ING PUBLIC Takaful Ehsan part of AIA AFG Takaful

18 December 2012 marked a historic date for ING Malaysia group of companies where the acquisition by AIA Malaysia was completed.  Companies affected were ING Insurance Berhad, ING Employees Berhad and ING PUBLIC Takaful Ehsan Berhad (IPTEB).  With the closure, AIA now owns two takaful licenses thus it must relinquish one of the licenses under several options.  It may sell one of the entities entirely to any interested party without affecting the business as well as the resources.  However, after several meetings with Bank Negara Malaysia (BNM), AIA had decided to merge the two entities and return one of the licenses to BNM for their further action to offer to new investor.  In the process of integrating the two takaful entities, four senior management including CEO of IPTEB have been terminated and it is expected similar casualties may happen to other levels in the near future.  It is interesting to note that the four senior management terminated had a total relevant working experience of close to 100 years. Whilst the regulator and industry had identified shortage of talent as one of critical success factors for takaful industry, it is amazing to note that talents with about 100 years of relevant working experience can easily be laid off.

Takaful Ehsan was established on 11 March 2011, obtained takaful license from BNM on 1 April 2011 and officially launched the operation and business on 5 April 2011.  It embarked on a multi-distribution channel strategy namely agency, bancatakaful and employees benefit (EB) or corporate business.  Among several achievements, Takaful Ehsan had successfully introduced a full-fledged e-submission or iPOS since it launched it’s business thus making it the first among takaful companies to embark on full-fledged iPOS.  With the facility, customer or intermediary can easily submit cases via online and can print the letter of approval on the spot within 1-2 minutes upon successful online underwriting using smart underwriting.  Takaful Ehsan had also received tremendous acceptance on it’s EB business in view of stability of the system.

Now, upon completion of integration between the two takaful operators which is expected by mid of 2013, Takaful Ehsan will no longer exist in the industry.  It may be the shortest life span for a takaful company in the world and should be recorded accordingly.  May Allah bless all those who had contributed tremendously in the establishment of Takaful Ehsan and wish them all the best in the future pursuit to enhance Islamic financial sector in Malaysia as well as global.

Takaful - Global Development & Opportunities Ahead

Based on 2009 statistics, Saudi Arabia recorded the biggest takaful market in the world with approximately US$3.6 billion worth of business. Malaysia recorded second with US$1.2 billion; United Arab Emirates third with US$640 mil; followed with Sudan and Indonesia of US$340 mil and US$252 mil, respectively.  However, in terms of population Saudi Arabia consists of about 27 mil; Malaysia about 29 mil; UAE about 9 mil; and Indonesia about 240 mil of people.  Based on the above statistics it is obvious that Indonesia has the biggest potential takaful business due to high population and Moslem with low business penetration.  Furthermore, Indonesia has currently only 4 full fledged and 36 takaful operators and windows, respectively, with separate license for family and general business.  Takaful market penetration is still low at slightly above 1% compared to it's neighbor of about 12%.

There are several interesting factors in Malaysia which can be the benchmark for other markets like Indonesia:
1. CAGR in the last 5 years about 25% (double digit)
2. Not adversely affected by the global financial crisis
3. Global insurers had participated in takaful business via JV partners (high growth potential)
4. No. of takaful operators surged to 12 from 8 previously

With low takaful market penetration especially in Indonesia, it indicates a huge growth potential ahead for existing and new operators to grab.  Conventional insurers in the said countries registered double digit market penetration for instance Malaysia with more than 40%.  For countries with high Moslem population, takaful market penetration is expected to surpass the conventional rate in the next 5-10 years given the right strategies in place.  Moreover, Moslem comprise of about 25% of world population thus making takaful a huge potential awaiting ahead.  Statistics also indicated that significant proportion of the population consist of those aged 35 and below with highly sophisticated education and IT savvy.  This will lead to high demand for product like takaful in the near future.

What needs to be done in order to achieve the aspiration to increase market penetration beyond conventional?

Firstly, existing takaful operators shall ensure strong financial capabilities to be able to absorb or underwrite large and specialised risks with bigger retention capabilies. Shall be robust in new product development to fulfill financial needs of modern days consumers.  Takaful operators shall also minimize their dependencies onto conventional reinsurers as well as insurers thus giving full support to retakaful players.  With stronger financial capabilities, the operators can look into expanding across borders and become global takaful operators.

Technically, takaful operators shall build sufficient financial strength in order to meet with minimum risk based capital requirement.  This will include prudent actuarial reserving requirements.

Wealthier countries including Islamic Development Bank (IDB) might want to consider to extend their funds into takaful operators mainly to support the Islamic financial institutions.  With additional funds (less emphasize on returns), takaful industry can equip with latest and efficient information system to ensure the best process flow leading towards beyond expectation deliverable.

Last but not least, the industry shall find ways and means to attract best talents who will build their career within the industry.

Do we really need microtakaful?

We always hear several quarters or parties urging the takaful industry to promote the microtakaful business whether in Malaysia, Indonesia, or any other countries.  Despite of those numerous efforts, the outcome of microtakaful business is not as what expected.The number of operators which participated in this business is less than 3 players even though the main objective of this initiative is really ethical and jive with the concept of takaful i.e. helping each other.  Now we need to do really assess whether this is the right strategy or not.

In Malaysia, the government is working hard to develop the nation into a high income population.  This is in line with the aspiration to become a developed country by 2020.  However, this high income population initiative definitely will result in lower low income population.  This segment of population is actually the main target market for microtakaful business.  Therefore, the appetite of takaful industry to promote microtakaful business is obviously eroding.  This could be the main reason why the response from the industry in microtakaful business is almost negligible.  We need to review the initiatives thoroughly and decide whether we should continue in promoting microtakaful business.

