Malaysia Islamic Insurance Updates

Malaysia’s Islamic insurance industry is set to double its growth rate this year as companies focus on selling cheaper policies in rural areas, according to the nation’s takaful body.

The number of policies will rise 10 percent to 5.05 million in 2016, compared with 4.3 percent growth in 2015 and a 1 percent estimated expansion of non-Islamic business, Ahmad Rizlan Azman, chairman of the Malaysian Takaful Association, said in an interview in Kuala Lumpur. Insurers entering the micro-takaful market and the liberalization of commission structures are the biggest drivers, he said.

Around a quarter of Malaysia’s 31 million people live outside of cities and government efforts to boost the insurance penetration rate to 75 percent by 2020 from 55 percent are supporting demand. Companies offering Shariah-compliant policies look set to benefit disproportionately as most rural Malays are Muslims.

“Growth prospects still remain positive just by the virtue of the fact that the takaful base is smaller relative to overall insurance industry,” said Ahmad Rizlan, who is also chief executive officer of Etiqa Takaful Bhd., Malaysia’s biggest Islamic insurer.

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.

There were 12.56 million non-Islamic insurance policies in Malaysia at the end of 2015, according to data from the association. Growth in takaful has pulled back from as fast as 8.3 percent in 2013.

This is due to the “slow expansion and development of agency distribution and the lack of awareness and understanding about takaful among consumers and their unwillingness to make the switch from conventional,” said Mohamed Hassan Kamil, group managing director of Syarikat Takaful Malaysia Bhd. in Kuala Lumpur.

The industry needs to improve distribution channels if it’s to meet it’s goal of increasing the number of takaful policies to 8.5 million by 2020, said the association’s Ahmad Rizlan. A new set of rules on commissions and allowing sales without advisory requirements will make achieving the target easier, he said.

“The introduction of the new framework is anticipated to boost the penetration rate,” said Syarikat Takaful’s Mohamed Hassan. “There is plenty of room for organic growth."

Who Is Ngou Yeow Hock & Tan Bee Choo

Couple Ngou Yeow Hock and Tan Bee Choo, who were killed in a hit-and-run accident, might have been homeless but their undying devotion to each other was a symbol of love and an inspiration to many. On Tuesday, a vehicle, believed to be a lorry, ploughed into Ngou and Tan as they were crossing a T-junction on their tricycle at KM3.5 of Jalan Maharajalela here, killing the couple instantly. There has since been an outpouring of shock and grief among the local community.
 
Going about their own business collecting recyclable items with their tricycle, they were known to be a happy and loving couple despite being intellectually challenged.

Clerk Mary Ng, 70, said the 51-year-old Ngou and Tan, 52, went everywhere together. “They were always laughing and in a world of their own. They offered each other their food, scooping spoonfuls onto each other’s polystyrene boxes. It was common to see Tan wiping the sweat off her husband’s face as they waited for the traffic lights to turn green. It always put a smile on my face watching them. It’s so sad that they were taken away so tragically,” said Ng.

Teacher Ahmad Faizal Osman, 47, who wrote a tribute to the couple on Facebook, told The Star that the pair had lived with dignity, never accepting donations. I have friends who offered Aunty money but she gave it back to my friends’ children. Once, another friend met Aunty at the bakery.

“She was so happy to see and play with my friend’s child. She even gave the girl RM1,” said Ahmad Faizal, adding that their hard work and determination ought to be emulated. Many times, Aunty fell from the tricycle and once, she was even warded at the Teluk Intan Hospital after receiving stitches to her head,” he said.

The couple, said Ahmad Faizal, usually showered at the hospital or the Petronas station near the accident scene. At night, they could be seen sleeping near the 7-Eleven outlet in Bandar Baru. Despite having almost no possessions, the couple were charitable, he said, adding that Ngou had once refused money when he offered to buy some boxes.

"I tried again to offer him money but he wouldn’t accept it and so at last, I bought a few canned drinks and placed them on his tricycle,” said Ahmad Faizal.

Businessman Robin De Silva said despite the hardship, the couple always wore smiles. They were quite an inspiration for our family because though homeless, they were still happy,” said De Silva, adding that the couple’s children used to go around with them on the tricycle when they were young.

MAA Takaful Sold To Zurich Insurance

Zurich Insurance is set to take full ownership of Malaysia’s MAA Takaful after the deal received regulatory approval, giving Europe’s fifth-biggest insurer a foothold in the world’s second largest Islamic insurance market.

