Malaysian Protection Gap

Working Malaysians need to have an insurance coverage of about nine times their annual salary, according to a study by the Malaysian Takaful Association (MTA).  This translates into a shortfall in insurance coverage of RM200,000 per individual and the overall "protection gap" of 12.5 million working Malaysians in 2012 totalled RM2.5 trillion.

The protection gap refers to the financial needs for working adults in Malaysia up to their retirement age, against the financial consequences of death, critical illness and disability.

According to Actuarial Partners Consulting Sdn Bhd, the company commissioned by the MTA to carry out the study, it revealed that Singapore and Taiwan had a lower protection gap over Malaysia, while for those in Indonesia, Thailand, Hong Kong and Vietnam, it was higher.

 Malaysia aspires to achieve a penetration rate of 75 per cent of total population for life insurance coverage. The present penetration rate is still low, with takaful at 13 per cent and life insurance 56 per cent.

Motor Insurance Non-Tariff

Under the New Motor Cover Framework introduced in 2012, there will be a gradual hike in motor tariff over a period of four years to pave the way for de-tariffication in 2016.

Unbundling tariff allows insurance premiums to be priced according to risks. In line with the New Motor Cover Framework, the third upward adjustment to motor premiums was made in Feb 2014.

Motor insurance premium rates is expected to drop as competition intensifies with the abolishment of statutory tariffs 2016 but insurers will bear the brunt in the initial stage. Competition will intensify once the statutory tariffs are abolished. Competition will drive down premiums, push up claims ratio, and drag profitability in the initial stage. But some normalisation over the years and the industry would be better off in the long term.

It noted that the extent and impact of de-tariffication is still unclear due to ongoing discussions between industry players and Bank Negara Malaysia (BNM). Most insurers we spoke to prefer a gradual removal of tariffs (rather than full enforcement in 2016) to enable the market to adjust and find equilibrium pricing. This would reduce shock to insurers and avoid a steep premium hike for consumers.

Post detariffication, motor premium will be priced according to driver and vehicle profiles. Risk-based pricing would enable customers with good risk profile to enjoy more competitive rates than those with higher risk ratings.

Insurers with good claims experience (low claims ratio) will benefit as they would have room to price their products competitively to gain market share, while the bigger players would be able to reduce operational costs by leveraging on economies of scale and improving efficiency.

Home Mortage Insurance

If you have yet to buy your first home; you may be unaware that you can actually buy insurance for your home loan! Not your home; but your loan! The objective of this insurance is to pay off your loan in the unfortunate event that you can’t due to death or disability.

If you’d like to insure your mortgage and protect your family from losing their home to credit collectors when you pass on; this is the product for you. But as with any kind of insurance; mortgage insurance also come in different types. At present, there are two: the Mortgage Reducing Term Assurance (MRTA) and the other one is the Mortgage Level Term Assurance (MLTA).

MRTA vs MLTA
To start you off; we made a super simple chart to show you the differences between the two insurance types. Though the purpose is the same; you’ll notice they are creatures quite different.

	MRTA	MLTA
Purpose	Protection	Protection, Savings and/or cash value
Coverage	Covers the outstanding housing loan on a decreasing sum assured basis	Covers the outstanding housing loan on a fixed level sum assured basis
Payment	Lump sum payment by cash or financed into housing loan	Paid periodically on a monthly, quarterly, semi-annually or annual basis
Total Premium	Lower	Higher
Nomination	Bank is the beneficiary	Anyone can be the beneficiary
Transferability	No	Yes
Suitable for*	Where buyer aims to own the house in a longer term	Where buyer is expected to sell the house in short-term

Do I even need mortgage insurance?
When we have passed on (or disabled); loved ones can either continue paying the loan or sell the house to repay if necessary.

Do I have to decide when I buy my house?
The simple answer is no. Insurance agents and banks will always be happy to sell you a policy later in your mortgage if you didn’t buy one on the outset.

If paying for MRTA which requires lump sum payment – can you afford this? Many who take MRTA upon application of their home loan will add the additional premium lump sum into their loan amount to help pay for it. Since you can’t do that later on – you must have the full amount on-hand.

