Investment-linked Policy More Popular

Investment-Linked policies sold in Malaysia outpaced traditional life policies in the first-half of 2013 (1H13) garnering 52.4% of new business premiums compared to 47.6% for more capital intensive traditional life policies, according to the latest statistics by the Life Insurance Association of Malaysia (LIAM).

LIAM’s president Vincent Kwo Shih Kang opined the reason being the low interest rate environment is pushing consumers who are willing to take on more risks in order to get higher returns, and investment linked policies with its savings and protection elements present the freedom for consumers to choose their investment mix.

“With the recent new highs achieved in the local stock market, those policyholders opting for a higher equity component in their portfolio have achieved a decent return,” said Kwo.

The investment-linked new business recorded a growth of 4.8% for 1H while the traditional life business contracted 15.5% during the same period.

Investment-linked policies continued to outshine traditional policies in terms of growth with 49.5% of new business share in 2012, up from 45.6% in 2011.

Nonetheless, for new business premiums, the life insurance industry recorded a 5.9% decline on a weighted premium basis (commonly adopted method for measuring new business volume by adding 10% of single premium business to 100% of regular premium business) during the 1H13 to RM1.85 billion from RM1.97 billion recorded a year before.

“The overall new business performance of the industry experienced some adjustments due to portfolio restructuring that was undertaken by some of the industry players,” said Kwo.

The statement added that the total claims payout for the industry eased slightly to RM2.9 billion for 1H13 as compared to RM3.1 billion in the corresponding period last year.

A total of RM6.7 billion worth of life insurance claims were paid in 2012, a 19% increase over RM5.6 billion paid in 2011.

Kwo pointed out the penetration rate is at 41.22 % presenting a growth opportunity for the industry especially in line with the Economic Transformation Programme targeting 75% of the population to be insured by the year 2020.

Total sum insured for 2012 was RM1.02 trillion, an 8% increase over RM946 billion in 2011 while the average sum insured was RM34,700, and increase of 6.7% from RM32,533 in 2011, said LIAM in an earlier report.

The average sum insured of RM34,700 per capita against an ideal average sum insured per person should be around RM310,000 also presents growth opportunities for the industry.

Commenting on the 2H13, Kwo believes that the industry will bounce back and should be able to deliver a positive growth of 2%-5% for the whole of 2013.

It is customary for insurance companies to register a high new business premium figure for the final quarter of the year as agents would be selling more policies in that quarter in order to meet their quotas.

Go Rural For Life

Insurance companies have been urged to go rural to achieve a life insurance penetration target of at least 75 per cent of the population by 2020.

Deputy Finance Minister Datuk Ahmad Maslan said the penetration rate of life insurance remained low at 42 per cent and there is still a large untapped life insurance market in Malaysia. The benefits of insurance are still not understood by the rural community, especially in Sabah and Sarawak. Hence, the insurance penetration in rural areas must be increased.

Insurance companies should also take into account the huge untapped market of the Bumiputera community that can be leveraged to improve the financial inclusion rate.

The Malaysian population was covered with RM1.02 trillion sum insured in various forms of life policies, at an average sum insured of RM34,700 per capita for 2012, a year-on-year increase of 6.7 per cent as at Dec 2012.

General insurance industry registered a growth of 8.2 per cent in gross premiums to reach RM15.180 billion last year, with net premiums growing at a rate of 8.3 per cent to hit RM10.528 billion.

In terms of growth in new business last year, both life and general insurance sectors increased by 2.2 per cent to RM4.3 billion weighted premium and 8.2 per cent to RM15.180 billion in gross premiums, respectively.

Ahmad added that the average annual income of a full-time insurance agent had increased from RM65,000 to RM91,000 and the number of full-time agents had grown in proportion to the total number of agents, from 23 per cent in 2002 to 39 per cent last year.

Accident Assist

Persatuan Insurans Am Malaysia (PIAM) and the Malaysian Takaful Association have established Accident Assist, a helpline for motorists and members of the public seeking immediate roadside assistance in the event of a road accident. The number to dial is 1-300-22-11-88.

Operated 24 hours, seven days a week by Telekom Malaysia, the service aims to improve the overall process following a road accident by offering road accident victims timely roadside assistance, including help in obtaining towing services to approved workshops, and objective guidance on making a motor insurance or takaful claim.

Accident Assist currently only serves private cars within Kuala Lumpur and Selangor, but the pilot programme will be extended nationwide later this year, The Star reports. The call centre was set up following consultation with the police, Health and Finance ministries, the Attorney-General’s Chambers, the judiciary, consumer associations, Bank Negara Malaysia, the Malaysian Bar Council and the transport operators association.

Comprehensive policy holders, whose roadside assistance services are free-of-charge, will be redirected to their insurer when they call the helpline, while third-party, fire and theft policy holders who do not have accident assistance will be offered towing and repair services by PIAM’s approved workshops, the daily reports.

