MALAYSIAN INSURERS FACING PROBLEMS WITH ICAR CALCULATIONS

Insurers in Malaysia have been facing problems calculating the Internal Capital Adequacy Ratio (ICAR) required under the proposed risk-based capital framework (RBC) in Malaysia, according to Vijayam Nadarajah, former president of Malaysia’s Institute of Internal Auditors. He said that “the evaluation criteria of enterprise risk is unclear to many insurers and they are looking for some guide on identification, assessment and particularly on quantification of qualitative issues and the eventual contribution to the determination of ICAR”. Insurers in Malaysia need to be RBC-compliant next year, but Mr Vijayam said that ”although the foreign insurers may be able to meet the deadline for the RBC framework by January 1 (2009), many local insurers may not as they are unclear on the process of developing the risk-cum-capital management models, and in addition, do not have a prescription to adopt”.