BNM seeks to encourage digital innovation in new proposed licensing framework for digital insurers and takaful operators

27 January 2022

On 4 January 2022, Bank Negara Malaysia (“BNM”) issued the Discussion Paper on Licensing Framework for Digital Insurers and Takaful Operators (“Discussion Paper”). 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. The framework will adopt a balanced approach and focus on encouraging more significant innovation, whilst promoting financial stability and protecting consumer interests.

The Discussion Paper complements BNM’s initiative on digital banks and digitalisation of the financial sector. It covers the entry requirements for licensed DITOs, such as the criteria in assessing an application and capital requirement, and explores new business models such as risk-sharing.

BNM 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. All feedback on the Discussion Paper should be submitted to BNM by 28 February 2022 via e-mail to DITF@bnm.gov.my.