Takaful Malaysia

Syarikat Takaful Malaysia Bhd (Takaful Malaysia), the only pure takaful operator listed on Bursa Malaysia, has been forecasted to see consistent earnings moving forward, thanks to the large regional Muslim population, currently low family takaful penetration rate and its niche expertise.

OSK Research Sdn Bhd (OSK Research) stated in a research note, “The takaful industry has been experiencing strong growth in Malaysia during the last decade on the back of various government initiatives to promote the country as a global Islamic financial centre.

“We see tremendous potential in the life takaful business as demand for healthcare strengthens due to demographic shifts, coupled with the fact that the family takaful penetration rate was merely 10 per cent of the population in 2010.

Takaful Malaysia with a market capitalisation of RM508 million was presently the only takaful operator which offered a 15 per cent no claim rebate for all its general insurance products and selected family takaful products.

In terms of gross takaful contributions, Takaful Malaysia was ranked second in 2011 with a 21 per cent market share. Zooming specifically into general and family takaful, Takaful Malaysia was ranked second for both categories with a market share of 19 per cent in 2011.

OSK Research expected more competition moving forward especially from bank-backed takaful operators, considering that they can distribute their products aggressively via their branches.

Malaysia’s penetration rate for overall life insurance in 2010 stood at 41 per cent of the population, or 2.8 per cent of gross domestic product (GDP), which is low compared with that in developed nations such as Singapore (6.1 per cent) and Japan (7.5 per cent),

Meanwhile, the penetration rate for takaful in Malaysia was about 10 per cent of the population of which the Muslim segment comprised more than 60 per cent; this indicated a large untapped market.

“We believe that the life insurance industry will grow at more than eight per cent annually as its growth rate is usually two to three per cent above the country’s GDP, while the takaful industry should continue to enjoy a double-digit growth of 20 to 30 per cent as the population becomes more familiar with the concept of takaful insurance moving forward.

OSK Research also believed the group’s Indonesian operations offered immense potential as the family takaful penetration rate stood at only one per cent of the population in a country with more than 213 million Muslims.