Times are improving for insurers in Malaysia - Liberalization efforts are ramping up in many sub-segments of the insurance sector, and with the life insurance and family takaful framework likely to be implemented this year, it is clear that emphasis is being placed on insurers to thrive and step up their game.
Tariff liberalization initiatives in respect of motor and fire products may result in some initial price undercutting, but will spur an improvement in product innovation and risk selection criteria of general insurers and takaful operators.
RAM Ratings Services Bhd (RAM) said on the life insurance and family takaful front, regulatory measures to promote greater operational efficiency and increase the focus on direct commission-free distribution channels will lead to more affordable product offerings.
“These will help address the protection gap in Malaysia and steer the sector towards the target penetration rate of 75 per cent,” it said in a statement.
“Regulatory reforms are expected to support the industry’s growth prospects, which remain favorable, despite some near-term moderation.”
This was on the back of Bank Negara Malaysia’s (BNM) reminder of the liberalization of motor insurance by July 1 this year.
The first phase of the liberalization of the motor and fire tariff was introduced on July 1, 2016. During this phase, insurers and takaful operators were given the flexibility to offer new motor products and add-on covers at market-based pricing.
“The liberalization of motor insurance means that the price of motor insurance products will no longer be determined based on Motor Tariff (a set fixed price list),” BNM said in a statement last week. “Pricing will be determined by individual insurers and takaful operators.
“Consumers will now be able to enjoy a wider choice of motor insurance products at competitive prices as liberalization encourages innovation and competition among insurers and takaful operators.
“Insurers and takaful operators are able to charge premiums that are in line with broader risk factors inherent in a group of policyholders being insured; and also sell new products that are not defined under the tariff.”
Hoped reduction in general insurance premiums - The General Insurance Association of Malaysia (PIAM) hopes general insurance premiums can be reduced in three to five years, driven by liberalization efforts put in place by Bank Negara Malaysia and the adoption of financial technology (fintech).
PIAM chairman Antony Lee said by making insurance premiums more affordable, the industry could increase insurance penetration among the lower income group, which was, currently, a large untapped market.
“The central bank is also pushing this initiative and liberalization is a big component of allowing greater freedom of pricing.
“Furthermore, the adoption of fintech by the insurance industry will also help in cost reduction,” he told reporters after delivering a keynote address at the two 2017 International Claims Convention.
While fintech development was still in its early days, even globally, Lee said the industry was keen on this emerging trend with some local insurers already commencing pilot initiatives in this field.
On outlook, he expected the general insurance industry to experience tepid growth this year given the slower growth expected in the external environment.
In 2016, he said the general insurance industry grew 1.1 per cent with gross written premium income at RM17.67 billion, underpinned by motor insurance, which maintained its dominant market share of 46.2 per cent.
“Motor insurance growth is directly linked to auto sales and at the moment, we are seeing it growing slightly higher than last year, albeit, not significantly,” he added.
EIS to be tabled in June sitting - Meanwhile, on employee protection in the work place, the Employment Insurance System (EIS) which will affect some 6.5 million local workers in the private sector will be tabled in the Parliament in June 2017.
Perkeso chief executive officer Datuk Dr Mohammed Azman Aziz, said the rate of contribution would be announced once the EIS Bills were approved by the parliament.
Mohamed Azman said among the system’s objectives were to provide income protection and increase "employability" to those who lost their jobs.
It would also support job search, job matching, job placement and worker’s mobility, while providing employment stabilization, he said.
Prime Minister Datuk Seri Najib Tun Razak previously announced that the EIS was expected to be enforced on January 1 next year, while interest payments would be made from Jan 1, 2019.
On this front, insurance providers are ramping up their game when it comes to unique insurance products in the market.
The coverage also applies if your rescheduled domestic flights are delayed for the same duration. Customers will then be credited RM50 into their bank account within three working days.
“Nobody likes flight delays. With Allianz Flight Care, you would pocket RM50 at the 31st minute of a domestic flight delay.
“And the best part of the deal, you will not have to lift a finger after making the purchase. If your flight is delayed more than 30 minutes, the money will be credited straight into your account without submission of any documents.