Which one is better?
There are two salient differences to note between the MRTA and the MLTA.

The first being that the MRTA will pay out based on the amount still owed to the bank and the MLTA will pay the exact amount agreed in the policy no matter how much you owe (this is usually more than the amount owed and based on the value or purchase price of the property).

The second difference is that the MRTA requires only a single lump sum premium payment whilst the MLTA will be recurring yearly.

There are two ways of looking at this selection: MLTA is great because not only will you receive the amount you need to repay the bank but a little extra which works as a cash value. But because MLTA premiums are repetitive; you’ll definitely be paying more in the long run than you would for an MRTA.

Think about your loan tenure: is the extra you will pay for an MLTA justified in the event of a pay out? MRTA on the other hand is great if all you want to do is to secure your mortgage. It’s the bare minimum in mortgage insurance and it’ll definitely do the job but it’ll give you little else. Still, it’s a single premium payment and is easier if you don’t expect to have a good enough cash flow to keep paying premiums every year.

Also remember that MRTA is non-transferable – meaning it is tied to this house during this financing period. Should you choose to sell; you cannot take your policy with you to the next property you purchase. The opposite is true for the MLTA which is a policy that follows you (if you so want it to!).

When it comes down to it, which is better will depend on you. If you want a bare minimum policy just to secure your house this time around – the MRTA is the choice for you but if you want something a little extra; the MLTA will be a better option.

Agenterpreneurship

To earn trust from clients, agents need to listen carefully to what they need. An agent who is only out to earn a commission is not likely to last long in the business.

Many believe that life insurance can be a hard sell because most people are reluctant to think about their own death or illness. However, it is also known among financial practitioners that life insurance has one of the top product commissions in the entire industry due to its level of adversity.

It is widely known that within the financial services industry itself, few professions match the opportunity for as swift and large monthly income as does being a life insurance agent. In fact, a hard-working insurance agent can easily earn more than Rp 100,000,000 million in his or her first few years of sales.

Regulation stipulates that becoming a life insurance agent only requires a license, which can be obtained by attending training and passing the exam. However, experts say that being successful life insurance agents requires much more.

Trusted advisor
Experts suggest that in order to be a successful insurance agent over the long haul, the person needs to accept his role as a “sales person” and he/she needs to be good at selling ideas. Being good at selling ideas does not mean selling someone something they do not need, or otherwise manipulating or taking advantage of someone.

A good agent needs to be aware that when he/she sells, the goals are to help people, to be a trusted advisor and to educate, further leading people down the path they need to take for the achievement of their financial goals.

Agent-preneurship
Success in any venture begins with the proper mindset. Many senior life insurance agents advised that to be successful, the agents need to have the mind-set that they are business owners. According to an accomplished agency manager, agents need to have the mindset that they are self-employed in their own individual small business.

They need to be aware that if they do their job well and generate sales and profit, they will have a job and a business. If you don’t generate enough sales and profit, you will be out of business looking for another job.

Agents need to manage their time wisely. There are only three activities that will ultimately make them money: prospecting, closing and servicing accounts. Those three activities are where most of, if not all of, agent’s prime selling time should be spent, with or without supervision of the managers.

Gather more sell more
Several practitioners are of the view that agents who listen carefully to what their clients and prospects say will be able to earn their trust, which is the hardest part of their job.

Agents need to put the needs of the customer first, an agent who is only out to earn a commission, regardless of the needs of the client, is not likely to last long in the business. Trusted agents need to be willing to put their clients into a product that might be paying a lower commission because it better fits their needs and is much more likely to be successful.

Best practice advisory life insurance sales process suggest that the fact finding process is one of the most critical and fundamental steps. The data gathered from fact finding can be interpreted, analyzed and put into a proposal that defines the problems and suggests an array of products that potentially addresses them.

Many insurer training and enablement programs now include a special skill in order for agents to be more successful: listening skills. Insurers agree that more than just a slogan, the ability of the agent in listening – really hearing the client – is vital for all financial advisors.

Customer’s perspective
Surveys reported that customers prefer to work with a “trusted agent” that should be able to present them with a number of insurance options that meet their criteria, and should be able to clearly and simply explain the details, advantages and drawbacks of each option.

