Bank Negara Malaysia (BNM) has released the Policy Document on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators (DITOs). This new policy is a significant step towards advancing the digitalisation of Malaysia’s financial sector, in line with the Financial Sector Blueprint 2022–2026. 

The policy document aims to facilitate the entry of Digital Insurers and Takaful Operators (DITOs) that can offer strong value propositions focusing on inclusion, competition, and efficiency. To achieve this, BNM has refined the entry requirements based on feedback from various stakeholders.

DITOs will undergo a foundational phase lasting three to seven years, during which they will operate with a lower minimum paid-up capital. This approach is designed to be proportionate to their early-stage business operations. During this period, DITOs are expected to introduce innovative business models and products that address consumer needs more effectively and close protection gaps in digitally-focused segments, complementing existing insurance and takaful providers.

BNM will then issue licenses to applicants who successfully demonstrate a strong capacity and capability to meet the intended policy outcomes, with a particular focus on risk management and consumer protection. It is also worth noting that BNM has removed the previous limit of five licenses announced in November 2022, allowing for a broader range of applicants. Applications for licenses will be accepted over a two-year period from January 2, 2025, to December 31, 2026. Prospective applicants are required to consult with BNM starting from October 1, 2024, via the dedicated email address DITF@bnm.gov.my.

The assessment criteria for applicants include prudential aspects, business conduct, consumer protection, Shariah compliance (where relevant), anti-money laundering measures, and terrorism financing measures. Additionally, applicants must present meaningful value propositions for Malaysia and adhere to the application procedures outlined in the policy document, together with the Application Procedures for new licenses under the Financial Services Act 2013 and the Islamic Financial Services Act 2013, as well as the Application Procedures for Acquisition of Interest in Shares and to be a Financial Holding Company.

Interested parties can read the policy document here. 

(Source: BNM , Fintech News Malaysia) 

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