Risk-based capital deadline by 2009 (October 30, 2007)

KUALA LUMPUR: Insurance companies must implement the risk-based capital (RBC) framework by Jan 1, 2009, Bank Negara deputy governor Datuk Zamani Abdul Ghani said yesterday.
He said the RBC framework, aiming to create a strong risk management culture, started its parallel run in 2007 with a two-year timeframe but insurers who were ready would be allowed by the central bank to implement it next year.
“The implementation of the RBC framework will give more flexibility if the (insurance) operator is good,” he told reporters at the 23rd Pacific Insurance Conference here.
The new requirement is to facilitate more efficient capital structures and provide greater investment flexibility to insurers without compromising on prudential standards.
Under the risk-based regulatory regime, responsibility for the implementation of risk management, market conduct governance and assessment of risks and management of the financial conditions of an insurer, will increasingly rest with its board of directors and senior management.
Earlier, Zamani said the insurance industry, including the takaful sector, recorded a combined premium growth of nearly 10% for both life and general segments to reach RM13bil in the first half of this year.
He said the assets of life and general insurance funds registered a double-digit growth of 14% to RM116bil as at June 30 this year, up from 11% in the previous corresponding period.
On the takaful industry, Zamani said the market penetration level remained low, with less than 5% in many Muslim countries and 6.8% in Malaysia, thus providing significant market potential that remained untapped. – Bernama

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