Andeka Putra, a life insurance customer who owns three life insurance policies with considerably large premiums, pointed out, “As a customer, at no point should I feel pressured into making a purchase; a trusted agent should work with me until I can find an insurance arrangement I am comfortable with.”

Andeka also said, “I do not like hit and run agents. Once I’ve purchased a policy, the agent should be available to review the details of the policy, including benefits and coverage, once every year”.

Syarikat Takaful Malaysia

Syarikat Takaful Malay­sia Bhd, Malaysia’s oldest takaful establishment, is gearing up to face greater competition as more for­eign multinationals enter the field as part of the government’s liberalisation measures.

Tighter lending measures imposed by Bank Negara Malaysia are adding to its pressures, as the Islamic insurer saw sales from its largest contributor to revenue, family takaful, take a hit in the first quarter (Q1) of FY14.

However, analysts have confidence the market leader will remain a step ahead of its closest rivals, which include bank-backed insurers and multinational players. The latest entry into the takaful field, AIG Malaysia Insurance Bhd, has obtained the required regulatory approvals and is looking at setting up a retakaful business this year.

The takaful market in Malaysia is getting more competitive, especially with the entry of bigger multinational companies, a low penetration rate in takaful plus an increasing focus on the liberalisation of the takaful sector. The newcomers are likely to make a push for market share, so existing bigger players may become aggressive to regain market share. Competitive pressure on existing takaful players will increase.

Takaful Malaysia is the market lead­er in family takaful with a 40% market share, and is also market leader for the combined family and general takaful business with 23%. Being aggressive means coming up with cutting-edge selling propositions and innovative products.

Invest Life Intelligently

The topic of life insurance doesn't have much going for it. First, it's about insurance, which many people find boring and complicated. Second, it can involve paying money for something you may never use. And, it's about death.

Those are difficult hurdles and probably among reasons why many surveys show populations are vastly underinsured when it comes to life insurance, which might better be called "income insurance" because its primary purpose is to replace income from a family breadwinner

 

Selling life insurance is an uphill battle. It's not a product that's fun to buy. But life insurance should be a fundamental part of financial planning for those who have others relying on their income.

 

Yet statistics show ownership of individual life insurance policies is at the lowest level in 50 years, with only 44 percent of households owning them, according to the insurance industry group LIMRA. And 86 percent of people say they haven't bought life insurance because it's too expensive, yet they overestimate its cost by more than two times, the group found.

A national survey commissioned by New York Life Insurance Co. recently found that Americans' gap in protection worsened considerably since the Great Recession, amounting to a $320,000 shortfall, up from about $289,000 in 2008. Americans say they want enough life insurance, on average, to cover expenses for at least 14 years after the loss of a breadwinner. But they have only three years of protection in place.

It's no surprise that Americans are underinsured. What did surprise us was the magnitude of the gap and the fact that it has grown so dramatically since 2008.

Also concerning is what the survey found about Americans' perception of what life insurance is for. A majority said the top reason for buying it was to cover funeral expenses, but paycheck replacement is far more important.

The good news for consumers is, the basics of life insurance continue to apply. "The beauty of life insurance is that it's not a fast-moving industry. Unlike health insurance, where what you know one month is wrong the next month, life insurance advice is consistent.

Here is some of that advice:

Determine whether you need it. The overly simple rule is that single people don't need life insurance, married people might and parents of school-age children do. The specific answer is easy to determine. Ask yourself, "Would anybody be hurt financially if I died and wasn't bringing home money anymore?" If yes, you need life insurance.

The cash beneficiaries get, known as the death benefit, replaces your income and can help your family meet financial needs, such as living expenses, including the mortgage or rent and health insurance, as well as kids' college funding, according to the Insurance Information Institute. There is no federal income tax on life insurance benefits.

How much? If you make $80,000 and are looking at $500,000 of life insurance, that's about six years' worth of replaced gross income. When you die, and you will die, are you planning to be dead more than six years. Rules of thumb say you should buy from five to 20 times your income, which is such a wide range as to be useless — and such simple calculations are panned by experts.

