jessica chew cheng lian : distribution in a liberalised environment keynote address by ms jessica chew cheng lian, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the general insurance agents convention “ distribution in a liberalised environment ”, kuala lumpur, 5 august 2016. * * * the profound impact of financial technology on the provision of financial services – including insurance – is set to gain more traction in malaysia. just last week, bank negara malaysia issued a discussion paper which outlines the conditions for companies to test financial technology ( also known as “ fintech ” ) innovations in a safe environment. this responds to the innovations that we have seen emerge in the financial services industry ; many of them tapping into opportunities now made possible by technology to enhance the customer experience, improve risk management and lower the costs of providing financial services. the insurance industry itself has just entered the first phase in the progressive liberalization of the motor and fire insurance tariffs which began on 1 july this year. after over 30 years during which more than 60 % of the general insurance market has been regulated under tariffs, this is arguably the most significant reform of the general insurance market in decades. the implications of the reform are much wider than just an adjustment to premium levels. it will pave the way for a new wave of product innovation, significantly expanding choices for consumers. it will improve incentives for safe driving behaviours and better risk management practices by both risk owners and insurers. and it will address market distortions which have threatened access to motor insurance, particularly for higher risks. this is also a time when businesses and households are facing rising costs and more uncertain conditions which can adversely affect discretionary spending on insurance. at the same time, the exposures of households and businesses which insurance is designed to protect, have actually increased as evidenced by more frequent and severe incidents of natural and man - made disasters. all of these developments raise critical questions for insurance agents. one question that comes up time and again is : will insurance agents continue to be relevant? if you are in this room today, then i assume you will agree with me that the answer is clearly ‘ yes ’. but i believe you are also here because there is a recognition that agents will have to evolve. even if some of you were not completely convinced of this before, that reality surely can no longer be ignored or dismissed. so the more important question then is how agents can be a meaningful part of this change in order to advance the important

which will allow consumers to easily compare product features, providers, coverage and price. these developments will drive the increasing adoption of multi - channel distribution strategies. the implications for agents will be a greater need to specialise and to be able to do so while seamlessly integrating with different and more diverse contact points with consumers. this will require innovative business models as parts of the distribution chain become commoditised. for example, agents may specialise in more complex product offerings, provide more tailored advice, improve the customer experience by deploying new technologies and reaching out to untapped consumer segments. as greater efficiencies drive bis central bankers ’ speeches down costs, fees and commissions will increasingly be tied to the breadth and depth of services provided by agents. this in turn will contribute towards lifting productivity and the value of jobs in the industry, including that of the agency force. third, insurance agents will need to embrace a broader role in the education of consumers. over the years, bank negara malaysia working together with the insurance associations has invested significantly in informing the public about insurance through our financial literacy initiatives. we have come a long way in this process. today, schoolchildren as young as 10 years of age will already be introduced to insurance through subjects taught in the formal school curriculum. by 2021, we expect to complete the process of integrating financial education content in the formal school curriculum at all levels of primary and secondary education. we have also continued to expand the ways in which we reach consumers, through different mediums and leveraging in particular on social media. we have adopted a life cycle approach to guide education initiatives, so that education content is more targeted and delivered when consumers are most responsive to receiving information. and we continue to adapt our education content so that it remains relevant and current to the issues and experiences that consumers face. in parallel with these efforts, agents will have a more important role going forward. with greater proliferation of online avenues for consumers to obtain information, contacts between agents and consumers are likely to be more targeted and specific in nature. consumer needs and appetite for advice will also be greater in a more diverse insurance landscape. this opens up an enormous opportunity to tap into the potential for the more than 100, 000 - strong life and general insurance agency force to play a much more active role in educating consumers on the importance of insurance protection, on how to evaluate their insurance needs, and on making informed choices about the insurance options available. it is often joked that an insurance agent can persuade