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Session III:

Country Experiences on Data Collection and

Monitoring of Insurance Industry

- Malaysia’s perspective

OECD-Asia Regional Seminar:

Enhancing Transparency & Monitoring of Insurance Market

23-24 September 2010

Kuala Lumpur, Malaysia

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Outline of Presentation

1. Overview of Statistical Compilation Framework

at BNM

2. Submission of Insurance Statistics

3. Overview of Insurance & Takaful Statistical

Systems

4. Surveillance of Insurance Industry

5. Challenges and Direction of Statistical

Compilation

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Statistical Compilation Framework at BNM

Scope of Statistics Users

Statistical

Services

Department

…the centre for

all statistical

collection,

compilation and

dissemination

• Banking statistics

• Insurance statistics

• Credit reports

• Development Finance

institutions statistics

• Credit & charge

card operations

• External assets &

liabilities of

banks/corporations

• Cross-border inflow &

outflow of funds External:

• Financial Institutions

• Department of Statistics,

Malaysia

• Government Agencies

• International Organisations

• Public

Internal:

• Regulation Departments

• Supervision Departments

• Monetary and Economic

Departments

• Investment Management and

Foreign Exchange

Administration Departments

• Payment Systems

• Financial intelligence

• Macroeconomic statistics

Compiler

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Commercial

banks

40.9%

Bank Negara

Malaysia

13.1%

EPF & other

pension funds

16.8% Other financial

intermediaries

7.1%

General

insurance funds

0.9%

Life insurance

funds

4.9%

Islamic banks

8.1%

Investment

banks

2.2%

Development

financial

institutions

5.9%

• Total assets of Malaysian financial system as at end-2009 was

RM2.8 trillion

• Insurance & Takaful System accounted for 5.8% of financial

system assets

Assets of the financial system

Size of Malaysian Financial System

(2009 : RM2.8 trillion)

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Insurance & Takaful Industry in Malaysia

Insurance & Takaful Industry in Malaysia

Number of players

0

10

20

30

40

50

1990 2006 2007 2008 2009

Year

No

of p

lay

ers

Life insurer General insurer Composite insurer

Life reinsurer General reinsurer Composite reinsurer

Takaful operator

Insurance & Takaful Fund Assets

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1990 2006 2007 2008 2009

Year

RM

'm

Life insurance General insurance Family Takaful General Takaful

Source: BNM Annual Insurance & Takaful Statistics 2009

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Insurance & Takaful Industry in Malaysia...con’t

New Business Premium for Life Insurance

(2009: RM 7.5 billion)

Whole life

11%

Endowment

29%

Temporary

17%

Others

14%

Annuity

0%Investment linked

29%

New Business Premium for Family Takaful

(2009: RM 2.2 billion)

Endowment

12%

Temporary

59%

Others

12%

Investment linked

17%

Annuity

0%

Gross Premium for General Takaful

(2009: RM 1.1 billion)

Motor

52%

Fire

21%

PA

11%

MAT

5%

CAR

3%

Misc

8%

Source: BNM Annual Insurance & Takaful Statistics 2009

Gross Premium for General Insurance

(2009: RM11.5 billion)

Motor

45%

Fire

18%

PA

13%

MAT

10%

CAR

4%

Misc

10%

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Legal Provisions on Insurance Statistics

Main provisions under the Insurance and Takaful Acts in relation to statistical compilation include:

• Collection of information and statistics as the Bank may specify

• Ensure confidentiality of individual information collected

• Allowance for public inspection of the statistics collected

• Ability to impose penalty for non-compliance with timeline and inaccurate submission

Insurance Act

1996

Takaful Act

1984

• 47 Insurance Companies (Life, General & Composite) • 82 Insurance intermediaries (Insurance Brokers, Loss Adjusters & Financial

Advisers)

• 13 Takaful Operators (Family, General & Composite)

Applicable to submission by:

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Submission of Insurance Statistics

Reporting Entity Type of Report

Frequency*

Mthly Qtrly 2nd Semi-

Annual Annual

Direct Insurers &

Takaful Operators

• Financial statements

• Capital/solvency adequacy

Reinsurers • Financial statements

• Capital adequacy

Insurance

Intermediaries

• Financial statements

• Activity reports

* Timeline (after end of reporting period): Monthly & Quarterly (21 days), 2nd Semi-Annual (14 days)

and Annual (90 days).

