Bank Negara Malaysia (BNM) yesterday issued the "Policy Document on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators (DITOs)".
In line with the “Financial Sector Blueprint 2022–2026” strategic thrust to advance the digitalisation of the financial sector, this policy document sets out requirements to facilitate the entry of DITOs that can deliver strong and meaningful value propositions of inclusion, competition, and efficiency.
Under the framework, DITOs will observe a foundational phase of between three years and 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 DITO’s business operations at their initial stages.
DITOs are characterised by their digital operations, with innovative business models and products to better meet consumer needs. DITOs are envisioned to close critical protection gaps in digitally-focused segments alongside existing ITOs 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.
Important dates
Interested applicants are invited to submit formal applications to BNM between 2 January 2025 and 31 December 2026. Prior to submitting the applications, all interested applicants must consult BNM and may do so from 1 October 2024 via DITF@bnm.gov.my.
Interested applicants are expected to meet the assessment criteria covering areas such as:
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Prudential aspects, e.g. the character and integrity of applicants, the nature and sufficiency of financial resources, soundness and feasibility of business and technology plans;
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Business conduct and consumer protection;
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Shariah (where relevant);
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Anti-money laundering and terrorism financing measures; and
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Meaningful value propositions to serve the best interest of Malaysia.
The policy document can be found here.