“It is really that simple,” said Michael Au, Sabah and Sarawak regional manager for Allianz General Insurance Company (Malaysia) Bhd in a statement.
The first of its kind in the industry, Allianz Flight Care offers customers a coverage option for one-way or round trips for a lone traveler or a traveler and a maximum of five family members. It covers any airline offering flights within Malaysia and ideally, should be bought no later than 24-hours before the departure time of a domestic flight.
Sold exclusively on Allianz Online, the Allianz Flight Care is the first of two general insurance products that customers can purchase on the platform. Previously, customers were only able to obtain insurance quotes before being directed to their preferred agent.
The other product available for purchase online is the Enhanced Road Warrior; Allianz’s best selling 24-hour roadside assistance.
“More and more people are travelling today and no one likes flight delays as it can disrupt their schedules, create stress and anxiety as well as lead to unnecessary, additional expenses.
“By providing Allianz Flight Care, we want to help take away some of that worry and offer compensation to provide some form of relief to our customers,” said Linda Lor, head of digital innovation and special projects for Allianz Malaysia to BizHive Weekly.
“As for inspiration, Allianz Malaysia is always finding new and innovative ways to drive superior customer experience by connecting business value and customer value through the products and services we offer.
“Offering Allianz Flight Care is part of our efforts to continuously find better and more efficient ways to serve our customers and alleviate their pain points when they face flight delays.”
Growing need for travel insurance
With the ease of travel today and an increase in passenger numbers over the years, it is growing crucial for traveller to take up travel insurance. Lor told BizHive Weekly that Alliamz Malaysia has seen an increase both in interest and demand for travel insurance as consumers today are more affluent, better informed and travel much more.
“More often than not, they don’t expect risks to occur during their holidays or travels, which is not entirely true,” she said in the email interview.
“Our experience shows that top travel concerns are costly and unexpected expenses from illness or hospitalization, loss of travel documents, undelivered luggage and delay, missed flights and natural disasters, just to name a few.
“Many travellers also assume that they will be covered by their standard medical plan when travelling. The truth is, while traditional plans may offer adequate domestic coverage, they may not be designed for international travel.”
To address such concerns, Lor said most travel insurance plans are made simple for ease of consumer understanding. There are also options for short period travel and annual plans for the more frequent travellers.
“At Allianz, our travel insurance plan; Allianz Travel Care provides international coverage twenty four hours a day and we have included medical expense as part of the product which we see as one of the more important benefits for our customers.
“To cater to a more diversified group of consumers, Allianz Travel Care has eight different options for customers to choose from. These include options for adults, children, senior citizens and families.”
Previously, customers were only able to obtain insurance quotes before being directed to their preferred agent. The other product available for purchase online is the Enhanced Road Warrior; Allianz’s best selling 24-hour roadside assistance.
Lor explained that this was part of Allianz Malaysia’s move to simplify processes for its customers.
“Customer buying behaviours are constantly evolving and it is important for Allianz Malaysia to be more customer-centric. We need to be conscious to such changes to be able to serve customers better and offer more innovative products and services,” she explained.
“It is really to keep up with what customers expect of service providers today.
“Allianz Flight Care can be purchased via Allianz Online which is available through the company’s corporate website. Customers are able to obtain a quotation using the hassle-free platform on their desktop, tablet or mobile device to purchase an insurance policy.
“It is a fast and convenient alternative in purchasing insurance and is just our way of providing simply the best value for our customers.
“With Allianz Online, customers are able to gain an insurance quotation in five simple steps – select a product, answer a few questions, fill in contact details, select an agent and click submit. The customers will then receive a quotation by email immediately and will be contacted by their chosen agent within 24 hours.”
When asked if Allianz planned to expand its coverage for air travel and its related services in the near future, Lor said yes, “if and when the need arises.”
“We are continuously focusing on our customers and find new and innovative ways to provide them with the products and services that best suits their needs. We will continue to monitor what our customers need and find ways to enhance existing products or develop new ones to meet their new requirements,” she concluded.
