PriyaPatel
TLDR:
- Fintech and insurtech firms are expected to apply for digital insurance licences in Malaysia.
- Bank Negara Malaysia is giving potential applicants a two-year window starting from Jan 2, 2025.
Key Elements:
Industry experts predict that companies such as PolicyStreet, Bjak, Fi Life, and DearTime are likely to apply for digital insurance or takaful operator licences in Malaysia. The introduction of a regulatory sandbox in 2016 has paved the way for start-ups to move up the insurance value chain. Bank Negara Malaysia has opened up applications for digital insurers and takaful operators, providing a two-year timeframe for submissions. The central bank is not limiting the number of licences available, unlike in the case of digital banks.
Beyond start-ups, the industry may see participation from foreign insurers like China’s Ping An and Hong Kong’s ZA Insure. Existing incumbent players, particularly those without existing takaful businesses, may also express interest in obtaining a DITO licence. However, experts believe that incumbents are less incentivized to apply as they can already conduct digital business under their existing licences.
Applicants are expected to form consortiums to strengthen their applications, with a focus on wide customer access, product and underwriting expertise, and tech/data capabilities. The entry requirements for DITO licences have been set at a minimum paid-up capital of RM30 million during the foundational phase.
Key opportunities for DITO players in Malaysia include addressing protection gaps for various segments such as mid-to-low income earners, SMEs, and health insurance. The shift towards digital insurance is expected to bring about disruption in the industry, encouraging incumbents to enhance their offerings and customer experiences.