Rates. The good news is that simple term insurance — insuring your life over a specific time for a specific amount of money — is relatively inexpensive. A 40-year-old male nonsmoker in a good health can get $500,000 worth of coverage for as low as $350 a year,

Term or perm? Term life is the easiest type to understand. For example, 20-year level term means you will pay the same premium for 20 years in exchange for a specified payout if you die within that period. If you don't die in that time window, your beneficiaries get nothing. But maybe that's OK because after that time, your children will be grown and have their own incomes. And you're confident that your retirement nest egg will be big enough to support your spouse.

Permanent life insurance, such as universal life or variable universal life that have investment components, can be much more complicated and much more expensive. But they can make financial sense. Make sure you thoroughly understand what you're buying.

A new type of policy that's gaining traction allows you to tap your life insurance death benefit before your die as long as it's for long-term care expenses.

Shop it. As with other types of insurance, premiums can vary widely, so get multiple quotes or use a broker. But don't let indecision delay getting the insurance you need. "Dying without coverage is a lot bigger problem than paying too much.

Don't keep it a secret. Tell beneficiaries that your policy exists. Imagine paying for life insurance for decades and decades and having that money go down the drain because your beneficiaries can't make the claim."

What Stop You From Investing In Life

Individual life insurance policy ownership is on the decline. In the 1960s, nearly three in four U.S. households owned an individual policy, according to the Household Trends in Life Insurance report from LIMRA, the life insurance industry’s research arm. In 2010, just 44 percent of households surveyed owned such a policy.

The Great Recession is oft-cited for why many Americans have opted not to buy a policy, or to let an existing policy lapse. But an even bigger trend is the root cause. In 1900, 75 percent of Americans died before the age of 65. Today, 75 percent of Americans live to celebrate their 65th birthday. So the fear of leaving family members destitute in the event of premature death has been replaced by the concern of being a financial burden to family members in old age.

 

Yet we still feel vulnerable. When asked, 58 million U.S. households admitted needing more life insurance. So what’s holding us all back? Here are the five reasons why we don’t have adequate life insurance.

Misperception of cost. Two-thirds of Americans believe life insurance is too expensive. But if you’re healthy and in your 20s or 30s, a policy can cost less than a dollar per day. Pushing 40, now’s a good time for us to revisit our policies. The younger you are, the better your rate.

Inertia. Insurance purchases are prompted by life events. Buying a house. Getting married. Having babies. Day-to-day, our money conversations tend to revolve around household expenses and short-term wants or needs. Dreaming of a winter vacation, and doing some legwork to decide if that dream can come true, is far more pleasant than having a conversation about how much insurance would be needed to replace the income of a spouse who probably won’t die young.

Competing expenses. This is the big one. It can be argued that families with kids at home have the most pressing need for life insurance. But families with kids at home are in a pricey life stage, forever juggling costs of child care, sports and keeping the pantries stocked with the looming twin terrors of college and retirement. So it can be hard to prioritize protection, especially in a slow economy. But insurance is critical because of the economy. It’s more important to maintain insurance when you don’t have additional resources coming in.

Complexity or confusion. How much insurance do I need? And what do all those complex insurance words mean? New research from LIMRA discovered 19 million “stuck” life insurance customers — people who started researching insurance and failed to purchase because they were overwhelmed by too much information or frustrated by opaque technical lingo.

A disconnect. Nearly 4 in 10 respondents in the Barometer study said they don’t trust insurance companies. That’s a lingering issue stemming from the financial crisis. Making policies easy to understand is one step toward rebuilding trust.

Singles Buying Insurance

If you’re like most people, you’ll purchase life insurance if you decide to get married or have children – milestones that are coming later and later for many Americans. According to the Insurance Information Institute, only 18% of life insurance is held by policyholders under 25.

For some, this makes sense. Marriage and children definitely increase the number of people dependent on your income. However, even if you’re young and single, there may be circumstances in which your death could financially hurt your friends or family members – and other reasons to sign up for life insurance.

You have significant financial obligations
Today, many start their adult lives with a significant amount of debt (example - student loan). If you die, your guarantor will be burdened with the loan. Credit card debt works in a similar way. A life insurance policy for at least the amount of your debt or loan will protect co-signers if you can no longer make payments.

