22nd February 2023 - 2 min read
The Malaysian Takaful Association (MTA) has said that digital insurers and takaful operators (DITOs) will be able to help Malaysia increase its takaful penetration rate from 18.6% in 2021 to 30% by 2027. This is as the country continues to strive for an overall insurance penetration rate of 75%, as previously set by the government.
Chief executive officer of MTA, Mohd Radzuan Mohamed said that DITOs will play a big role in digitally transforming the insurance and takaful segments. “Hopefully, DITOs will be able to supplement some numbers to the target rate as we all know that insurance and takaful operators offer diverse products and services. DITOs can help operators reach untapped areas to introduce their products to the people,” he said.
Chief executive officer of Deloitte Malaysia, Yee Wing Peng, too, echoed the sentiment, adding that the upcoming introduction of the DITO framework will help streamline the process. This is as the framework will promote innovative product design, better risk-response underwriting practices, more efficient claims management process, and seamless service to consumers.
For context, Bank Negara Malaysia issued its exposure draft for the DITO framework in November 2022, seeking written feedback from industry players. This came after the issuance of the discussion paper back in January, in the same year. Essentially, the framework aims to facilitate the entry of DITOs to serve the unserved and underserved markets, as well as provide better offerings, via the adoption of technology and innovative business models.
Yee further shared that Malaysia’s insurance penetration rate currently stands at 4.7%, in comparison with the higher global average of 7.2%. Additionally, only 25% of working adults in the B40 household group have purchased some form of life insurance or family takaful cover – significantly lower than the 59% of insured working adults recorded for the general population.
“DITOs can play an important role to close the protection gap, especially within the B40 household,” Yee said, adding that DITOs can also contribute towards better social and economic benefits with its services, such as reducing poverty. In turn, this will help Malaysia in its transition to become a digitally driven, high-income developed nation.
(Source: Malay Mail)
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world