Shariah-complaint Financial Product During Covid-19

Gulf Cooperation Council (GCC) countries and Malaysia to help drive growth in Shariah-compliant financial products though the Covid-19 coronavirus may disrupt sukuk issuance.
Islamic finance is set to keep expanding in 2020 and beyond but the downside risks are rising which could dissuade issuers to come to the market.

Sukuk issuance to remain stable at around US$180bil this year, and the takaful insurance market will see steady growth as insurance premiums pick up in newly penetrated markets. However, downside risks are rising because of the coronavirus outbreak, as prolonged market disruption could dissuade issuers from coming to market.

Islamic financing asset growth will continue to pick up in 2020, underpinned by strong demand across core Islamic markets. Additionally, mergers between Islamic and conventional banks in the GCC will drive one-off increases in assets, as they did in 2019.

Saudi Arabia (A1 stable) will remain the world's largest Islamic banking market, while the sector will continue to expand rapidly in Malaysia. Sukuk issuance will stabilize after growing for four consecutive years.

Sukuk issuance is expected around US$180bil in 2020, after a 36% rise in 2019 to US$179bil. Continued focus on this industry and increased activity by the governments of the core Islamic finance markets, regionally and internationally, will support issuance. The deficit financing needs of some GCC sovereigns, amid weaker oil prices and higher sukuk refinancing, will also provide support.

Corporate issuance in asset-backed sukuk will remain limited because of more attractive conventional market opportunities. Nevertheless, sukuk issuance from these sectors could help to underpin the industry's longer-term potential.

Global demand and regulatory developments will continue to fuel growth in Islamic insurance. Global demand for takaful – Islamic Shariah-compliant insurance – driven by relatively low insurance penetration in Muslim countries, continues to fuel growth in premiums.

Continued pressure from weaker economic expansion to hinder, but not halt, growth in this sector which will remain propelled by demand and regulatory changes in the takaful regions that aim to foster appetite.

Deferment Premium For Life Insurance Only

The General Insurance Association of Malaysia (PIAM) said the deferment of payment for insurance policies, as announced by the government today under its economic stimulus package, only applies to life insurance and family takaful.

The deferment does not apply to general insurance policies, PIAM said in a statement. The association was clarifying an infographic that was being shared on social media. This, it said, has also been clearly indicated in a press release by Bank Negara Malaysia today.

"Life insurers and family takaful operators will allow affected policyholders and takaful participants an option to defer the regular premium/contribution payments due under life insurance policies and family takaful certificates for three months without affecting the policy coverage. This flexibility may be provided by life insurers and family takaful operators through a no-lapse guarantee, an extension of grace period or any other means that maintain the policy/certificate intact during the deferment period. This option will be available from April 1 until Dec 31, 2020,” BNM's statement read.

Cost Of Treating Covid-19

A trip to the hospital for coronavirus treatment may set you back financially by thousands. A recent report by healthcare cost database - which looked at the economic impact of the coronavirus pandemic on the healthcare system, found that a six-day inpatient stay for treatment of coronavirus symptoms would cost 100% of the price for someone without insurance: a whopping average of $73,300. (The same would apply if you stay in a hospital outside of your insurance network and your insurance plan doesn’t have out-of-network benefits.) 

There are 27 million Americans without insurance, despite the passage of the Affordable Care Act. The analysis considered nearly 18 million people under age 65 who used employer health plan claims.

The chart below looks at the estimated average costs per patient with COVID-19, per the report. It breaks down payment costs for professionals – individual health providers like physicians – and for a six-day inpatient stay for those with and without insurance. It also includes the average reimbursement amounts for Medicare and Medicaid patients, which are $10,561 and $7,533, respectively.

Those with insurance are estimated to have an average medical bill for the same duration stay of $38,221, but that doesn’t mean that’s how much they’ll pay. That is the rate negotiated between your insurance plan and your in-network health providers. How much you’d actually pay depends on your insurance plan.

To determine these cost averages, it reviewed the most commonly received treatment and professional services that patients with influenza and pneumonia in its sample size received. A respiratory illness, COVID-19 typically include shortness of breath in severe cases. But symptoms range widely across individuals, and treatment is often a case-by-case basis.

It’s possible that if you are hospitalized for COVID-19, you won’t undergo all of these procedures, might undergo different procedures, or could undergo additional procedures. So, you could owe less – or more – than what’s shown in the chart above, depending on your treatment.

But even if you aren’t hospitalized for COVID-19, testing and treatment could still cost a pretty penny. Normally a patient (based in the Boston area) tested positive for COVID-19 and is uninsured - would involved three trips to the ER before she was tested, resulting in a nearly $40,000 medical bill.

And two people who didn’t test positive, but received other related treatment and testing, received bills for over $3,000. Add up all these high medical costs for matters of life and death during a pandemic and you see a broken healthcare system at a time when Americans literally can worst afford it.