Family members depend on you
Regardless if you live with your family members, they may depend on you to get by. Perhaps one of your parents is elderly or handicapped and needs you to do their shopping or chores. Or maybe you’re helping a sibling through school. If you were to die, they’d still need help – but might not have the means to pay for it. A life insurance pay-out could defray bills for in-home care or educational costs.

You’re worried about funeral costs
Funerals are expensive. In 2014, the national median cost was RM20,000. If you’re worried that that expense would be unmanageable for your friends and family members, and you’re not prepared to set money aside yourself, you might consider a small life insurance policy.

You own a business
Much of your personal net worth might be invested in your company, and if you have business partners and employees, the situation is even more complicated. It’s best to consult with a lawyer for details, but a life insurance policy could allow your co-owners or employees to buy out your portion
of the business – or take other necessary action – if they couldn’t otherwise afford it.

What’s the next step?
For some singles, doing without life insurance is perfectly fine. Keep in mind, though, that buying a policy when you’re young is significantly less expensive.

Myths On Life Insurance

Life insurance is something that almost everyone needs and not having it when you need it can be devastating to your family’s well being. Here are some of the most common and dangerous myths about this often misunderstood product:

Your employer-provided life insurance is all you need.
You will lose the employer-provided life insurance once you leave the employer. Should you purchase an individual policy, the premium rate is more expensive due to higher age upon entry. In the event of deteriorated health, your application may be denied, loading on premium and/or limitation imposed.

Only the breadwinner needs life insurance.
If something were to happen to the stay-at-home spouse in your family - the breadwinner may need to hire someone to clean and take care of the kids and that can cost a lot of money. Unless your family would have that extra income to spare, you may need life insurance on both spouses. Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss.

Life insurance is really expensive.
Study conducted by LIMRA, found that 25% of Americans said they need more life insurance but only 10% planned to purchase it within the next year. The main reason given was cost, with 63% saying that it’s too expensive. However, 80% of them overestimated the cost. 25% thought that a $250k 20-year level term policy for a healthy 30-yr old would cost $1k a year or more when it actually would cost about $150.

My health disqualifies me from life insurance.
There are a lot of companies that cover a range of health conditions and some even specialize in high-risk cases. You can also purchase a policy that is not medically underwritten at all. Just be aware that they tend to be more expensive and have lower coverage limits.

Everyone should buy term and invest the difference.
While this generally makes sense for most people, a permanent policy can be a better deal if you need life insurance for your entire life. Some examples would be to provide for a special needs child or to cover estate taxes. For a small percentage of the population, the cash value can also be a good investment if you need life insurance, are in a high tax bracket and have maxed out all your other tax-advantaged options.

You get a better deal purchasing life insurance online.
The Internet can be a great place to research life insurance and find an agent but you actually pay the same price whether you purchase a policy online or through a human being. What you don’t get online is the personal service that can help you figure out how much you need, which company is likely to give you the best price based on your health situation, and what the terms on the application mean.

You’re too young to worry about life insurance.
Life insurance actually makes the most sense when you’re young since the premiums are less expensive and you have fewer assets to pass on to heirs. The longer you wait, the more expensive it will tend to be and the more likely you are to develop a medical condition that makes it much more expensive. Of course, the biggest problem with procrastinating life insurance is that by the time you need it, it’s too late to get it.

Every person’s situation is unique. Some people don’t even need insurance at all. Whatever decision you make when it comes to life insurance, just be sure it’s an informed one. After all, if something does happen to you, you don’t get to come back and relive the day.

LTH Debit Card

Lembaga Tabung Haji become the first non-banking Islamic institution in the world to introduce a debit card service with the launch of its "Tabung Haji Debit-i MasterCard " today.

The Tabung Haji Debit-i MasterCard would provide depositors another access to their Tabung Haji account which works like cash or personal cheque in which all purchases and transactions would be debited directly from their saving accounts.

The card would allow hajj pilgrims to conveniently withdraw and make purchases in the Holy Land.

