Foreign insurance companies operating in Malaysia have until the end of 2023 to reduce their shareholding in the local arm or contribute to a charitable fund, Bloomberg reported citing sources.

Bank Negara Malaysia, the central bank of the country, has set the cut-off more than a decade after the provision was introduced.

Insurers who fail to comply with the ownership limit by the deadline will have to contribute to a national insurance programme, called B40 Health Protection Fund, the sources said.

The Malaysian government first piloted B40 Health Protection Fund in 2018. It provides insurance coverage to households with weak financials in need of treatment for critical illnesses.

To comply with the requirements, the insurers had the choice to divest their shareholding or contribute to the health fund.

In response to the publication’s query, Bank Negara Malaysia said that insurers entering the Malaysian market accepted the divestment condition. The central bank is working closely with foreign shareholders on their divestment plans.

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Japanese insurance major Tokio Marine, AIA, Generali, Prudential and Zurich Insurance Group are among the international players with operations in the Southeast Asian country.

According to a stock exchange filing, Singapore-based Great Eastern Holdings pledged to contribute MYR2bn ($451m) to the B40 fund in 2019.

Till now, it is the only insurer to have publicly announced a contribution. The central bank’s provision for ownership was introduced in 2009 and mandates that foreign players can control only up to 70% of a local arm.