I urge the industry to come together and focus on the long term benefits, and give its full support to initiatives such as ISM’s Fraud Intelligence System, and collaborate on other innovations such as the electronic reporting of motor accidents to bring the cost of insurance closer to its “true cost”. Such collective effort is critical to make insurance and takaful accessible to many, and to promote its sustainability over the long term. Individual insurers should also adopt the longer term view and invest in innovation. Much more can still be done by insurers that are part of global insurance groups to bring new technologies, product designs and process improvements into the Malaysian market. The undue focus on short term profitability driven at the group level have often come at the expense of certain market segments being underserved and customers being denied best value for money. Foreign insurers need to contribute more to justify their presence in the Malaysian market. Thirdly, insurers and takaful operators need to cultivate and continuously affirm society’s trust in the industry. Insurance and takaful products have become more complex with the result that most consumers do not fully understand what they have purchased. A larger number of players chasing the same pool of customers, result in intense competition that gives rise to poor sales practices. Pressure to improve underwriting results by controlling claims costs can also have unintended effects on the consumer experience.
We shall review this policy from time to time, with a view to further liberalise the rules. 3. The Financial Market Committee (FMC), through an industry-driven effort, is in the final stages of rolling out an operational framework for Foreign Exchange Administration (FEA) compliance. This will be an industry standard that sets the minimum due diligence and list of documents required for FEA. Further to this, a standard summary of the relevant FEA rules to facilitate common understanding and consistent interpretation among market participants is being formulated. It is expected, through this important initiative, there would be better clarity and greater efficiency for the financial institutions and their customers, in undertaking FX and hedging transactions. Taken together, these three measures are targeted at residents such as the Small and Medium Enterprises with a view to expand their access to hedge freely and directly with onshore banks. This flexibility will provide the avenue for simplified processes and flexible hedging activities within prudential limits and incentivise residents to use onshore banks for their hedging needs. These are but first steps. We will be looking at further measures, similar to these. The idea behind these measures is to make our onshore financial market more flexible, facilitative and competitive. In other words, we are deepening the onshore markets towards becoming the main actor to conduct the foreign exchange needs of our economy. This journey will be exciting and require some behavioural changes. But we have no doubt that with the full support of the industry, we can achieve these outcomes.