KUALA LUMPUR: The Malaysian Takaful Association (MTA) expects the digital insurers and takaful operators (DITO) to boost the country’s takaful penetration rate to 30 per cent by 2027 from 18.6 per cent in 2021.
Its chief executive officer (CEO), Mohd Radzuan Mohamed, said DITO would bring significant digital transformation in both the insurance and takaful segments and eventually help the country to achieve the overall target rate of 75 per cent set by the government.
“Hopefully, DITO will be able to supplement some numbers to the target rate as we all know that insurance and takaful operators offer diverse products and services.
“DITO can help operators reach untapped areas to introduce their products to the people,” he told the media after the Malaysia DITO Conference 2023 here, today.
Meanwhile, Deloitte Malaysia CEO Yee Wing Peng said that with the introduction of the DITO framework, the digital transformation in the insurance and takaful sectors could be achieved through innovative product design, risk-responsive underwriting practices, more efficient claims management process, and seamless services to consumers.
Citing data from Bank Negara Malaysia (BNM), Yee said that only 25 per cent of working adults in the Bottom 40 per cent household income group (B40) have some form of life insurance or family takaful cover and this was significantly lower than the 59 per cent of working adults in the general population with takaful or insurance protection.
He said that Malaysia’s insurance penetration rate, based on the insurance premium as a percentage of gross domestic product, currently stands at 4.7 per cent, lower than the global average of 7.2 per cent.
“DITO can play an important role to close the protection gap, especially within the B40 household,” he said.
Most Malaysians are aware that insurance and takaful would provide financial protection against uncertainties and unforeseen circumstances, he added.
Yee said that in the long term, this would contribute towards reducing poverty and improving social and economic conditions, thrusting Malaysia towards a digitally-driven, high-income developed nation.
“In this regard, I believe the DITO (licence) applicants would strive to demonstrate meaningful value propositions that will contribute towards long-term social and economic benefits,” he said.
Introduced in November 2022 by BNM, the DITO’s licensing and regulatory framework aims to facilitate the entry of DITOs with 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. – Bernama