Perlindungan Tenang is intended to reach 8 million working-age Malaysians and over 700,000 micro enterprises that currently need insurance and takaful protection against key risks. Products that meet the three criteria of being: Affordable, Accessible and Easy to understand. This product will carry the Perlindungan Tenang logo and benefit from regulatory flexibilities and co-branding and promotional initiatives. The aim is to address ‘pain points’ that commonly hold consumers back from purchasing insurance and takaful products. To-date, four insurers and two takaful operators have developed products that will be introduced under this initiative and we expect many more to come on board. Secondly, the industry needs to embrace digitalisation to revolutionise the customer experience. Many of the factors that make digitalisation possible in other sectors, such as a high mobile penetration rate of 134% and the proliferation of new technologies, are also available to the insurance and takaful sector. The banking industry has made significant strides towards enhancing the take up of financial services delivery through the use of technology. In 2016, there were 22.8 million Internet banking subscribers which represents over 70% of the total population. The insurance and takaful sector needs to catch up. Today, online insurance distribution still accounts for less than 0.1% of business volume. A very poor achievement. With consumers already enjoying benefits of digitalisation in many other daily activities, they should expect better levels of personalisation, responsiveness and reliability from their insurance and takaful experience. This includes shorter time-to-compensate for insurance claims.

In terms of the migration to e-payments, the insurance and takaful sector is a key sector where the usage of cheques is still prevalent. In 2016, 2.3 million cheques were issued by insurance and takaful companies while 9.8 million cheques were collected by such companies from their customers. While good progress has been made this year with the decline in cheque collection accelerating from -0.5% in 2016 to -22.1% in the first 7 months of 2017, more effective and creative measures are needed to drive cheque usage to negligible levels. To this end, Bank Negara Malaysia has recently concluded a consultation exercise with the industry on the implementation of an ePayment Incentive Fund Framework (ePIF). Under the framework, insurance companies shall set aside RM3 for every cheque issued and RM1 for every cheque collected to be used as incentives to encourage their customers, agents, service providers and government agencies to migrate to e-payments. The current practice where agents collect premiums from customers in cash and make payment to insurance and takaful companies using the agencies’ own cheques or credit cards should stop. The industry should promote greater prudence and transparency in the collection of customer premiums by facilitating customers to make direct payments to the insurance and takaful companies. To this end, the industry equipping agents with mobile point-of-sale (mPOS) or mobile apps to collect payment directly from customers should be the norm. Thirdly, the industry needs to collaborate and invest in key market infrastructure and arrangements.