Worldwide, insurers have been successfully leveraging on bancassurance to gain a foothold in markets with low insurance penetration and a limited variety of distribution channels. Bancassurance can increase market penetration given the relatively higher level of public confidence in dealings with banks. For the banks and insurers, capitalising on synergies derived from tapping into the banks' extensive customer base to offer consumers comprehensive financial solutions while optimising on the branch network have proven to be highly successful strategies towards mutually improving productivity and profitability. In Malaysia, bancassurance constitutes a significant feature of Malaysia's financial landscape, and continues to develop rapidly in terms of market reach and operational sophistication. These developments have contributed towards significantly raising the nation's insurance penetration level and enhancing the competitive structure of the insurance industry. In addition to bancassurance, the Internet is emerging as a promising medium for insurers to advertise products and service policyholders. With the rapid technological advancements and increasing consumer demands for more efficient delivery of products and services, it offers the potential for insurers to target a wider market, improve client service and conduct business seamlessly across borders. While planning for effective distribution channels may become the key differentiating factor in the growing region today, one must not overlook the implications of the changing demands of the general public. The ageing of the population is an issue of increasing importance in the developing world. All across Asia , the number of people aged 65 and above is expected to grow dramatically over the next 50 years.

In this respect, we should learn from the unsatisfactory outcomes that have emerged in some of the more developed markets where product disclosures can run into 60-page documents, which no one can reasonably expect an average consumer to read, let alone understand. Ultimately, the purpose of disclosures must be to help consumers understand the risks associated with different product options. In this context, more information is not necessarily better. The quality of information and financial capability of consumers must be enhanced in tandem with improved disclosures. Of course, increasing product innovations also need to be matched by strong risk and portfolio management capabilities critical to ensure the long-term sustainability and viability of the products offered in the market as well as the financial soundness of insurance companies. The operating landscape in which we operate has also changed significantly. Convergence in financial services has blurred the boundaries between insurance, banking and capital market activities. In this environment, financial sector regulation and supervision has become significantly more challenging. The increasing linkages between insurance and the banking systems as well as capital markets have increased the importance of achieving a harmonised regulatory approach and standard across sectors to minimise possibilities of regulatory arbitrage between different types of institutions. Under such environment, the approach towards regulatory and supervisory framework also has to evolve in tandem with the change in the environment. Recognising these dynamic changes, Bank Negara Malaysia took efforts to strengthen our regulatory and supervisory capabilities as well as sharpen our focus.