Prudential’s coverage for couples - Marriage is on the rise in Malaysia. Over the past eight years, the number of marriages have grown by some 27 per cent versus 22 per cent seen in population growth.However, many Malaysians still remain severely underinsured. Many Malaysian households are unprepared to manage their financial risks; the average protection gap for families whose primary wage earner do not have life insurance is RM723,000 per family.
Most telling of all is that 25 to 35 year old show the highest percentage of being underinsured.
“When we get married, we often think of buying a house together, having a child, planning for our child’s education; but what about financial protection as a couple?” asked Khoo Ai Lin PAMB’s chief marketing officer.
“Studies have shown that couples who make financial decisions together are more satisfied and confident about the progress of their financial goals, which makes for a healthier and stronger relationship.”
Thus came the PRUlife partner, a policy that provides dual life coverage for couples. Touted as the first of its kind, PRUlife partner can be bought together as a couple or as an individual where the spouse gets included into the policy upon marriage.
PRUlife partner is different from an individual life policy in that it celebrates major life events that a couple will go through and offers value through discounts.
In addition, couples are assured peace of mind through the ‘no lapse guarantee’ feature which means that the policy will definitely continue until your preferred maturity age of either 60, 70 or 80 years old.
“Our goal was to support better financial planning and creating a firm foundation for couples to begin their married life together with this new investment-linked life insurance.
“PRUlife partner is the first of its kind in Malaysia, a first in market insurance plan for couples and specifically tailored for young married couples or singles aspiring towards marriage.”
Among benefits of this unique insurance is firstly the life stage multiplier benefit which allows couples to increase their protection – up to double of their initial sum assured – when they celebrate major life events such as marriage, graduation, conceiving a child, owning a property, or at every fixed interval of three years from their policy commencement or revival date.
The second benefit is the spouse and large sum assured discount. Both partners receive a 10 percent discount on their basic premium and insurance charges. Furthermore, they will get to enjoy an additional 10 percent discount if their combined coverage is RM250,000 or more.
The policy also features a no lapse guarantee which means that the policy is guaranteed to last until their preferred maturity age of either 60, 70 or 80 years old.
“In the unfortunate event of the death of a spouse, PRUlife partner provides for continuity and seamless transfer of ownership as the policy is automatically transferred to the surviving spouse and coverage continues uninterrupted,” Khoo added.
“As mentioned earlier, this policy delivers great value through the spouse and large sum assured discount. It also features no lapse guarantee which means that the policy will not lapse until their preferred maturity age,” Khoo added.
“It is an affordable policy from as low as RM5 per day and allows them to start the foundation of their financial security and give them a peace of mind.”
The policy can be bought on an individual basis whereby the spouse is adapted into the policy upon marriage or together as a married couple. Married couples can enter together into one policy (two lives under one policy), each having their unique coverage amount.
Khoo said the need for money guides all of our money-related decisions which may cause conflict. From accepting a job offer to the choice of vacation, money can lead to deep misunderstandings and conflicts when the couple’s dominate view of money differ.
Couples may find themselves having disagreements over financial matters when they discover that their partners have different saving or spending habits.
“It is important to approach your partner with the goal of having an open discussion on financial habits, priorities and future goals,” she advised.
“Be honest and be clear about your understandings and expectations – it is always best to discuss this in order to sync your financial priorities and develop a solid financial future.
“There are various milestones in a couples life that couples should address together – such as purchasing their first home, investing in property, having children, furthering their studies, travelling – couples should talk about these milestones and make savvy financial decisions that can help them plan in the long term.
Zurich Takaful’s care for the elderly - Perhaps a relatively untapped market is insurance for the elderly. Growing advancements in healthcare and pharmaceutical solutions mean that people are living longer than ever – expanding the need for quality senior insurance as
well.
Thus we meet Zurich Takaful Malaysia Bhd (ZTMB)’s Takaful SeniorGold, a family takaful plan designed to offer valuable protection to those in the 50 to 80 years age group with contribution from as low as RM50 per month.
“At Zurich, we aim to help our customers understand and protect themselves from risks.
