KUALA LUMPUR (Nov 28): Bank Negara Malaysia (BNM) says domestic insurers have to do more to develop their own competitive advantage against foreign players, or risk being driven out of the market in the face of an increasingly integrated regional insurance market.
At the third instalment of the Asean Insurance Summit here today, BNM assistant governor Adnan Zaylani said home-grown insurers, having benefitted from the partnership with their foreign counterparts, should do more to serve the protection and financial needs in not just their home country, but Asean too.
"Having domestic players as part of the insurance landscape is a goal that is shared by most countries, if not preferred by all... Unfortunately, many domestic players have yet to develop their own competitive advantage.
"They have yet to reach a sizeable scale of operations in order to compete effectively against their foreign counterparts," Adnan said in his keynote address.
While he recognised the positive and extensive contribution of foreign insurers to domestic partners, he said the translation of these benefits to the development of the local insurance market, when compared against foreign insurers' expansion in Asean, remains uneven.
"As the Asean region moves into the next phase of growth and progresses towards becoming a more integrated market, domestic players will need to strengthen their capacity and capability, or risk being driven out of the market," he added.
Adnan also highlighted the growing demands of society to look into the needs of the underserved, which remain vast across and within Asean.
"Working towards promoting equitable and inclusive growth is necessary for the long-term sustainability of Asean.
"The industry should explore these less penetrated markets through new strategies and strengthened capabilities. Nonetheless, expecting markets to effectively provide for the needs of the underserved may be challenging," he said.
Hence, Adnan said Malaysia is in the midst of finalising details for an insurance scheme targeted for the underserved bottom 40% (B40) households. The scheme, supported by pioneering contributions from foreign insurers, is expected to be fully operational early next year.
"This policy intervention attempts to resolve the market's inability to provide such protection. Perception out there has been that this segment of the population is uninsurable, or from the perspective of insurers, too risky and likely unprofitable. We are taking a different view that this is misplaced, and it will take proof to change this," he said.