We had recently issued a concept paper on Life Insurance and Family Takaful Framework. This Framework is set to transition the life insurance and family takaful industry into a new operating environment, characterised by changing market dynamics including demand for greater transparency, and driven by advancement in technology and changing consumer behaviour. The Framework’s main aim is to increase insurance and takaful penetration, and ensuring a fair deal to consumers. The framework is supported by three main pillars; the liberalisation of operating limits, diversification of delivery channels and strengthening of market conduct practices. The Framework will be implemented in two phases to allow the industry and the public sufficient time to adjust to the new operating environment before further liberalisation is  BIS central bankers’ speeches  1  considered. Under the first phase, greater operational flexibility is given to life insurers and family takaful operators to operate in a more competitive environment and allow greater product innovation to be delivered through a wider range of delivery channels. The Framework proposes for the current commission and other operating cost limits for investment-linked products to be removed. In addition, the commission limit for pure protection products, namely pure term, critical illness and medical and health is also proposed to be removed subject to certain preconditions. While allowing greater operational flexibility, the Bank will ensure consumers’ interest remains protected.

At the same time, insurers and takaful operators should take advantage of the emergence of new and low-cost distribution channels such as the internet and mobile technology, and adopt multidistribution strategies as a competitive tool to expand the pool of potential customers and cater to a wider range of needs of society. •  Secondly, the industry must deliver more positive customer experience. As the industry is operating in a challenging operating conditions with intense pressure to control costs, one should not compromise on the level of customer service standards. Bad perception of the insurance industry can only happen if services rendered are poor. Industry players must always put the customer experience at the center of their business strategy. Once customers are satisfied with the service level, the upside is to improve customer retention and satisfaction. A recent research has shown that there are various factors that influence customers’ decisions to choose or leave an insurer. Although price and rates and product features are the most often cited reason to select and to leave a provider, about 40% of customers say they would consider choosing an insurer because of brand trust and after-sales services. Therefore, insurers and takaful operators need to assess how customers perceive the quality of their interactions, taking into account the views, perceptions, expectations and values of customers. •  Thirdly, with more complex products and more sophisticated customer demands, the industry needs more skilled professionals to support the financial sector. The insurance industry need to change their approach in attracting talent.