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Licensing and Regulatory Framework: Digital Insurers and Takaful Operators (DITOs)
In Malaysia, 90% of the population are underinsured and over 85% of small and medium enterprises (SMEs) have inadequate coverage, leaving them vulnerable to business disruptions and financial risks.
To close Malaysia’s protection gap, Bank Negara Malaysia (BNM) recently released the policy document on the licensing and regulatory framework for Digital Insurance and Takaful Operators (DITOs).
DITOs need to develop strong value propositions to serve the unserved and underserved market, provide competitive offerings and enhance consumer experience via the adoption of advanced digital technology and innovative business models.
To develop a successful DITO application, financial institutions need to consider the following:
- Shareholder suitability
- Seven-year business plan
- Foundational phase
- Exit plan
- Distribution channels
- Technology
BNM’s DITOs policy will facilitate the entry of licensed DITOs with strong value propositions and innovative businesses. To compete in digitally focused market segments, DITOs must look beyond the traditional notions of the underserved and unserved, and use transformative technologies and data.