Cardholders can also withdraw cash at more than 2.5 million automated teller machines worldwide, as well as, shop at over 38 million merchants locations where MasterCard was accepted in Saudi Arabia and around the world.

281 FARSs Only

Bank Negara Malaysia (BNM) is simplifying the process of obtaining financial adviser's representative (FAR) licence in order to attract more FARs and is expected to make an announcement some time this month.

The modules for Certified Financial Planner (CFP) and Registered Financial Planner (RFP) qualifications will be reduced to three. Currently, there are six modules under CFP and seven modules under RFP and each module takes some 42 hours. As of Sept 30, 2013, there are only 281 FARs.

FARs only need to undertake Modules 1, 2 and 3 to obtain the RFP qualification, which is conferred by the Malaysian Financial Planning Council. Meanwhile, the Securities Commission is also expected to simplify the process of obtaining New Capital Markets Services Licence (CMSL) and New Capital Markets Services Representative's Licence (CMSRL).

The source said similarly, the SC will also reduce the requirements to three modules. The definition of FARs according to BNM, are individuals in direct employment of, or acting for, or by arrangement with, a financial adviser (FA).

FARs perform for the FA any of the functions of a FA (other than work ordinarily performed by accountants, clerks or cashiers), whether his remuneration (if any) is by way of salary, wages, commission or otherwise, and includes an officer of the FA who performs for the FA any of those functions.

The activities of FAs include analysing the financial planning needs of an individual relating to insurance products, recommending the appropriate insurance products, sourcing insurance products from insurers or arranging of contracts in respect of insurance products.

FAs are licensed under the Insurance Act as a category of intermediaries. In addition to insurance products, they may also provide advice and market other financial products subject to prior approval from the relevant authorities.

FAs are responsible for providing holistic financial advisory services to consumers, ranging from insurance protection, savings for education, retirement planning and investments for the future.
According to previous news reports, the Malaysian insurance market is expected to see premiums increase by an average of 7% a year and will more than double in size by 2024 from RM45.6 billion in total premiums recorded in 2013.

Yang Berhormat Puan Dayana

On May 31st, 2014 - Yang Berhormat Puan Dyana Sofya Mohd Daud lost her inaugural battle at Teluk Intan.










Dear Dyana Sofya,

You may have lost this small election but you have won the hearts of many, many Malaysians. Despite the ugly ways and attempts to shame or demonise you, we are pleased you did not sink down to the level of those who were shameless in their behaviour.

We know you are ethnically Malay, but throughout this campaign it was clear you are first a Malaysian and stand for all Malaysians. So we seldom think or see you as a Malay, but more as our fellow sister and Malaysian.

It is vital that all of us move away from any form of ethnic politics, ethnic decision-making, ethnic criteria in selection, etc., as this just divides us further. So we are delighted with your stand of inclusiveness.

We want to assure you that you did not lose but won many heart.

The amount of pressure, threats, inducements, promises, etc., that were used is unbelievable. Such behaviour is unethical in any developed and ethical nation.

Do not lose heart.

We are all fighting for the true One Malaysia, where our ethnic differences are celebrated and appreciated, where our religious difference are respected and protected, where we no longer have to classify ourselves by our ethnicity but by our identity as Malaysians.

Like you, we long for the day when Malaysians from all walks of life will fight for their fellow man, regardless of their skin colour, beliefs or position. Thank you for doing so.

Letter from Datuk Dr Amar-Singh HSS and Datin Dr Lim Swee Im 

Investing In Life

You may have read that you don’t need to buy life insurance early in life, but getting a policy before midlife may prove wise. In fact, there are compelling reasons to get life insurance between the ages of 18 and 45,

The key question. Are you supporting individuals whose livelihood depends on your income? If the answer is yes, it’s time to look at life insurance.

You’ve got your health. Typically, people shop for a life insurance policy in the middle of their life spans – when they are in their 40s or 50s. At that time, they may already have fallen into the grip of unhealthy lifestyle habits, or disease may already have entered their health picture. All these conditions can jack up premiums or make it harder to get a policy. 

