raised 30 years ago remain with us today. there are a few areas in particular that i would like to highlight : first, the failure to make insurance and takaful attractive enough to large segments of our population who are still devoid of any form of protection ; second, underinvestment in talent and the continued dependency on group resources to support core functions, and third, the low commitment to domestic arrangements for reinsurance optimisation. from the perspective of the population that remains underserved, the existing business models 1 / 5 bis central bankers'speeches are essentially broken. while life insurance premiums and family takaful contributions have grown by 48 % since 2010, the penetration rate has only increased by 5 percentage points. this indicates that the industry is increasingly concentrated on a narrow insurance segment. if we eliminate double - counting, only 35 % of adults have some form of cover. for the rest, products are too complex and remain unaffordable. existing distribution channels also fail to provide adequate access, especially outside urban centres. technological advancements are not being used to the fullest. even for the population segments that are being served, making a purchase or a claim is a process fraught with anxiety and headache. increasing medical insurance premiums have also placed insurers under heightened public scrutiny, with questions raised on the suitability of product designs that offer little protection against escalating costs of healthcare. insurers ’ contracting arrangements with healthcare service providers have also been called into question. while insurers might not be the guilty party here, the response to the criticism has been slow and wanting. as a group, the insurance community is meek in safeguarding the sector ’ s image and reputation. underinvestment in domestic talent and capacity is another key concern. among a large number of foreign insurers, significant reliance on group level support has limited the investments in core functions needed to develop strong domestic capabilities. in addition, large amounts of payments are being made for management fees and outsourcing arrangements. between 2014 and 2016, it is estimated that insurers in malaysia made no less than rm1. 3 billion of such payments to foreign affiliates. the repatriation of funds will be even larger if we compute the amount over a longer period. such arrangements are extractive in nature, and will have longer term implications for the development of a strong domestic industry. we need higher reinvestment by insurers to support the protection and risk management needs of our

where their success is not only measured by financial sustainability but whether they also improve the lives of those impacted by the businesses they support. on this note, i would also like to mention that sustainable and impactful financial solutions are not reserved exclusively for dfis. the whole financial sector has a professional and civic responsibility to advance the sustainability and inclusion agenda. this responsibility includes upholding the fiduciary duty of financial institutions to preserve the trust, integrity and confidence in the financial system. by being responsible citizens, financial institutions will go a long way to repair the trust deficit between the industry and the public brought about by bank failures and the numerous cases of market misconduct, manipulation and scandals. 3 / 5 bis central bankers'speeches to this end, bank negara malaysia has pioneered the measurement of development impact to complement financial performance by implementing the value - based intermediation ( vbi ) scorecard with selected banks. the vbi scorecard contains components of qualitative and quantitative measures of impact to cultivate an impact - driven mindset and drive improvement within the banking industry. we hope that this will be a stepping stone to enhance the contribution of the financial sector to public welfare. in summary, as the old adage correctly points out, “ if you can ’ t measure it, you can ’ t improve it. ” hence, the accountability and effectiveness of dfis need to be measured through a robust, structured and comprehensive performance framework. this two - day forum is dedicated towards realising this outcome. challenges in measuring performance and collecting credible data that will best quantify the development impact will be discussed to identify workable solutions drawing from the experience of other leading international dfis. key message 3 – enabling regulatory and policy environment to support dfis in realising their full potential my third and last point relates to the regulatory framework to support dfis in realising their full potential. an appropriate regulatory and policy ecosystem is crucial to nurture a culture of innovation that will support the achievement of development impact within the dfis. bank negara malaysia is committed to cultivate this through the application of proportionality in our regulations. the concept of proportionality is related to the application of differentiated prudential requirements for institutions of varying sizes, systemic impact and complexity in order to avoid excessive compliance costs. these costs may be burdensome and disproportionately high to smaller institutions. the application of proportionality can take the form of reduced reporting burdens or simplified rules for some institutions.