KUALA LUMPUR (Nov 8): The Malaysian Takaful Association (MTA) said it will seek to expand its membership base by revising its constitution to allow digital insurers and takaful operators (DITOs) licence holders to join the association.

This comes ahead of Bank Negara Malaysia’s (BNM) launch of the DITO application process, which will be open from Jan 2, 2025 to Dec 31, 2026. The association currently has a legal limitation that limits DITO holders as its members.

"We have this recommendation coming from our members saying that we should amend the constitution and we are doing that to allow DITOs to be part of the MTA members so that we can work together," MTA chief executive officer Mohd Radzuan Mohamed said after the launch of MTA's takaful framework on Friday.

He said that while DITOs are not yet formal members of MTA, they are already included in the association’s programmes to ensure they benefit from industry-wide initiatives.

Announced by BNM in July this year, the upcoming DITO application process requires companies to prioritize digital distribution and service capabilities, including the flexibility to shift to offline services when digital infrastructure is inadequate.

In addition, each licence applicant must have a minimum paid-up capital of RM30 million during the foundational phase.

The central bank has not set a cap on the number of DITO licences to be issued, allowing for broader participation and innovation within the industry.

MTA's takaful framework,  dubbed as Hijrah27, is aimed at transforming the takaful industry and expanding its market reach, particularly among underserved groups such as the BM40 segment, which includes low- to middle-income households.

The framework emphasises leveraging technology as its backbone to drive innovation and digitalisation across the sector, which bodes well for the DITO applications, Radzuan noted.

“Hijrah27 provides a structured approach to integrating technology into our operations. We are collaborating with fintech companies to explore advanced solutions, including AI, to enhance service delivery and customer satisfaction,” said Radzuan.

He added that the framework also addresses capacity building in emerging areas such as cybersecurity and energy insurance, aligning with evolving market needs.

The Hijrah27 plan aims to increase the penetration rate of takaful products in Malaysia, which currently covers only 60% of the population. By targeting the remaining 40%, particularly those with low financial literacy, the framework seeks to raise awareness and enhance accessibility.

“We do not have a specific numerical target but aim to make takaful a household name. By focusing on underserved segments and improving financial literacy, we anticipate substantial growth in market share,” said Radzuan. 

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