Vynn Capital Partners BIB Insurance Brokers

Vynn Capital, Southeast Asia’s leading early-stage venture capital firm, has formed a collaboration with BIB Insurance Brokers, an insurance brokerage firm.

With this collaboration, Vynn Capital and BIB aims to create more revenue streams for insurance companies, technology firms as well as traditional businesses by introducing new insurance and financing products that will benefit the value chain of economies

“We believe the recent virus outbreak, as well as the pace of market movements that have never been witnessed before, are not just impacting economies but have also changed our view on how we should live as human beings.

“As such, we need to breakdown walls and think out of the box on how we can leverage on innovation to create new ways to protect and enhance economies and societies,” Vynn Capital founding and managing partner Victor Chua said in a statement Tuesday.

To-date, Vynn Capital has invested into Malaysian companies such as Dropee and Carsome, both of which have already expanded their business coverage to offer financing services. The latest addition to the portfolio, Epost from Sabah, has also started offering insurance products to customers.

Vynn Capital believes that a partnership with BIB Insurance will result in better products and solutions for customers which can be provided to them in a more productive and cost-efficient manner. The venture capital firm also plans to bring more products and solutions to untapped markets such as Sabah and Sarawak.

PT Bank Rakyat Indonesia - Plans To Sell

PT Bank Rakyat Indonesia has revived its plan to sell a stake in its life insurance arm, which is attracting interest from suitors in a deal that could fetch about $500 million, according to people familiar with the matter. 

FWD Group Ltd., backed by Hong Kong billionaire Richard Li, and BNP Paribas Cardif SA are among potential bidders for a significant minority stake in PT Asuransi BRI Life, the people said. Prudential Plc and Samsung Life Insurance Co. are also weighing offers for the business. 

A transaction could also involve a so-called bancassurance partnership, which allows an insurer to sell its products through the bank’s branches, the people said. The state-owned lender has requested binding bids as early as next month, although the coronavirus outbreak could delay the process. 

Deliberations are ongoing and the companies could still decide against pursuing a transaction, the people said. This could be at least the third attempt by Bank Rakyat to sell a stake in the insurer. The lender tried to dispose a 40% stake in BRI Life in 2015. At that time, FWD and BNP Paribas Cardif were already among parties vying for the holding. 

In 2018, Morgan Stanley was hired to advise on the sale only to see process put on ice again last year. Any transaction would add to the $34 billion of announced deals involving Southeast Asian financial institutions in the past 12 months. That includes FWD’s $3 billion purchase of the life insurance operations of Thailand’s Siam Commercial Bank Pcl and Bangkok Bank Pcl’s $2.7 billion acquisition of a controlling stake in PT Bank Permata. 

Bank Rakyat was founded in 1895 in Purwokerto, Central Java. The country’s oldest lender used to be fully owned by the government until its listing in Jakarta in 2003. The bank had about 1,417 trillion rupiah ($87 billion) in assets in 2019, according to its latest annual report. The lender is seeking to boost its digital presence and allocate financing to unearth promising startups.

Adaptability - Key Leadership Requirement

Leaders all over the world are facing change and complexity. The outbreak of coronavirus (COVID-19) has presented us all with new challenges, new circumstances, and new uncertainties. Because change is constant and inevitable, leaders must adapt to succeed.

Successful executives - 

• Adapt to the changing external pressures facing the organization.
• Adjust their management style to changing situations.
• Accept changes as positive.
• Revise plans as necessary.
• Consider other people’s concerns during change.

Conversely, the inability to develop or adapt was the most frequently cited reason for career derailment. That’s because inflexible leaders limit the adaptability of others. New initiatives may be halted or stifled. Resistance to change may undermine critical projects or system-wide implementation. Employee enthusiasm, cooperation, morale, and creativity are jeopardized, making it all the more difficult to run the business or organization.

Adaptability is about having ready access to a range of behaviors that enable leaders to shift and experiment as things change. “To survive change in your organization or industry or profession, you must first lead yourself through the process of transition. This includes finding ways to help yourself feel more grounded, understanding the impact that change is having on you, and understanding the impact of your behavior on others.

Adaptable people show 3 kinds of flexibility:

1. Cognitive flexibility — the ability to use different thinking strategies and mental frameworks. Leaders who have cognitive flexibility are able to incorporate different thinking strategies and mental frameworks into their planning, decision-making, and management of day-to-day work. They can simultaneously hold multiple scenarios in mind and can see when to shift and inject a change. Cognitive flexibility indicates nimble, divergent thinking, an interest in developing new approaches, the ability to see and leverage new connections, and the propensity to work well across the organization. These leaders readily learn from experience and recognize when old approaches don’t work.

2. Emotional flexibility — the ability to vary one’s approach to dealing with emotions and those of others. Leaders with emotional flexibility vary their approach to dealing with their own and others’ emotions — an area that many leaders often fail to consider. An emotionally flexible leader is comfortable with the process of transition, including grieving, complaining, and resistance. Adapting to change requires give and take between the leader and those experiencing the change. A leader without emotional flexibility is dismissive of others’ concerns and emotions and shuts down discussion. At the same time, an emotionally adaptive leader moves the change or agenda forward.

