Malaysia’s central bank is giving foreign insurers until the end of 2023 to either reduce stakes in their local ventures or contribute to a charitable fund. Foreign insurers that do not comply with the ownership limit by the deadline will have to pay into a national health insurance program known as B40 Health Protection Fund, said the people, who asked not to be identified as the information is private.
The initiative, which was piloted in 2018 by the Malaysian government, provides coverage to lower income households needing treatment for critical illnesses. Insurance companies that contribute to the B40 fund will be deemed to have complied with the ownership limit.
Foreign shareholders accepted the divestment condition when they entered the Malaysian market. The central bank continues to engage with foreign shareholders on their divestment plans and does not comment on specific cases.
AIA Group Ltd, Prudential Plc, Tokio Marine Holdings Inc and Zurich Insurance Group AG are among the international insurers with ventures in the country. Singapore’s Great Eastern Holdings Ltd is the only foreign insurer to have publicly announced a contribution to date, pledging RM2bil (US$451mil) to the B40 fund in 2019, according to a stock exchange filing.
70% Cap Foreign Insurer - The deadline would see Bank Negara enforcing the limit it introduced in 2009 with the liberalization of foreign ownership. The ruling mandated that overseas insurance companies were allowed to hold a maximum 70% in local firms, but it was mostly disregarded until 2017 when the regulator issued a directive reminding insurers they have to meet the requirement.
A plan to impose a hard deadline for compliance in 2018 fell by the wayside following a change in government in the general elections that year. Bank Negara governor Tan Sri Nor Shamsiah Mohd Yunus told reporters at the time that foreign insurers would be given some flexibility to pursue options, and that the deadline would be determined on a case-by-case basis.
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