The insurance industry in Malaysia, like other financial sectors, is highly regulated and comes under the supervision of Bank Negara Malaysia.
Prior to the introduction of liberalisation, several governance and solvency measures had been introduced to ensure insurance companies and takaful operators are financially strong.
The Risk Based Capital Framework which was introduced, ensured that companies’ reserves are in line with the risks underwritten by them. If the company is selective in insuring large accounts with high risk profiles, it has to make sure that its capital is adequate to meet its liabilities in the event there is a loss from this account.
With the freedom to introduce innovative products, consumers will have better choices and insurance companies will be able to meet their customers’ needs as a one-stop centre, if they choose so.
Insurance companies are also required to be more efficient as in this competitive environment, this will be one of the measures that the consumers will look at, i.e. how efficiently they are serviced when they want to buy a product or when they have a claim.
For better and more efficient services, insurers are likely to use online platforms to market their products. Consumers will be able to purchase their insurance policies at the click of a button. However, this does not mean that the conventional marketing channel using agents will diminish. There are segments of the public who prefer and are comfortable to deal with insurance companies through their agents. Agents have a wealth of knowledge on products sold by them and are able to advise consumers. The strong relationship they have developed with their agents over time will also work in their best interests.