In Malaysia, all takaful operators are operating based on full-fledged takaful business model. Comparatively, most of takaful operators in Indonesia are based on window concept business model. Window takaful concept are more towards product manufacturer and distributor relationship where takaful operator will launch takaful products to meet with the need of conventional insurer which act as distributor. Moreover, takaful operator is established with minimal infrastructure where most of the core back-end and supports are outsourced to the conventional insurer which has comprehensive infrastructure and establishment. Nevertheless, regulator in Indonesia is trying to move towards full-fledged model.
Coming back to Malaysia takaful landscape, there are several takaful operators particular new ones are more towards window concept business model where their main shareholders, established insurers, are responsible to distribute the takaful products via their existing conventional distribution channels. In addition, several core functions including actuarial, IT, underwriting, etc are heavily outsourced to the conventional expertise. This should be allowed by regulator only for newly setup companies with limited duration say 3 years after which the takaful operator shall manage internally with few exception like IT which may require longer period say 5 years. By imposing such condition, takaful industry shall see strong development of talents to boost the market penetration in the medium term. When Bank Negara approved 4 new takaful licenses in 2010, it has selected those with strong and established conventional insurers (mainly foreign) with the intention to promote the transfer of knowledge and technology to takaful operators. This can only be achieved provided that the takaful operator is required to be independent from the conventional insurer within specified timeframe. Therefore, all those relevant takaful operators must establish a clear roadmap to indicate their specific deadline to separate themselves from the conventional insurer in totality. The separation between conventional and takaful is vital to ensure that the takaful business is 100% sharia compliance end to end.
Tuesday, February 26, 2013
Tuesday, February 12, 2013
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.
Thursday, March 15, 2012
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.
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.
Saturday, March 10, 2012
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.
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.
Tuesday, February 7, 2012
Sunday, September 4, 2011
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.
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.
Thursday, July 28, 2011
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.
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