Yoon Yew Khuen
Director of Insurance Development, BNM
QCongratulations on your new role. Please share what does it entail.
As the Director of Insurance Development Department, I will be leading a team that is tasked with researching and formulating strategies to strengthen the insurance sector for the benefit of the economy. The role will also involve engaging with a range of stakeholders from the insurance industry.
QWhat are your objectives for the new department?
In the immediate term, the focus will be on the orderly implementation of the Life Insurance and Family Takaful Framework (LIFE Framework) and phased liberalisation of the motor and fire classes of business.
Our longer term goal is essentially to have an insurance system that meets the needs of a high income and high value-added economy. Such an insurance system must be innovative, efficient and sustainable. I will briefly unpack these in turn.
Innovation in the insurance system is absolutely necessary if we are to meet the needs of a growing economy. From a shifting demography, to rapid urbanisation and integration with the region, many forces will continue to change the way insurance is supplied and consumed and it is important that the insurance experience continues to match public expectations.
Efficiency is important to ensure that services are of a high standard and customers get good value, while ensuring that all producers along the value chain are adequately rewarded and shareholders get a reasonable return on investments.
Our longer term goal is essentially to have an insurance system that meets the needs of a high income and high value-added economy.
Most importantly, all these have to be pursued in a sustainable manner to engender public trust and for the longevity of the system. This requires prudential safeguards to evolve in tandem with a more advanced insurance system.
Specific areas of policy focus include diversifying delivery channels for better outreach and consumers’ convenience, driving innovation in business models through new technologies, access to underserved segments through microinsurance, health insurance with emphasis on personal and preventive care, longevity protection, deepening the talent pool and enhancing our capacity for large and specialised risks. Many of these have already been articulated the Financial Sector Blueprint 20112020.
QHow do you plan to deliver these goals?
We have embarked on a review to identify gaps and opportunities, in terms of the mix of market participants, products and delivery channels that will help us achieve our goals. Beyond the insurance sector itself, we will also need to think about the ecosystem within which insurance business operates. This includes a wide range of factors from the data infrastructure to availability of talent and engagement with the public sector.
Clearly, much that needs to be done to achieve these goals involves a wide range of stakeholders. To a large extent, the Bank acts as a facilitator to get conversations going between different groups, ensuring the best ideas are uncovered and hopefully get enough consensus to emerge through this process for the actions of the different players to be mutually reinforcing.
Communication will be a key tool of the Bank in order to forge this consensus, so we will be spending more time in dialogue with stakeholders and even setting up consultative groups with participants from the industry and beyond for exploring new ideas in key thematic areas.
QIn your opinion, why is it necessary to create such a department?
Previously, insurance development was part of a department with a broader mandate for development of the whole financial sector. Having a dedicated department for insurance development allows for better focus to ensure we achieve the desired goals for the insurance sector.
QIs it related to the upcoming liberalisation move?
The formation of this department was not driven directly by the liberalisation measures themselves but rather the stage in the evolution of our insurance market that is signified by the liberalisation move.
From our perspective, the foundations of financial strength and risk management laid in the preceding decade has positioned the market to be ready for a step increase in the level of innovation and competition, which we expect will ultimately benefit the consumer through better quality services and more choices to meet specific needs.
QMalaysian insurance industry is undergoing significant transformation over 5 to 10 years to address the underinsurance issue. What are your thoughts on this?
Specific areas of policy focus include diversifying delivery channels for better outreach and consumers’ convenience, driving innovation in business models through new technologies, access to underserved segments through microinsurance, health insurance with emphasis on personal and preventive care, longevity protection, deepening the talent pool and enhancing our capacity for large and specialised risks.