3. Dispositional flexibility — the ability to remain optimistic and, at the same time, realistic. Leaders who display dispositional flexibility (or personality-related flexibility) operate from a place of optimism grounded in realism and openness. They will acknowledge a bad situation but simultaneously visualize a better future. They are neither blindly positive nor pessimistic and defeatist. Ambiguity is well-tolerated. Dispositionally flexible leaders see change as an opportunity rather than as a threat or danger.

By learning and practicing behaviors that boost your cognitive, emotional, and dispositional flexibility, you can become more adaptable and, in turn, help others to adapt. As a leader, you not only have to respond to change, but you also have to steer change. Use these 5 tips as you adapt to change and guide your team through change:

• Be curious. Ask lots of questions. Wonder, explore, and consider before you judge and decide.
• Don’t get too attached to a single plan or strategy. Have Plan B (and C) at the ready.
• Create support systems. Don’t go it alone. Look to mentors, friends, coaches, trusted peers, professional colleagues, family members, and others to serve as your support system in times of change. Encourage employees to do the same.
• Understand your own reaction to change. You have to be clear about your own emotions and thoughts about changes, so you can be straightforward with others.
• Immerse yourself in new environments and situations. Do this when you are confronted by change — but get practice by joining activities, meeting new people, and trying new things on a regular basis.

Covid-19 Subsidize Test

Life insurance policyholders and family takaful participants will have the option to defer their regular payments for three months without affecting their policy coverage. This flexibility may be provided by life insurers and family takaful operators through a no-lapse guarantee, an extension of grace period or any other means that maintain the policy/certificate intact during the deferment period.

This option will be available from April 1 to Dec 31, 2020. Additionally, life insurers and family takaful operators will also provide the following assistance to the affected policyholders and takaful participants until Dec 31, 2020.

• Extend the period during which a policyholder and takaful participant can reinstate a policy/certificate that has lapsed;
• Provide options to enable policyholders and takaful participants to continue to meet their premium/contribution payments and maintain their policies/certificates. This may include changes in the sum assured/covered, adjustments to the premium/contribution structure and conversion into a paid up policy;
• Waive fees and charges imposed for changes made to policies/certificates;
• Waive any penalties/consequences for late payments of premiums/contributions, particularly where policyholders/takaful participants are unable to access electronic payment channels during the Movement Control Order.

Buying Life Insurance During Covid19

In a global health crisis, life insurance can be confusing. Will it still cover you if anything happens? And, is it too late to sign up? 

Online life insurance distribution has seen a 50% increase in applications since February.
There's no certainty that the increase is tied to the virus, but it points to people thinking about life insurance who would have normally put it off. 

1. If you already have life insurance, there's no need to worry
Anyone who already has life insurance doesn't need to worry about their policy — it's already in place, and no virus could change that. If anything should happen to you, your policy will cover it. Nothing will change, and so there's really no need to worry. Even if you're in an affected area, your policy and monthly premiums aren't likely to change — the rate you have is locked in for the entire term of your policy. 

2. Potential price fluctuation makes now a good time to apply
Insurance prices are constantly fluctuating, due to many factors. While life insurance would certainly be impacted by an influx of fatalities, its prices can also vary based on the market and interest rates, which play a big role in how life insurance companies make money through investing. 

Record-low interest rates could pose a threat to the life insurance industry, affecting its investments and ultimately its profitability. But, It is still too early to say just how much it could jolt life insurance prices for consumers, if at all.

Premius are expected to hold steady in the short term, without much change. If you're a healthy young person and you're applying for life insurance, your rates shouldn't be changed due to this Coronavirus. The underwriting process is the same if you apply today as if you were to have applied two months ago. In the long term, anything could happen. But, anyone concerned about a potential future price increase could benefit from applying now.

3. If you're applying, don't lie
Lying on your life insurance application could cost you, and it's not worth risking your policy's validity to save a few dollars. Lies about your health or medical conditions will likely be caught, as life insurers can check medical records, and can go as far as to cancel your coverage.

Many online life insurers also request travel history. It is not tied to the virus. This question predates any of the Coronavirus concerns. The answers to this question are more about the amount of risk posed by traveling, and that certain destinations that are higher risk than others. Lying on the travel history portion, or on any other portion, of your application could constitute as fraud. You're better off telling the truth.

4. If you're applying now, don't forget to shop aroundAs always with life insurance, you'll want to shop around and make sure you're getting the best possible deal. Each insurance company considers your information differently, and companies price your policy depending on your individual risk profile. To avoid paying more than you should each month for your policy, get quotes from several different insurance companies or online life insurance agents. Compare them to find the most coverage for the least money, and you'll find the one that's the best deal for you.