Stronger base for insurance sector

Tuesday June 23, 2009
Stronger base for insurance sector

KUALA LUMPUR: The local insurance industry is undergoing a transformation to provide a strong foundation for a more resilient and competitive industry in support of Malaysia’s economic development agenda.

Bank Negara assistant governor Datuk Muhammad Ibrahim said Malaysia had implemented the risk-based capital framework this year and new product regulations.

He said these developments were part of a broader move towards introducing a more principle-based regulatory regime that would allow greater flexibility for insurers to compete and improve performance.

“Later this year, Bank Negara will consult the industry on risk management standards that insurers are expected to observe as part of this evolution,” he said in his keynote address at the LOMA/LIMRA 17th Annual Strategic Issues Conference yesterday.

The conference, themed The New Global Economy: Resilience in Challenging Times, is jointly organised with the Life Insurance Association of Malaysia.

It aims to serve as a platform for captains of the financial services sectors operating in Asia to discuss the latest development in the industry.

Muhammad said the distribution channels for insurance products and services had also been broadened significantly with the development of bancassurance and financial advisers.

“This will contribute towards enhancing revenue and reducing costs, while enhancing consumer protection and improving the insurance penetration rate in Malaysia,” he said.

In April, Bank Negara announced a liberalisation package for the financial sector aimed at strengthening Malaysia’s economic inter-linkages with other economies and enhancing the role of the financial sector as a key enabler and catalyst of economic growth.

In the insurance sector, the measures included the issuance of new family takaful licences with higher limits of up to 70% on foreign equity participation in insurance companies and takaful operators, and incentives for the consolidation and rationalisation of the insurance industry.

They also included the removal of restrictions on the establishment of branches and bancassurance tie-ups, and greater flexibility to employ specialist expatriates. — Bernama

http://thestar.com.my/news/story.asp?file=/2009/6/23/business/4171897&sec=business