Ehsan ILT Med

Excellent Takaful Agent

Takaful agent is an entrepreneur thus his earning depends on how well he observe the key success factors of being an excellent takaful agent.  The approach is known as DOME:
1.  DIAGNOSIS - You should conduct a comprehensive evaluation of your current status against your desired goal. This will lead to a gap analysis result where you compare between your existing achievement against your objective or goals as set at inception. For instance, you have set to close 4 certificates per month however you had only achieved 2 per month so far on average.  Thus, your gap is 2 certificates to be closed per month.  Similarly, you may have set a target of RM2,400 per certificate for average annual contributions whilst your current achievement is only RM1,800 thus your gap is RM600 per certificate.  For leaders, you may have set to recruit 120 agents per annum whilst your current achievement is only 60 agents thus creating a gap of 60 agents to be recruited.  You may have also set persistency as your key diagnosis.
2.  OBJECTIVE - After conducting a comprehensive diagnosis, you then set your objectives to minimize or zerorised the gap.  For instance, your objectives are to close 4 certificates per month, contribution target of RM2,400 per certificate for annual contribution, recruit additional agents of 60 agents in the next X no. of months.
3.  METHODOLOGY - Now you have to lay out the strategic initiatives that will lead to your achievement of the objectives as set above.  For instance, if your closing rate is 20% then in order to recruit 60 additional agents you need to have a prospect agents of at least 300 persons (60 / 20%).  Similarly, if you want to close 4 certificates per month you need to have prospects of at least 20 per month if your success rate is remain at 20%.  Furthermore, if your success rate for appointment or meeting is say 20% again then you need to have at least 100 leads or referral.  This is also known as Prospect 100.  Basically, it is an activity game plan.
4.  EXECUTION - Finally, a plan will remain just a plan if it is not well executed.  Therefore, all the above in item 1 - 3, shall be properly documented in a project management plan (PMP) in order for ease of execution.  PMP usually comprises of at least What to do, Who shall be responsible, and When it is due.

In addition to the above, there are also certain behavioral elements which ensure greater success in takaful agency business which can be summarised as EHSAN:
1.  Excellent - always perform your duty to the best of your ability and take extra milestone to deliver excellent services to your clients
2.  Honesty - always being honest when dealing with your clients
3.  Solution - remember that you are offering the best solution to help ease the burden of your client when the mishap arises
4.  Assurance - always give your assurance that you are always there when the need arise
5.  Nurture - you should always nurture the best in whatever you do to delight your client.


I will share a new concept in your endeavor to become an excellent takaful agent in my next posting.

Zero Based Philosophy

Zero is a special number which is weird and unexplainable. For instance, 4/2 = 2 thus 2 X 2 = 4. However, 4/0 = Infinity but 0 X Infinity not equal to 4, following the mathematics as above.  If we  come across with a house under fire we commonly just watch and maybe ask around about the owner of the house or whether anybody trap inside it.  We may further ask whether someone had contacted the firemen for the rescue.  Similarly, if we happen to be at a seaside and someone is drowning we may ask more or less the same kind of questions such as whether someone had called for the rescue, etc.  If we change the situation where inside the burning house is our baby or loved one we would definitely without any delay, rush into the house to rescue the person.  We would waste no time asking questions like calling for the rescue etc.  Same goes to the drowning case.  This is a situation called a Zero Based where we forget who we are and whether we will survive or not and etc. Instead, we  leave it to the God to determine our fate as we deeply believe that our intention is absolutely good and pious.  That is a moment where nothing is important to us other than saving the life of our loved one and we solely submit our life entirely to God.  Thus, if we believe that doing takaful is a pious act from Islamic point of view and shariah jurisprudence, we should zero based ourselves with takaful company we are in, and fully commit and contribute to deliver the best results of the company.  The rest is up to Allah swt to determine our outcome and fate.  The more you give the more you get and doing good deeds will result in good return.

1st Roadshow and Launching of Takaful Salam

After successfully launching the first product, Mortgage Reducing Term Takaful (MRTT), Takaful Ehsan continues it's initiatives in increasing market penetration by launching the second product, Takaful Salam, during it's first Malaysian roadshow from 17 - 22 May, 2011.  It took a bold move to conduct the launching in Bukit Mertajam, Pulau Pinang, far away from capital of Malaysia, Kuala Lumpur.  Bukit Mertajam is selected as the venue due to it's strategic location in the midst of 3 states i.e. Pulau Pinang, Kedah and Perak.  Main purpose of the roadshow are:
1. Brand awareness campaign;
2. Takaful Salam product launching; and
3. Agency recruitment campaign.

Takaful Salam is an investment linked type of policy with 4 additional riders as follows:
1. Investment linked Takaful Ameen;
2. Investment linked Takaful hospital income;
3. Investment linked Takaful accelerated illness; and
4. Investment linked Takaful Salam saver.

Takaful Ehsan is expected to collect more than 1,000 leads generation for potential agents as well as customers to Takaful Salam. With highly Moslem populated area in Bukit Mertajam and surrounding area, Takaful Ehsan expects to create a successful brand awareness campaign in the north part of Malaysia.
The activities are held in the biggest shopping mall in Bukit Mertajam, AEON Jusco shopping complex, where huge number of visitors usually spend their time for shopping, eating, networking, business, etc.  This roadshow marked a historical milestone for Takaful Ehsan and more interesting events scheduled to be launched in the near future.  www.takaful-ehsan.com.my