##ved will go a long way in closing the huge protection gap which remains our most important priority right now. we will also be looking more closely at the experience with direct distribution channels to date. we would like to see greater impact from direct channels, including online or mobile platforms, in supporting higher insurance penetration. today, the millennials and igeneration expect significant technological innovations in the entire chain of insurance experience – from product comparisons, purchase, claims, and customer support. the industry cannot ignore this fact as they will become the key customer segment in the near future. further attention also needs to be given to the role of shared infrastructure to support insurance undertakings, building further on the fraud and motor insurance databases. from the bank ’ s perspective, our aim is to facilitate innovation in three main ways. first is by lowering the barriers to innovation and competition. this is achieved by providing an environment through the regulatory sandbox for the industry, including non - insurance firms, to test innovations without costly regulatory reprisals. it also allows the bank to appropriately tailor our rules to better suit innovations as we too, learn from observing the solutions that are tested in the sandbox. second is through proportionality. we aim to better reflect proportionality in our regulatory framework. for insurance, we expect that this will be mostly targeted at conduct rules where a more proportionate approach could be taken to reduce compliance costs for insurers to introduce innovative solutions in areas where we believe the risks to consumers are low. the third area of focus will be to develop a more coherent approach, particularly across agencies, for ensuring legal and regulatory compatibility with new innovations in insurance. this includes addressing issues that may arise in legal constructs, for example, smart contracts, liability issues associated with robo - advice or driverless cars, and strengthening defences against cyber threats and abuses by criminal elements. regulatory framework and priorities : laying the foundation for a stable and welldeveloped insurance sector my third message today relates to the regulatory priorities and framework to ensure the stability and development of the insurance sector. stability and development are not two contradictory goals. since the supervision of insurance was brought under the bank ’ s ambit in 1988, the industry has come a long way. building on the stronger foundations in the industry, in the more recent period, we have embarked on a broad range of reforms to further develop the full potential of the industry to better serve the economy. one of the recent significant policies we have put in place is the life insurance

and will not be met without strong leadership, a longer - term view on investments in capacity, and a relentless focus on quality standards and operational efficiency. yet, today these conditions remain hampered by what is still a fragmented industry. it is therefore timely, if not more urgent, for institutions to consider synergistic partnerships to achieve the scale and competitive edge to lift performance and break into new markets. our economy is in need of transformational change in the insurance sector – not incremental ones. to achieve this, we believe there is room for further consolidation in the industry. technology and innovation let me turn to our views on innovation. this industry has no shortage of evidence of its ability to seize opportunities provided by technology to improve itself. in the united states in the 1950s, the life insurance industry was one of the first and largest commercial users of the computer during its formative years. the data processing power of the computer allowed the industry to design new products, scale up operations and increase efficiency. fast forward to today, we are at the brink of another great technological revolution and disruption. artificial intelligence, big data and robotics will reshape the way we live, work and play. in many ways, the industry is in a prime position to seize the opportunities arising from these technologies given that the ability to manage risks remains the single most compelling proposition of insurance. for example, e - hailing services have become part and parcel of modern life. many of the drivers do not benefit from generic motor insurance products. perhaps usage - based or pay - as - you - drive insurance policies would be better suited for these consumers. technology such as telematics could also be adopted to incentivise drivers to good behaviour. artificial intelligence and blockchain can be utilised to enhance the efficiency of the claims settlement process. as a service industry, it is important for insurance companies to address the user experience. from our extensive engagements with the public, many malaysians still find purchasing insurance too much of a hassle. products are perceived to be too convoluted, complicated and non - transparent. we are taking this very seriously, particularly given the measures we have taken to encourage the use of plain language coupled with clear and concise disclosures. 2 / 4 bis central bankers'speeches clearly, these measures have not had the desired effect. there is an urgent need for the industry to design a more positive customer experience. for example, quality engagements with first - time buyers and the underser