MAA Takaful, one of Malaysia’s 11 Islamic insurers, is a joint venture launched in 2006 by MAA Group Berhad and Bahrain’s Solidarity, which hold 75 percent and 25 percent stakes respectively.

MAA Group said it had received central bank approval for the sale, a deal which was first proposed in November of last year. No size for the transaction was given.

MAA Takaful held 1.2 billion ringgit ($306.7 million) worth of assets as of June 2015, a 5 percent increase from a year earlier.

The Swiss insurer has been reshaping its geographic footprint, scaling back parts of its Asian franchise seeking to build more sustainable businesses and improve profitability.

A move into takaful could allow for greater penetration in core markets in the Gulf and southeast Asia. Zurich Insurance also has a presence in Bahrain, Qatar and the United Arab Emirates.

An alternative to conventional insurance, takaful is based on the concept of mutuality; the takaful company oversees a pool of funds contributed by all policy holders.

In their investments, takaful firms follow religious guidelines, including bans on interest and pure monetary speculation, and a prohibition on investing in industries such as alcohol and gambling.

Malaysian Knees Exposed - A Big Problem

A Woman was barred from entering the Dewan Bahasa dan Pustaka (DBP) northern region office for not being properly dressed. Miss Tan, insisted there was nothing wrong with her attire – a knee-length skirt.

But the security guard at the office, which is in Bukit Mertajam, Penang, refused her entry. The guard said that Tan’s skirt did not reach her knees. Miss Tan said there was no issue when she went to the office last week in the same dress, which is her company uniform.

Sarawak Politician - Rich But Thick

A BN direct candidate has given a different twist to the 1MDB scandal - he put the blame squarely on the opposition. Dudong candidate Tiong Thai King said fiascos such as the 1MDB came about because the opposition had shirked its duty in monitoring the government.

The opposition had neglected its duty, he said in an interview with China Press today. The opposition has become irrelevant as it was unable to play up its role effectively, Tiong added.

"They (the opposition) have failed to monitor the government and prevent all these things from happening. If they have failed in their job, why should we continue to vote for them?" he asked.

As such, Tiong urged the voters to support the Sarawak BN so that it would have a bigger mandate to build the state.

Tiong was formerly with United People's Party (UPP) but quit the party to stand as BN direct
candidate this time. He was defeated by DAP candidate Yap Hoi Liong by 317 votes in the 2011 state polls, and is facing Yap for the second time in a five-cornered fight. He was the MP for Lanang from 1996 to 2013, and is also the brother of Ribunan Hijau Group founder and billionaire Tiong Hiew King.

Mind Over Muscle

To investigate why some become champions while others fail to make the grade, a team of researchers from the University of Central Lancashire, UK, interviewed 54 athletes from a variety of different sports including soccer, rowing, skiing, and karate and boxing.

To find distinguishing characteristics between participants that set apart the great, the good, and those who weren’t quite good enough, the researchers interviewed the athletes about their career path so far, any challenges they had faced, their reactions to these challenges, commitment to the sport and their relationships with both their coaches and family.

The athlete’s answers showed that it was those who demonstrated an internal drive, motivation and commitment that achieved greatness, qualities that their ‘almost great’ peers lacked. They also pushed themselves harder, with those who always strived for better actually becoming better.

Athletes in this group also didn’t let setbacks such as injury demotivate them, and instead came back from failures more determined than ever.


Those who were ‘almost’ great, however, avoided taking on more challenging training exercises which would push them further towards greatness, and let failures and setbacks knock their motivation and enthusiasm for their sport.

And it wasn’t because the ‘almost’ great faced more challenges that they failed to make it, with the responses showing that when it came to career setbacks there was little variation in either the number or nature of challenges faced by each participant. What made the difference was their attitude towards these challenges, rather than the amount encountered.

Commenting on the results, Professor Dave Collins, lead author of the study, said, “We’ve found that there are universal psychological characteristics amongst those who are aspiring to get to the top. We have a good idea of what makes people excellent and how we can help them reach peak performance.”
Collins now believes the results could be used by coaches to help train athletes, and that the results could also be applicable to performance in other areas such as music.

AIA Up Tata-AIA India Stake

Global insurer AIA Group has successfully completed its increase in stake in Tata AIA Life Insurance Company to 49 per cent from 26 per cent after receiving all necessary governmental and regulatory approvals.

The private insurance company is a joint venture between AIA Group and India’s Tata Sons.

 

AIA Group and its subsidiaries comprise the largest independent publicly listed pan-Asian life insurance entity. It has a presence in 18 markets in Asia-Pacific including Hong Kong, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei, Sri Lanka and India.