• Electronic submission via statistical systems, namely Insurance

Online Submission System (IOSS) & Takaful Operators Statistical

System (TOSS) Contains main statements, supporting schedules and additional

compliance reports

• Hardcopy submission with declaration from CEO & external auditor Applicable to quarterly, 2nd semi-annual and annual statistics; and involves

main statements only

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Overview of Insurance & Takaful Statistical Systems

Electronic submission systems for insurance/takaful data compilation…

Verification

Packaging

Data Entry / Extraction

Insurers/ Takaful Operators/

Brokers/ Adjusters

Data Quality Assurance

& Analysis by officers

Internal & External

Stakeholders

CD when

necessary

Online via

IOSS/TOSS

website

Verification by

system

BNM

Reports &

Cubes

Insurance & takaful Intermediaries

Accessibility of statistics:

• BI tools i.e. Cognos Powerplay Multidimensional Cube

• Report i.e. Crystal/Excel Powerplay Report

• Extraction of data to secondary systems/databases e.g.

CFIIS (centralised FI reports) & INSIDES (debt securities

database)

Uses of statistics:

1. Surveillance, supervision, regulation and policy formulation

2. Dissemination of statistics to :

• Government agencies e.g DOSM

• International Organizations e.g. IMF, OECD

• Public e.g. Annual Reports, Monthly Statistical Bulletin

Data

Submission

Module

Data

Validation

Module

Data

Processing

Module

Data Coverage (Statements & detailed information)

• Revenue Account

• Income Statement

• Balance Sheet

• Changes in Equity

• Premiums & Claims

• Commissions

• New Policies

• Terminations, Transfers & Revivals

• Investment Linked Business

• Risk-based Capital (insurance)

• Authorised Assets (takaful)

• Income Statement

• Balance Sheet

• Changes in Equity

• Activity Report

• Premiums &

Brokerage

• Training Expenditure

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Financial Stability Surveillance Framework …comprehensive, dynamic, integrated and forward looking

Financial System Risks

• Enable comprehensive coverage and assessment

of risks

• Ensure optimal and efficient allocation of

resources

• Identify transmission channels

• Understanding and monitoring linkages

• Assess contagion and systemic impact

• Payment system oversight

Financial Institution Risks

• Minimise potential risks and vulnerabilities and

subsequent domino effect

Mutually

reinforcing

Mutually

reinforcing

Complementary objectives of macro & micro surveillance

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Financial Surveillance & Macroprudential Analysis

Understanding linkages

Monitoring linkages

Identifying

relevant

indicators

Assessing

implications

on financial

sector

Real sector

Household

sector

Property

market

Corporate

sector

Financial

markets

FINANCIAL SYSTEM

…brings together macroeconomic, monetary, financial market and

supervisory input to detect sources of systemic risk

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Governance & Communication of Risk Assessment

Financial Stability & Payment System Report,

Monthly & Quarterly Statistical Bulletins,

Speeches and Press Statements Public

Horizontal

collaboration

Management

committee

Working and Technical Groups

Financial Stability

Policy Committee

Publication of insurance statistics : www.bnm.gov.my

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Challenges and Direction

• Timeliness of data

Timeliness vs data accuracy

• Reporting burden and cost of doing

business

Data comprehensiveness and

statutory requirements vs.

reporting burden

• Increasing demand of data from

users

• Frequent ad hoc system

enhancements due to policy

changes and adoption of FRS

• Efficient data collection processes

Challenges

Implementation of Enterprise-wide

Statistical Information Architecture

(ESIA), leverage on:

The latest technology to

promote a dynamic and

integrated environment for

efficient information and

systems integration

The eXtensible Business

Reporting Language (XBRL) as

reporting language for

regulatory reporting to BNM

Direction

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Initiatives to improve statistical framework:

1. Implement an end-to-end Integrated Statistical System (ISS) with agile IT

infrastructure and architecture over a period of 2 years (2011 – 2012) with the

following scope and functionalities:

a. A centralised, standard and unified platform for submission of

financial, monetary and economic data to replace the various statistical

submission systems at BNM

b. A centralised data repository for all statistical data from various data

sources, covering the submission system, internal applications, data

sharing partners and commercial databases, etc.