The cost is relatively cheap. Additionally, premiums for standard-risk term life insurance actually fell 50 percent between 1994 and 2007. Premiums have been getting cheaper and cheaper for new term life policyholders, partly because the mortality rate has dropped over the decades.

Why would young singles need life insurance? Good question. Some financial consultants will tell you there is no pressing reason for it. Yet if you are single, buying a term life policy (or even a permanent life policy) early on could bring you a better deal and potentially guarantee your insurability. 

Maybe it’s time. Time passes, things change, and so does your need for insurance. Even if you are insured, it’s important to keep up with change, age, a marriage or a new baby.

If you’re young and you haven’t yet talked to a qualified insurance advisor, think about doing so today – you may be pleasantly surprised how affordable life insurance can be.

Distribution Mall-assurance

Already making waves in the personal lines general insurance sector, Coles has today launched a life insurance product. The supermarket giant has said it will offer life insurance, starting at $1 a week, underwritten by Metlife.

Rob Scott, Coles finance director, says offering life insurance was a natural progression for the company, which already sells car and home insurance.

“Coles realises how important your life, your health and your family are and we want to help everyday Australians protect what is dear to them,” Scott said.

“We know that changes to life circumstances are a big driver in consumers making the decision to take out life insurance. It’s important for them to know Coles now offers protection, with a price beat guarantee, that is simple, easy to understand and easy to apply for.”

He added that when Flybuys members combine Coles Credit Card and insurance products they have the opportunity to save over $900 a year.

 

 

Distribution Online Insurance

Want to sell life insurance online?  The idea of sitting at home and selling life insurance over the internet is attractive to many brokers.  No more suits, no more evening appointments, no more traffic.

I have some bad news - It doesn't work like that.  There really is no broker website you can build where consumers are going to click a few buttons, purchase life insurance and money gets deposited into your account.   Really.

Actually, that's good news.  When the day comes that consumers simply click and buy life insurance, that's the day that the life insurance companies don't need you anymore – they just need their IT department.

That doesn't mean that using your website to increase sales is a no-go – Far from it.  Your website can and should be an effective tool in your marketing kit.   But we need to strip away a number of misconceptions and clarify our thinking.  You can translate a website into sales, but remember this - it's not a computer problem with a computer solution; it's a marketing problem with a marketing solution.  And that means you should already have some level of expertise in this area.

What is the sale?
So we know you're not going to directly sell life insurance through your website.  So what good is the website?  The answer is to rethink our idea of a sale. On your website a sale is a lead.

Generating leads is your focus.  You're not selling life insurance. Your goal is simply to convert a visitor into a lead.  You want their contact information, their name and phone number and permission to call them.

Once you have the leads, then you can go all old-school.  You've got names and numbers of people you can call and sell life insurance to, just as you've always done.  But first, rethink your website strategy to be simply a way to generate leads.  Treat your website like other lead generation methods like direct mail, telemarketing, or the one I cut my teeth on – preapproach letters to the birth announcements.

Double your sales
You know the sales funnel.  1000 contacts turns into 100 prospects turns into 10 sales.  Want to double your sales?  Simply dump 2000 contacts into the top of the funnel.

Wow – that's hard on the web!  If you're getting 1000 visitors, how are you going to double that?  More and better Google rankings?  Paid advertising?

The answer is once again to rethink our approach to our website.  You know a 'sale' is a conversion to a lead on your website.  And you know that you always have to ask for the sale.  So, are you asking for the sale on your website?   Because the easier way to double your sales on your website is to double your conversions, not double your traffic.

Don't bring in more visitors.  Instead, convert more visitors into leads.

Have a look at your website, but do it from the perspective of it being a lead generator.  Are you asking for the sale?  Are you specifically, directly, and pointedly asking for their contact information as the primary purpose of every single page on your site?  If not, you're not asking for the sale.

Failing to ask for the sale is the biggest single mistake I see on broker websites.  Your website should be focused visually and graphically on getting the visitor to provide their contact information.  Does everything on the page draw you towards entering your name and phone number?

A simple 'contact us' form on a contact page is useless.  People don't click through to another page and fill out a contact form any more than they say, “Hey, can we please fill out the application now?”.