 

It had total assets of $ 168 billion as of November 30, 2015.

 

Several overseas insurance companies have been increasing stake in their Indian ventures after the government raised the limit of foreign investments in domestic insurance firms to 49 per cent from 26 per cent in 2015, more than one-and-a-half decades after the key sector was thrown open to private players.

Great Eastern Profit Dives

Great Eastern Holdings (GEH), the oldest and most established life insurance group in Singapore and Malaysia, reported on Tuesday a net profit of S$96.9 million for the first quarter ended March 31, 2016, down 56 per cent from the net profit of S$220.5 million achieved a year ago.

The weaker performance was due mainly to unrealised fair value losses from the valuation of assets and liabilities in the insurance business amid unfavourable financial market conditions, the insurance arm of OCBC Group said.

GEH's chief executive, Khor Hock Seng, said "the volatility in the global financial markets during the quarter impacted the valuation of our assets, resulting in a lower profit attributable to shareholders".
"Notwithstanding this, our investment portfolio remains sound and our capital position also remains strong," Mr Khor added.

Gross premiums increased 21 per cent from a year ago to S$2.3 billion.

Profit from insurance business was S$89.1 million, compared to S$205.6 million a year ago, down 57 per cent mainly because of unrealised losses from the widening of credit spreads and decline in equity markets. Profit was also affected by higher claims in the Singapore non-participating fund.

GEH said the profit contribution from Malaysia in Singapore Dollar terms was lower, primarily due to a weaker Malaysian Ringgit.

Profit from general insurance of S$5.6 million was lower than the S$6.7 million achieved a year ago due to higher claims.

Cash and cash equivalents increased by 20 per cent to S$4.2 billion on March 31, 2016, mainly due to net cash flows from operating activities.

India Insurance Digital Ahead

Today, in India and all across the world, the use of internet and mobile phones has witnessed significant growth. This has enabled us to reach out to a larger audience and bridge the gap between rural and urban people. Most of us believe that technology is only for the urban educated consumers; however, we have observed that with the advent of social media, e-commerce sites and convenience services, more and more Indians are getting digitally savvy.

Today most of the financial products are already high on the technology curve — be it equity market, mutual funds, banking transactions or even NPS. These are all available only in the electronic platform.

The Digital India campaign that was launched by the government has given insurance companies a huge opportunity to ride on. The use of technology should benefit all parts of the ecosystem. An insurer would benefit from lower cost of operations, innovation and customisation of insurance products, while the distributor would benefit from simplification of KYC norms and the policy holder gets an enhanced purchase and post-purchase experience.

Similarly, e-Insurance is not just about the opportunity to buy insurance through an electronic channel. An insurance repository is a place where a customer can keep his insurance policies in an electronic form. Just like you keep your money in a bank account (or shares in a demat account), you can open an electronic Insurance Account (e-IA) with a repository which will ‘credit’ your policy in it. Thereafter, you will not need to hold the physical paper documents and all subsequent transactions from renewal to claim settlement will be done through your e-IA. Currently, IRDAI has permitted six firms to become Insurance Repositories giving customers the option to select the repository of their choice.

Benefits of e-Insurance Account

There are multiple benefits in holding insurance policies in electronic form under a single e-Insurance Account (e-IA).

Safety: There is no risk of loss or damage of a policy as may happen with paper policies; the electronic form ensures that the policies are in safe custody and can be easily accessed when needed.

Convenience: You can keep all your policies (currently, only life, not general), even from multiple insurers, in a single e-IA. While creating the account for the first time, you need to fulfil the KYC (Know Your Customer) requirements. Any subsequent change in KYC details, bank account, nomination, etc. can be updated through the repository and not to each insurer.

No fee: Opening an e-IA is free for a customer. The repositories get paid by the insurers who meet this cost out of savings from issuing paperless policies.

Single point of service: All service requests or any of the electronic policies held under the e-IA can be submitted at any of the repository’s service points — there is no need to go to the offices of individual insurance companies for service. The details of any of the policies can be accessed at any time by logging on to the online portal of repositories. Premium for all the policies can be paid online and many service requests or complaints can be logged at this website.

 Easy to get new policies: It is easy to add a new policy to your account. All you need to do is quote your e-IA number in the proposal form and your new policy gets added directly and immediately on the day of issuance.

Though opening an e-IA is not mandatory at present, it makes immense sense to do it. With both the government as well as the regulator supporting this initiative, the insurance industry is well poised for exponential growth by adopting e-insurance. So, get going and get electronic!