“As life post-retirement often comes with a whole new set of challenges including a significant reduction or loss of regular income, we took note of the need to develop affordable takaful solutions to help retirees as well as adults with retired parents mitigate the risk of financial setbacks due to unexpected events.
“Takaful SeniorGold offers our customers an added peace of mind so that they can continue to live life confidently,” said Salim Majid Zain, Chief Executive Officer of Zurich Takaful Malaysia in launching the plan in February this year.
Takaful SeniorGold is a regular contribution family takaful plan that offers easy and hassle-free enrollment as no medical underwriting is required of the participants prior to purchase of the plan. Takaful SeniorGold’s key features and benefits include:
1. Participants may renew their plan coverage up to age 90.
2. Participants may elect to obtain takaful coverage at RM50 per unit, up to a maximum of 10 units.
3. Depending on the participant’s attained age, the accidental death payout is up to 5 (five) times of the certificate’s basic sum covered.
4. Upon maturity of the certificate, participants will receive the Investment Account Value under the certificate.
‘A gift of love’ - In an interview, executive vice president Saiful Nizam Esahak explained that Takaful SeniorGold was designed as the ‘Ideal Gift of Love’ – a means to express love and appreciation to our beloved ones especially our parents.
“From our research, we gathered that 5.9 million or 19 per cent of the country’s total population falls under this age band.
“Though the product may seem applicable to only the senior/elderly to purchase, our target is not just limited to customers within the 50 to 80 age band but also provides the younger generation an opportunity to purchase this plan for their beloved parents.
“On top of that, Takaful SeniorGold offers easy and hassle-free enrollment as no medical underwriting (check-up) is required of the participants prior to purchase of the plan,” Saiful detailed to BizHive Weekly.
This plan covers anyone from the age of 50 years old up to 80 years old. However, Saiful noted that the participant or applicant must be at least 18 years old and above.
For example, an adult who is above the age of 18 is eligible to apply for their parents who fall within the age band.
And as this insurance plan comes with a contribution from as low as RM50 per month, this showed the group’s effort taking into consideration of those aged between 50 to 80 years old who are in their retirement phase.
“At Zurich, our aim is to ensure our customers have adequate life protection so that they can enjoy piece of mind should the unforeseen happen including during their retirement years,” he said.
“As life post-retirement often comes with a whole new set of challenges including a significant reduction or loss of regular income, we took note of the need to develop affordable takaful solutions to help retirees as well as adults with retired parents mitigate the risk of financial setbacks due to unexpected events.
“Takaful SeniorGold can help ensure that their retirement years are worry free so that they can continue to live life confidently.”
Assisting during old age - When asked of the premium increase with the policy holder’s age, the executive vice president assured that the Takaful SeniorGold contribution is affordable and level throughout the term of the certificate.
Should a policyholder surrender the policy before it matures, Saiful noted that he or she will get some money back as the Participant Investment Account (PIA) value is payable when the participant decides to surrender the Certificate. The PIA value, however, is not guaranteed.
“At Zurich, our mission is to help our customers understand and protect themselves from risks. Managing one’s life particularly in terms of financial planning is always important, but it becomes even more critical during retirement.
“The source of income during this stage comes from savings which can be limited and easily depleted due to unforeseen events or medical emergencies. Therefore, it is important for a person to be adequately/financially protected for a worry-free retirement life.”
Zurich Takaful Malaysia operates under the principle of wakalah whereby the takaful operator acts as an agent to the participant for managing the operations of the takaful business.
A wakalah fee is charged up-front from the contributions paid. Tabarru’ (donation) will be deducted to the PRIA, where it will be used for mutual aid and assistance, based on the concept of takaful. The benefits are paid from the PRIA only upon a covered loss, and not upon maturity or surrender of the Certificate.
Surplus sharing (if any) at the end of each financial year will be shared between the participant and Zurich Takaful at 50:50 ratio based on Hibah (gift) contract. The investment profit generated in the PIA is not guaranteed and depends on the actual performance of the fund.
The investment profit earned in the PIA belongs to the Participants and the Takaful Operator does not participate in these returns.
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