Asking for the sale
It all sounds nice, visitors dropping in their name and phone number.  But why would they do that?

Well, the answer is two-fold.  First, as mentioned above, you have to specifically ask.  The visual focus of every page must be a request for their contact information.  Secondly, they need a reason to fill out that form.  That's frequently additional information they are requesting.

Here's three examples of contact information requests:

1.    Request a personalized quote.
2.    Request an online life insurance quote (note: Compulife (R) Software has a low cost plugin you can add to your website that provides instant online life insurance quotes.  I use their advanced customizable version, however their entry level version  is more than sufficient for most brokers).  This would be what I would recommend as a starting point.
3.    Request a white paper or report on something (mortgage insurance vs term insurance, term vs. whole life, top 10 ways to get cheaper life insurance).

Summary
Certainly gaining more traffic is nice, but for most broker sites, it's far easier for you to increase your conversions to leads.  Review your site to make sure you have a request for collection of contact information on every page, and that the request is the focus of every page.  Try using a life insurance quote plugin to get visitors to leave their contact information.

Consolidation Takaful Sector

Islamic insurers, lagging behind the merger and acquisition (M&A) scenario, are likely to see some consolidation. Over the last two years, M&As in the insurance sector have mainly involved conventional insurers, and analysts foresee some consolidation taking shape in the takaful sector in view of the Financial Services Act (FSA) and the Islamic Financial Services Act (IFSA).

Among the candidates for potential M&As, according to analysts, are Takaful Ikhlas Sdn Bhd, a unit of MNRB Holdings Bhd, and Syarikat Takaful Malaysia Bhd (STMB). Under the FSA and IFSA, which came into force on July 1 last year, composite insurers and takaful players will, among others, be required to split their life and general insurance businesses under separate licences.

Under these Acts, insurers and takaful players have been given until 2018 to comply with the requirement. The need to have separate licences could result in M&As due to the cost factor. M&As would strengthen the capital base and capabilities of the merged entities and lower the cost of operations, moving forward.

Industry observers feel that those affected by the FSA and IFSA would have started scouting around for M&As rather than waiting for the remaining four years to split their insurance businesses.

RHB Research analyst Kong Ho Meng feels that the IFSA may prompt MNRB to sell its stake in Takaful Ikhlas to a strategic partner, as further internal capital injections could be complicated. MNRB’s high gearing and leverage situation implied that options for capital injections for potential internal restructuring exercises might be limited, he added.

MNRB’s leverage position has deteriorated mainly as a result of debt-funded equity investments in its subsidiaries and its increased gearing level, which is more than 50% currently from 32% in 2012/2011. MNRB had previously undertaken a revolving RM120mil credit facility to inject RM100mil into Takaful Ikhlas and RM10mil into Malaysian Re, its reinsurance subsidiary.

RAM Rating Services head of insurance ratings Julie Ng said the FSA and IFSA could spur some consolidation or M&A activity in the next few years, in particular, among takaful operators with small general insurance businesses whose scale would not be able to justify the additional capital investment required for separate licences.

The size of the Malaysian takaful industry, she added, was currently about a fifth of conventional insurance. Ernst & Young Malaysia partner (assurance) Brandon Bruce Sta Maria said that in the next few years, the main thrust for M&As would be on the general insurance and general takaful industry. The life insurance sector seemed to have consolidated somewhat for the time being, he noted.

There were three M&As involving foreign insurers. Sanlam Emerging Markets, a unit of Sanlam Ltd, bought a 51% stake in MCIS Zurich Insurance Bhd for about US$118.4mil (RM385mil), and AMMB Holdings Bhd disposed of its stake in its life insurance and takaful units to MetLife for RM812mil. The third was the acquisition of Uni.Asia Life Assurance by The Prudential Insurance Co of America and Bank Simpanan Nasional for RM518mil.

Analysts view these acquisitions as part of the financial sector liberalisation initiatives started in 2009, among which foreign shareholding limits were eased to 70% from 49%. Considerations to allow beyond the 70% limit would be on a case-by-case basis. The risk-based capital framework introduced in January 2009 opened the floodgates for M&As, as under-capitalised companies were acquired by larger ones to boost their capital base.