Session III: Country Experiences on Data Collection and Monitoring of Insurance Industry

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1 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 September 2010 Kuala Lumpur, Malaysia 1

2 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 2

Statistical Compilation Framework at BNM Compiler Scope of Statistics Users Statistical Services Department the centre for

charge card operations Development Finance institutions statistics Cross-border inflow & outflow of funds External assets &

and Economic Departments Investment Management and Foreign Exchange Administration Departments Payment Systems Financial

3 Statistical Compilation Framework at BNM Compiler Scope of Statistics Users Statistical Services Department the centre for all statistical collection, compilation and dissemination Banking statistics Insurance statistics Credit reports Credit & charge card operations Development Finance institutions statistics Cross-border inflow & outflow of funds External assets & liabilities of banks/corporations Macroeconomic statistics Internal: Regulation Departments Supervision Departments Monetary and Economic Departments Investment Management and Foreign Exchange Administration Departments Payment Systems Financial intelligence External: Financial Institutions Department of Statistics, Malaysia Government Agencies International Organisations Public 3

4 Size of Malaysian Financial System 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 Islamic banks 8.1% Investment banks 2.2% Development financial institutions 5.9% Life insurance funds 4.9% General insurance funds 0.9% Commercial banks 40.9% EPF & other pension funds 16.8% Other financial Bank Negara Malaysia 13.1% intermediaries 7.1% Assets of the financial system (2009 : RM2.8 trillion) 4

5 No of players RM 'm Insurance & Takaful Industry in Malaysia Insurance & Takaful Industry in Malaysia Number of players Insurance & Takaful Fund Assets , , ,000 80, Year Life insurer General insurer Composite insurer Life reinsurer General reinsurer Composite reinsurer Takaful operator 60,000 40,000 20, Year Life insurance General insurance Family Takaful General Takaful Source: BNM Annual Insurance & Takaful Statistics

6 Insurance & Takaful Industry in Malaysia...con t New Business Premium for Life Insurance (2009: RM 7.5 billion) New Business Premium for Family Takaful (2009: RM 2.2 billion) Investment linked 29% Annuity 0% Whole life 11% Investment linked 17% Annuity 0% Endowment 12% Others 12% Endowment 29% Others 14% Temporary 17% Temporary 59% Gross Premium for General Insurance (2009: RM11.5 billion) Gross Premium for General Takaful (2009: RM 1.1 billion) MAT 10% CAR 4% Misc 10% Motor 45% PA 11% MAT 5% CAR 3% Misc 8% PA 13% Fire 18% Fire 21% Motor 52% Source: BNM Annual Insurance & Takaful Statistics

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

7 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 Applicable to submission by: Insurance Act Insurance Companies (Life, General & Composite) 82 Insurance intermediaries (Insurance Brokers, Loss Adjusters & Financial Advisers) Takaful Act Takaful Operators (Family, General & Composite) 7

8 Submission of Insurance Statistics 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, 2 nd semi-annual and annual statistics; and involves main statements only Frequency* Reporting Entity Type of Report Mthly Qtrly 2 nd 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), 2 nd Semi-Annual (14 days) and Annual (90 days). 8

9 Overview of Insurance & Takaful Statistical Systems Electronic submission systems for insurance/takaful data compilation Insurers/ Takaful Operators/ Brokers/ Adjusters Online via IOSS/TOSS website BNM Internal & External Stakeholders Data Entry / Extraction Verification Packaging Data Submission Module CD when necessary Data Validation Module Data Processing Module Reports & Cubes Data Coverage (Statements & detailed information) Insurance & takaful 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) Intermediaries Income Statement Balance Sheet Changes in Equity Activity Report Premiums & Brokerage Training Expenditure Verification by system Data Quality Assurance & Analysis by officers 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 9

10 Financial Stability Surveillance Framework comprehensive, dynamic, integrated and forward looking Complementary objectives of macro & micro surveillance Financial System Risks Mutually reinforcing Identify transmission channels Understanding and monitoring linkages Assess contagion and systemic impact Payment system oversight Enable comprehensive coverage and assessment of risks Ensure optimal and efficient allocation of resources Financial Institution Risks Minimise potential risks and vulnerabilities and subsequent domino effect Mutually reinforcing 10

11 Financial Surveillance & Macroprudential Analysis brings together macroeconomic, monetary, financial market and supervisory input to detect sources of systemic risk Understanding linkages Real sector Assessing implications on financial sector Household sector FINANCIAL SYSTEM Corporate sector Identifying relevant indicators Property market Financial markets Monitoring linkages 11

12 Governance & Communication of Risk Assessment Financial Stability & Payment System Report, Monthly & Quarterly Statistical Bulletins, Speeches and Press Statements Public Financial Stability Policy Committee Management committee Working and Technical Groups Horizontal collaboration Publication of insurance statistics : 12

13 Challenges and Direction Challenges 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 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 Efficient data collection processes 13

14 Implementation of ESIA 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 ( ) 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 14

Standardised Taxonomy for Reporting Overview Objectives Scope and Usage Developed based on the

(reporting of financial statements data) customised to meet BNM s needs Streamline the differences in

classification and definition Standardise reporting framework and infrastructure for submission of

flexible to meet on demand data needs Common across the five regulated industries (with specific data

15 Standardised Taxonomy for Reporting Overview Objectives Scope and Usage 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 Common across the five regulated industries (with specific data items by industry): Banking Insurance (including intermediaries) Takaful (including intermediaries) Development Finance Payment Systems 15

16 Overall Information Flow of ISS Data Acquisition Commercial/ Islamic/ Investment Banks Development Financial Institutions Insurance / Reinsurance / Takaful Companies Intermediaries Data Source layer New Statistical Submission Data Store Financial Data Banking Insurance / Takaful Development Finance Credit Data External Data Payment System Intermediaries Others () Data Integration Layer Staging and Integration Data Repository Layer Operational Data Store (ODS) Credit Data External Data Data Warehouse Insurance Credit Data Data Mart store Compliance Credit Data Data Dissemination Layer External Data Financial Statement Reporting Services Standard Reporting Ad hoc query Dashboard Analytics (Mining) Event driven reporting External reporting Other Agencies Non Financial Data Macro economic Industry & Institutions Macroeconomic Individuals Card Companies Compliance Data integration process monitoring DOSM, IMF, KWSP, PIDM, BURSA, ISM etc. Macroeconomic Data Banking Data Integration process management Profile Non NSSS Source applications 16

17 Overall Information Flow of ISS 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. Data Source layer New Statistical Submission Data Store Submission of data through BNM Enterprise Portal platform with data quality checks at source Non NSSS Source applications Financial Data Banking Insurance / Takaful Development Finance Credit Data External Data Payment System Intermediaries Others Non Financial Data Macroeconomic Data () Data Integration Layer Staging and Integration Run data integrity checks and resolve inconsistencies using data transformation Data Repository Layer Operational Data Store (ODS) Credit Data External Data Data Warehouse Insurance Credit Data Standard, consistent Macro economic data elements as per the metadata definition Compliance Data stored at atomic level Banking with lowest level of granularity Data Mart store Compliance Data Integration process management Data Dissemination Layer External Data Information organised as per functional Credit Data domains Financial Statement optimised for performance Industry & Macroeconomic Institutions Compliance with conformed dimensions for cross domain consistency Profile ODS can populate data into the Data Warehouse Reporting Services Standard Reporting Ad hoc query Dashboard Analytics (Mining) Data Event driven reporting authorisation according to External reporting needs Pre-calculation of aggregates, Data integration key process figures, monitoring time series Dissemination of information via reports, alerts and data feeds 17

18 Thank you

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