At Bank Negara Malaysia’s Sasana Symposium on 28 and 29 July 2026, Governor Datuk Seri Abdul Rasheed Ghaffour set out three aspirations for the future financial sector: finance for a more resilient society, finance for a more prosperous society and a financial system prepared for future change.
Economic transformation is usually discussed in terms of capital, technology, productivity and jobs. But it also creates risk. The Symposium included extensive discussion of risks facing the economy and financial system, but the risks faced directly by businesses and households also matter: physical damage, business interruption, liability and other losses that insurance and reinsurance help them absorb.
As businesses invest in more expensive assets, specialised equipment and interconnected supply chains, these risks become more complex and the consequences of disruption become greater. Reinsurance may not be at the forefront of discussions on economic development, but it helps businesses invest, recover from losses and manage increasingly complex risks. In its capacity as Malaysia’s national reinsurer, Malaysian Re contributes to this broader agenda through its core reinsurance role and selected initiatives that strengthen risk understanding and market capability.
From recovery to preparedness
The most familiar role of reinsurance is to help insurers absorb large and volatile losses. By spreading risk across institutions and markets, it protects insurers’ balance sheets and preserves their ability to pay claims after a major event. This supports business continuity, speeds up recovery and helps prevent an insured event from becoming a wider economic problem.
While paying claims remains the fundamental purpose of reinsurance, its contribution to resilience begins well before a loss occurs. Through catastrophe modelling, portfolio analysis, stress testing and analysis of claims experience from different markets, reinsurers can help insurers and businesses identify where losses may arise, where exposures are concentrated and what measures may reduce the damage. Better information can lead to stronger assets, more resilient supply chains, improved business-continuity plans and appropriate insurance protection.
Flood modelling illustrates how this can work in practice. Flood risk is particularly relevant to Malaysia and the ASEAN region. Malaysian Re is working with specialist partners to make flood-modelling capabilities more accessible to the Malaysian insurance industry. Wider access can help insurers understand their exposures, manage accumulations and make more informed decisions on underwriting, mitigation and reinsurance protection.
Supporting investment and prosperity
A recurring theme at the Symposium was the need for finance to remain closely connected to the real economy if growth is to translate into wider prosperity. This includes ensuring that businesses can manage the risks associated with new investment.
Major industrial facilities, data centres, logistics hubs and renewable-energy projects require protection against property damage, construction risks, equipment breakdown, cyber threats and natural catastrophes. Investors and lenders need confidence that these risks can be managed.
Reinsurance forms part of the infrastructure supporting such investment. It allows insurers to provide protection for risks that may exceed their individual capacity, while bringing additional capital and expertise into the market. In turn, businesses can undertake larger and more complex investments, while lenders and investors gain confidence that unexpected losses can be absorbed.
This will become increasingly important as Malaysia expands its presence in advanced manufacturing, digital infrastructure, renewable energy and other higher-value activities. The risks may involve technologies or industrial processes with which local insurers have limited experience. A reinsurer can bring underwriting and claims expertise from its experience in other countries, while the local insurer or reinsurer complements this with its understanding of the client and domestic market.
What also matters is the knowledge transferred through the arrangement. Investment should leave behind stronger firms, skills and capabilities, and the same test can be applied to reinsurance. Its value should not be assessed only by the capacity supplied or premium ceded, but also by whether the relationship builds stronger risk-management capability within the market.
As domestic expertise develops, insurers should be better able to assess complex risks, determine appropriate retentions and participate more meaningfully in the business generated by economic growth.
Narrowing protection gaps
The purpose of economic reform is not simply stronger indicators, but better outcomes for households and businesses. Yet many remain underinsured or uninsured against a range of risks. When losses occur, individuals and businesses may depend on personal savings, borrowing or public assistance, placing greater strain on families, delaying recovery and amplifying the wider economic impact.
Closing protection gaps is therefore part of national resilience. While insurers distribute protection products, reinsurers can support them through capacity, risk analytics and product-development expertise. Research into affordability, emerging risks and areas of underinsurance can also help the market and policymakers understand where vulnerabilities exist and how they may be addressed.
Preparing for what comes next
Another aspiration is to future-proof the financial system by ensuring that it can adapt as technologies, business models and risks evolve.
Cyber insurance provides a clear example. The risk changes rapidly, is difficult to measure and can produce large, correlated losses. A vulnerability affecting widely used software or cloud infrastructure could trigger claims across many policyholders at once.
Artificial intelligence may raise similar questions involving liability, intellectual property, data use and automated decision-making. An AI system may produce inaccurate advice, misuse confidential information or generate content that infringes copyright. It may also be difficult to determine responsibility when several parties are involved.
Reinsurers can help because they work across multiple insurers, industries and markets, giving them a wider view of how exposures from new risks may arise, interact and accumulate. By sharing developments from other markets and working with specialists, they can help insurers develop realistic loss scenarios, refine policy wording and adjust their underwriting approaches as risks evolve. This gives businesses greater confidence to adopt new technologies and business models with appropriate protection.
Working across the wider system
The Symposium also emphasised the importance of co-creation. Complex national challenges cannot be solved by one institution acting alone, and the same is true of managing risk.
For Malaysian Re, this means combining its commercial role with selected initiatives that bring together various stakeholders to strengthen risk understanding and market capability. Malaysian Re’s flood-modelling work and its participation in the Medical and Health Insurance and Takaful reform agenda reflect this collaborative approach.
The same principle applies regionally, where industry forums, knowledge-sharing and practical cooperation allow reinsurers to exchange experience, address common challenges and draw on one another’s strengths. The value lies not in any one institution having all the answers, but in the collective capability created for the market.
Conclusion
Malaysia’s next phase of growth will depend on its ability to attract the right investments, develop new industries and adopt new technologies. It will also depend on whether the risks created by that transformation are understood and managed.
Reinsurance is not always visible in discussions about economic development. But it forms part of the infrastructure that allows insurers to support investment, helps the economy recover from major losses and gives the market access to knowledge that may not yet exist locally.
The financial sector will therefore need to develop two capabilities in parallel: the ability to finance opportunity and the ability to absorb risk. Sustainable progress requires both. A
Mr Ahmad Noor Azhari Abdul Manaf is President and CEO of Malaysian Re.