BNM to open licences to digital insurers that meet requirements

KUALA LUMPUR (July 9): Bank Negara Malaysia (BNM) said on Tuesday it will issue licences to any digital insurers and takaful operators (DITOs) that meet its requirements instead of limiting the number of licences to just five.

Applications are open starting Jan 2, 2025 to Dec 31, 2026, though interested applicants must consult with the central bank before submitting their bids, BNM said in a statement. A policy document on licensing and regulatory framework has been issued, it added.

Interested applicants must meet specific assessment criteria covering areas such as prudential aspects (including the character and integrity of applicants, the nature and sufficiency of financial resources, and the soundness and feasibility of business and technology plans), business conduct and consumer protection, adherence to shariah principles where relevant, anti-money laundering and terrorism financing measures, and delivering meaningful value propositions that benefit Malaysia’s interests

Consultations with BNM, which must be done before submitting the applications, will commence on Oct 1, 2024.

“Taking into account the feedback received and insights gained from various stakeholders, BNM has further refined several aspects of the entry requirements proposed in earlier consultations. DITOs will observe a foundational phase over a period [of] 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 DITOs’ business operations at their initial stages,” said BNM.

“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 ITOs (insurers and takaful operators) and other players in the insurance and takaful value chain. Recognising this prospect, BNM 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,” the central bank added.

According to BNM, all interested applicants must adhere to the application procedures outlined in the policy document, along with other relevant policy documents, such as the application procedures for new licences under the Financial Services Act 2013 and Islamic Financial Services Act 2013, and the application procedures for acquisition of interest in shares and to be a financial holding company.

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