c. Facilities for reporting, analysis, data query, data mining and

dashboard capabilities for alert, simulation and projection

d. A common information portal as the gateway for all internal and

external stakeholders

2. Develop and implement Data Governance to instill discipline in managing

structured data from data origination till archiving

Implementation of ESIA…

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Standardised Taxonomy for Reporting

Overview

Objectives

Developed based on the International Financial Reporting

Standards (IFRS) 2008

Leverage on XBRL Taxonomy for FINREP (reporting of financial

statements data) customised to meet BNM’s needs

Streamline the differences in the reporting of financial statements

and other statistical data in terms of description, classification and

definition

Standardise reporting framework and infrastructure for submission

of data by all financial institutions

Facilitate comparative analysis across the regulated industries and

flexible to meet “on demand” data needs

Scope and

Usage

Common across the five regulated industries (with specific data

items by industry):

Banking

Insurance (including intermediaries)

Takaful (including intermediaries)

Development Finance

Payment Systems

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Data Source layer

Data Acquisition

Commercial/

Islamic/

Investment Banks

Development

Financial

Institutions

Insurance /

Reinsurance /

Takaful

Companies

Intermediaries

Other Agencies

Individuals

Card Companies

DOSM, IMF,

KWSP, PIDM,

BURSA, ISM etc.

New Statistical Submission

Data Store

Financial Data

Banking

Insurance / Takaful

Development Finance

Credit Data

External Data

Payment System

Intermediaries

Others

Non Financial Data

Macroeconomic Data

()

Data Repository

Layer

Operational Data

Store (ODS)

Data Warehouse

Credit Data

External

Data

Insurance

Banking

Compliance

Macro

economic

Credit Data

Reporting

Services

Data Mart store

Compliance

Credit Data

Industry &

Institutions

Data Integration

process

management

External Data

Financial

Statement

Macroeconomic

Profile

Data mart

Data mart

Data mart

Data martData mart

Data mart

Data mart

Data mart

Standard Reporting

Ad hoc query

Dashboard

Analytics (Mining)

Event driven

reporting

Data integration

process monitoring

External reporting

Data Dissemination Layer

Data

Integration

Layer

Staging

and

Integration

Non NSSS

Source applications

Overall Information Flow of ISS

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Data Source layer

Data Acquisition

Commercial/

Islamic/

Investment Banks

Development

Financial

Institutions

Insurance /

Reinsurance /

Takaful

Companies

Intermediaries

Other Agencies

Individuals

Card Companies

DOSM, IMF,

KWSP, PIDM,

BURSA, ISM etc.

New Statistical Submission

Data Store

Financial Data

Banking

Insurance / Takaful

Development Finance

Credit Data

External Data

Payment System

Intermediaries

Others

Non Financial Data

Macroeconomic Data

()

Data Repository

Layer

Operational Data

Store (ODS)

Data Warehouse

Credit Data

External

Data

Insurance

Banking

Compliance

Macro

economic

Credit Data

Reporting

Services

Data Mart store

Compliance

Credit Data

Industry &

Institutions

Data Integration

process

management

External Data

Financial

Statement

Macroeconomic

Profile

Data mart

Data mart

Data mart

Data martData mart

Data mart

Data mart

Data mart

Standard Reporting

Ad hoc query

Dashboard

Analytics (Mining)

Event driven

reporting

Data integration

process monitoring

External reporting

Data Dissemination Layer

Data

Integration

Layer

Staging

and

Integration

Non NSSS

Source applications

Overall Information Flow of ISS

Submission of data through BNM Enterprise Portal platform with data quality checks at source

Run data integrity checks and resolve inconsistencies using data transformation

Standard, consistent data elements as per the metadata definition Data stored at atomic level with lowest level of granularity

Information organised as per functional domains Data optimised for performance Compliance with conformed dimensions for cross domain consistency ODS can populate data into the Data Warehouse

Data authorisation according to needs Pre-calculation of aggregates, key figures, time series Dissemination of information via reports, alerts and data feeds

Thank you