Insurers urged to pool resources to build common technological infrastructure

KUALA LUMPUR: Insurance players should “pool” their resources and build a common technological infrastructure to improve efficiency, promote ethics and tackle risks.

“Investments in infrastructure, especially in ICT is very expensive. By pooling funds to build shared infrastructure, the burden becomes more manageable,” said Bank Negara Malaysia (BNM) governor Tan Sri Muhammad Ibrahim in his keynote address at the IAIS Annual Conference 2017.

“More investments in IT will enable new possibilities to expand insurance reach, improve efficiency and increase effectiveness,” he added.

Muhammad said strategic investments in shared infrastructure and data sharing could potentially reduce costs, improve access, deliver customer experience and improve resilience against risks.

He noted that while technological advancements such as the use of big data and machine learning could improve risk identification, it also could blur business lines, professional and ethical standards.

“First, the lifespan of regulations is getting shorter and shorter, with new areas of risk emerging faster than regulators can write new rules. Adding to the complication, potential threats are also creeping in from beyond the regulatory perimeter,” he explained.

Muhammad cautioned that potential risks factors could stem from non-traditional players, unfamiliar business models or technologies.

Hence, he reminded the industry to move beyond conceptual discussion and come up with practical application when it comes to the practice of ethics – by raising the standards of competence and developing well-defined codes of behaviour.

He concluded that insurance industry’s stability shouldn’t be viewed in isolation but should instead be seen within the wider context of preserving social economic value of the insurance system.