Malaysian Central Bank said Tuesday that it will issue licenses to any digital insurers and Takaful operators (DITOs) that meet the requirements.

Bank Negara Malaysia (BNM) said in a statement that it has issued the policy document on licensing and regulatory framework for DITOs.

It said in line with the Financial Sector Blueprint 2022-2026 strategic thrust to advance the digitalization of the financial sector, this policy document sets out requirements to facilitate the entry of DITOs that can deliver strong and meaningful value propositions of inclusion, competition and efficiency.

Taking into account the feedback received and insights gained from various stakeholders, BNM has further refined several aspects of the entry requirements proposed in earlier consultations.

DITOs will observe a foundational phase over a period between three years and up to seven years to demonstrate their viability and operational soundness.

DITOs will also be accorded a lower minimum paid-up capital during the foundational phase to be more proportionate to DITO’s business operations at their initial stages.

DITOs are characterized by their digital operations, with innovative business models and products to better meet consumer needs.

Once in operations, DITOs are envisioned to close critical protection gaps in digitally-focused segments alongside existing ITOs and other players in the insurance and takaful
value chain.

Recognizing this prospect, BNM will issue licenses to applicants who can successfully demonstrate their capacity and capability to achieve the intended policy outcomes while still preserving a strong focus on risk management and consumer protection.

Interested applicants are invited to submit formal applications to BNM between January 2, 2025 and December 31, 2026.

Prior to submitting the applications, all interested applicants must consult BNM and may start to do so from 1 October 1, 2024.

Interested applicants are expected to meet the assessment criteria covering areas such as:
• Prudential aspects, e.g. the character and integrity of applicants, the nature and sufficiency of financial resources, soundness and feasibility of business
and technology plans;
• Business conduct and consumer protection;
• Shariah (where relevant);
• Anti-money laundering and terrorism financing measures; and
• Meaningful value propositions to serve the best interest of Malaysia.

All interested applicants must ensure that the application procedures described in this policy document are duly observed, together with other relevant policy documents such as the application procedures for new licenses under the Financial Services Act 2013 and Islamic Financial Services Act 2013, and the application procedures for acquisition of interest in shares and to be a financial holding company.

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