Dual Agency Distribution

PETALING JAYA: The dual agency concept, where conventional and takaful policies are sold by the same agents, is gaining popularity, especially among bigger insurance players, as an effective way to boost market share and deepen the penetration rate of insurance in the country.

Some may not agree to this method and instead sell separate policies, but judging from the pace of its adoption among insurers, it is fast making headway amid new players coming into the market.

Great Eastern Takaful Sdn Bhd chief executive officer Mohamad Salihuddin Ahmad said the company would adopt the dual agency or a single structure concept akin to a one-stop agency system that distribute both conventional and takaful products.


Great Eastern Takaful Sdn Bhd CEO Mohamad Salihuddin Ahmad
He added the three major conventional insurance players like Great Eastern Life Assurance Malaysia (GELM), Prudential Assurance Malaysia Bhd (PAMB) and American International Assurance Bhd (AIA) were adopting the single structure system.

Salihuddin said having almost two thirds of the conventional market share amongst themselves, these three players, by adopting a single structure or dual agency concept, would definitely make a huge impact in the takaful industry with their local joint venture partners respectively.

By adopting the one-stop or dual agency approach, he said the takaful operators, especially the new ones, would have an immediate access to the experienced and professionally-trained agency force .

It would also assist them to make a quick entry into the takaful industry and help manage the initial set-up costs, he noted.

Furthermore, adopting this approach was a huge step towards developing or moulding the agency force to be a complete and well rounded professional financial advisor, he said.

The only disadvantage for this approach, he said, would be the possibility of “mis-selling” by some of these dual agents, adding that the onus here would be on the takaful operators to provide structured training programmes to ensure they knew the difference between takaful products and conventional insurance products.

Great Eastern Takaful, he said, would leverage on the strength of its sister company GELM’s 17,000 strong agency force to kickstart its takaful operations where they could sell conventional and takaful policies provided they passed the Takaful Basic Examination (TBE). Great Eastern Takaful at the moment has more than 4,000 agents which had passed the TBE and was in the final phase of consolidating its dual agency structure.

Great Eastern Takaful was one of the four companies which were recently awarded a takaful licence from Bank Negara. The other three were joint ventures between AMMB Holdings Bhd and UK’s Friends Provident Group plc; Public Bank Bhd, Public Islamic Bank Bhd and ING Management Holdings (M) Sdn Bhd; and AIA and Alliance Bank Malaysia Bhd.

PAMB CEO Charlie E. Oropeza said the company’s agents distribute both conventional life insurance products as well as takaful produts underwritten by its sister company Prudential BSN Takaful.

He said the company adopted a single structure for supporting and developing its agency force to ensure unity, fairness and transparency across the organisation.

“We run a single structure to support the agency distribution channel both for bumi and non bumi agents. However, we do make sure that we have staff that are representative of the diversity of the agency force that we support.

“From our experience, having a single structure that is sensitive to the various backgrounds of agency is most advantageous,’’ Oropeza added.

ING Insurance Bhd president and CEO Datuk Dr Nirmala Menon, however, felt that the takaful concept was different from that of conventional insurance and was important to actually build the right expertise to penetrate the Muslim market.

“Being different in approach, it is important to have the right training so that the right customer segment is penetrated. There is a huge opportunity in the existing Muslim/bumi market and this is something that we would like to tap on to increase the overall penetration of the local market and will focus our efforts in areas with a larger Muslim population.

“Cannibalisation is something that we would like to avoid and minimize at all costs and so this will be carefully managed as the ultimate aim is to increase the overall spend on insurance and takaful as we develop into the future,’’ she noted.

Meanwhile, MAA Takaful Bhd CEO Salim Majid Zain said the company would maintain a separate structure as conventional insurance companies and takaful ones were regulated differently.