, Malaysia

Clock’s ticking for foreign insurers in Malaysia to reduce stakes in local ventures

The Malaysian central bank is giving foreign insurers until the end of 2023.

Bank Negara Malaysia is has announced a looming deadline for foreign insurers: reduce stakes in their local ventures or pay into a national health insurance program.

A report by Bloomberg revealed that the Malaysian central bank will order foreign insurers to pay into a national health insurance program known as B40 Health Protection Fund if they do not comply with the ownership limit by the deadline.

First piloted in 2018, the B40 Health Protection Fund provides insurance coverage to households with lower income in need of critical illness treatments. Insurance firms who will contribute to the fund will have been deemed to have complied with the ownership limit.

ALSO READ: Malaysian digital insurer VSure.life expands footprint in the UK

Foreign shareholders had accepted the divestment conditions when they entered the Malaysian market. The central bank said that it will continue to engage closely with foreign shareholders on their divestment plans and does not comment on specific cases, the report said.

International insurers AIA Group Ltd., Prudential, Tokio Marine, and Zurich Insurance Group AG are amongst some with ventures in Malaysia. Singapore-headquartered Great Eastern is the only foreign insurer who have publicly announced to pledge a contribution to the fund to the tune of $451m back in 2019.

Regulatory rules limited foreign insurers to hold only a maximum of 70% stakes in local firm which was mostly disregarded until 2017 when Bank Negara Malaysia issued a directive to remind insurers to meet the requirement.

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