
Disruption to insurance industry
In his presentation, Mr Bob Hayward, Principal, Management Consulting, Asia Pacific at KPMG, emphasised that insurers are particularly vulnerable to disruption as they have fewer touch points with their customers than other industries. Blockchain Technology has a large potential impact on the insurance industry, but it is still very early days and success relies on cross-industry collaboration, he said.
Mrs Lee Li Hui, Product Innovation Specialist, Health & Medical Solutions Asia, Swiss Re, also highlighted how smart devices such as wearable technology help insurance companies to collect information and understand their customers’ behaviour. The wearable market is expected to worth more than US$12 billion by 2018 with lifestyle and fitness trackers dominate 60% of the market share.
The 6th Malaysia Insurance Summit was hosted by the Malaysian Insurance Institute with the theme “Winning Strategies for Tomorrow’s Uncertainties: Rethinking the Current Paradigm”. The conference was attended by almost 150 delegates and 20 speakers around the region.