Malaysia’s Islamic insurers are seeking to double policy holders in five years by investing more in digital technologies to attract a younger audience, according to the industry association’s head.
Takaful operators should also step up educational campaigns
to boost customers to 8.4 million by 2020 from about 4 million now, Ahmad
Rizlan Azman, chairman of the Malaysian Takaful Association, said in an
interview from Kuala Lumpur Tuesday. The Shariah-compliant industry is aiming
for a 25 percent market share compared with 14 percent at the end of 2014, he
said.
Islamic insurance in Southeast Asia has the potential to
catch up with the leader Saudi Arabia, driven by increasingly young populations
and strong economic growth, according to a report from Ernst & Young LLP,
which forecasts global assets will climb to $20 billion by 2017 from an
estimated $14 billion last year. Attracting more professionals is another
prerequisite to achieving Malaysia’s targets, Ahmad Rizlan said.
“There’s still much to be done in increasing awareness of
takaful insurance amongst Malaysians,” said Mohamed Hassan Kamil, group
managing director of Kuala Lumpur-based Syarikat Takaful Malaysia Bhd. “With
less than 60 percent of the population having a life insurance or a family
takaful policy, there is still very high upside potential.”
Takaful is based on mutual assistance, where policy holders
contribute a sum of money to a common pool managed by a company. The funds are
used to pay for claims and any excess is returned to customers. Shariah law
prohibits the payment of interest and embraces both profit and risk-sharing.
Tertiary Campaigns
Malaysia is seeking to bolster its position as a global
Shariah-compliant hub after pioneering Islamic finance 30 years ago. About 61
percent of the country’s 30 million people are Muslim. U.S. government data
estimates 46 percent of the population are 24 years old or younger, compared
with 43 percent of Indonesia’s 253.6 million.
Islamic insurance assets within the Association of Southeast
Asian Nation’s may grow to $6.4 billion in 2016 from $4.2 billion in 2014,
according to Ernst & Young’s report. Asean countries account for 30 percent
of the global takaful market led by Indonesia and Malaysia, compared with 48
percent in Saudi Arabia, it said.
“We are targeting the underserved and the younger people who
are entering the workforce,” said Ahmad Rizlan, who is also chief executive
officer of Etiqa Takaful Bhd., Malaysia’s biggest Islamic insurer. “We are
doing this by embarking on awareness campaigns at the tertiary level.”
Digital Age
In countries such as Malaysia, Singapore, Indonesia and
Thailand there’s an impetus for companies to embrace digital in financial
services, the public sector and media and telecommunications, according to a
Deloitte Touche report in May as it started Deloitte Digital in Southeast Asia.
Smartphone penetration in the region is expected to expand at a compound annual
growth rate of more than 20 percent, it said.
“Digital is the CEO’s next battleground,” said Jonathan
Rees, executive director of Deloitte Digital in Southeast Asia. “As the engine
room for growth in emerging markets, responsibility for digital cannot be
delegated. It must start at the top.”
Malaysia’s central bank introduced new rules in 2013
requiring insurers to have clearly defined licenses for takaful and those
covering conventional policies to ensure transparency and Shariah compliance.
That should help boost efficiency and market growth, according to Ahmad Rizlan.
Syarikat Takaful’s Mohammad Hassan said the nation’s Islamic
insurers have to push for innovative new ideas to keep their growth momentum
going. The company is considering an acquisition in the next two years to
increase its customer base, he said.
“Takaful operators need to be innovative and to offer
products that are competitive with conventional insurers to entice policy
holders,” said Mohd. Effendi Abdullah, Kuala Lumpur-based head of Islamic
markets at AmInvestment Bank Bhd. “If that can be done, then it’s possible for
takaful operators in Malaysia to double policies in five years.”
Written by Elffie Chew on Bloomberg
0 comments:
Post a Comment