For example, quality engagements with first-time buyers and the underserved will go a long way in closing the huge protection gap which remains our most important priority right now. We will also be looking more closely at the experience with direct distribution channels to date. We would like to see greater impact from direct channels, including online or mobile platforms, in supporting higher insurance penetration. Today, the Millennials and iGeneration expect significant technological innovations in the entire chain of insurance experience – from product comparisons, purchase, claims, and customer support. The industry cannot ignore this fact as they will become the key customer segment in the near future. Further attention also needs to be given to the role of shared infrastructure to support insurance undertakings, building further on the fraud and motor insurance databases. From the Bank’s perspective, our aim is to facilitate innovation in three main ways. First is by lowering the barriers to innovation and competition. This is achieved by providing an environment through the regulatory sandbox for the industry, including non-insurance firms, to test innovations without costly regulatory reprisals. It also allows the Bank to appropriately tailor our rules to better suit innovations as we too, learn from observing the solutions that are tested in the sandbox. Second is through proportionality. We aim to better reflect proportionality in our regulatory framework.
Nor Shamsiah Mohd Yunus: Innovation in a disruptive era Remarks by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Malaysian Insurance Institute (MII) Summit "Innovation in a Disruptive Era", Kuala Lumpur, 28 September 2018. * * * I would like to congratulate the Malaysian Insurance Institute for organising this summit. This is my inaugural engagement with the industry and it gives me great pleasure to be able to address all of you today. In line with the theme of this conference, my remarks today will cover three things: 1. Firstly, the role of insurance within the context of key developments that are shaping our economy; 2. Secondly, how the Bank views and is responding to innovation in the insurance sector; and 3. Finally, some perspectives on our regulatory and supervisory focus moving forward. Role of insurance in an economy Insurance plays a core function in the modern economy and the financial system. There is a positive relationship between economic growth and insurance development. This is borne out by studies which have shown that more developed markets have a higher share of insurance in the economy. The role of insurance in the economy is worth restating, particularly given the economic and social challenges that we face today. A core purpose of insurance is providing protection against individual and business risks through risk transfer and pooling. This improves individual welfare, and supports consumption and investment activities.