Life Insurance Versus Takaful Famili

A common question that many Malaysians ask when it comes to buying insurance is this: What is the difference between Takaful and Life Insurance? Basically, Takaful is based on Shariah (Islamic Law) principles, and the general concept of a Takaful is:

A group of people (in this case, policy owners) contribute a sum of money to a Takaful fund in the form of participative contribution (tabarru’). These policy owners will undertake a contract (aqad) for them to become one of the participants; by agreeing to mutually help each other should any of the participants suffer any form of misfortune, either arising from death, permanent disability, loss, damage, or any other such misfortunes as covered under the Takaful they personally undertake.

Here is a basic example of how Takaful works: Eg: Sharifah and Shafawati contribute RM100 a month to a Takaful fund for ten years. During that period of time, should any one of them suffer any misfortune (or death), the benefit will be taken out from the fund that they contributed to, and not from their individual accounts.

Issues	Takaful	Life Insurance
ACCOUNTS	For Life Takaful, there are two accounts, namely Personal Accident (PA), which is treated in line with the principles of al-Mudharabah; the other account is Participants’ Special Account (PSA), which is treated on the basis of al-Tabarru.	In life insurance policy, the collected premiums are credited into the account known as life insurance account or fund.
BENEFITS	Paid from the defined funds under joint indemnity borne by participants.	Paid from the funds legally owned by the company.
BONUS	Takaful contract specifies from the outset how the profits from Takaful investments are to be shared between the operator and the participants. This shall be in accordance with the principle of al-Mudarabah, and the share could be in the ratio of: e.g. 5: 5 or 6:4 or 7:3 etc. as agreed between the participant and the operator in the contract regardless of the amount of investment profit made during the year.	May offer bonus or profits in general terms only, especially with profit policies, i.e. there is no exact specification with regard to the profit-sharing in the contract. The rate of bonus itself can vary from year to year and is up to the discretion of the Board of Directors of the company.
CLAIMS	In a life Takaful policy, if the risk occurs, the beneficiary(s) shall have the right to claim the policy value from the PSA besides the accumulated entire amount from the PA. But if in this category of policy, the participant survives at the maturity of the policy, his/her claim shall be confined within the amount available in the PA.	In a life insurance policy where the risk occurs, the beneficiary (s) shall have the right to claim whole amount named in the policy. But in the case the risk does not occur, the insured shall have the right to claim the policy value at maturity together with the interest if any.

Buy Life Insurance Online

The Monetary Authority of Singapore has approved that basic life insurance products can be sold online by the middle of next year. The move, which will include a web aggregator, is a major change as financial advisers and insurance agents are the traditional model to buy life insurance.

In addition, agents' commissions are to be capped at 55% in the first year, with the rest spread over the next five years.

The revised remuneration framework is designed to make sure advice aligns the interests of the financial advisers with customers.

The Monetary Authority of Singapore's decisions came as it responded to recommendations made by the Financial Advisory Industry Review made in January.

Lee Chuan Teck, assistant managing director for capital markets at the Monetary Authority of Singapore, said, “This set of initiatives will transform the financial advisory industry by creating an environment where firms compete on the quality and value of their products and services rather than on the aggressiveness of their sales force. Consumers will be the ultimate beneficiaries of this change. MAS will review these measures periodically to see if more needs to be done.”

Singapore: Results Not Excuses

As the Government sets out to translate its strategic policy shifts into programmes that will improve the lives of Singaporeans, a major determinant of its success will be citizens’ trust, said Prime Minister Lee Hsien Loong yesterday.

He said the public service can strengthen this trust by working together as one, placing Singaporeans at the centre of its work and upholding the highest standards of integrity.

“Ultimately, integrity is not about systems and processes but values,” Mr Lee told 250 public service leaders gathered at its annual planning session. “The government must have a culture that doesn’t tolerate any wrongdoing or dishonesty and the public officers must have the right values — service, integrity, excellence — and each officer and the service as a whole must take pride in being clean, incorrupt.”

Calling on public service leaders to take the lead, the Prime Minister added: “This is your command responsibility, you cannot devolve it to your subordinates, you cannot leave it to your procurement or financial officers. You are the boss, you are in charge.”

The Public Service Division yesterday announced several measures to strengthen integrity within its ranks. From today, all public officers will need to declare within seven days whenever they visit the local casinos more than four times a month or if they buy an annual pass. For certain groups of officers, tighter rules will apply.

While the Government is adapting its structure to new needs, Mr Lee said issues will increasingly straddle multiple ministries, as they are inherently complex and inter-related. Thus, Mr Lee outlined three approaches that the public service should adopt, so that it can adapt to these changes.

First, he said that the public service has to present a “seamless and coherent experience” to Singaporeans, as it is “frustrating for the public to deal with multiple agencies and conflicting policies. And over time, the public will lose trust in the (public service) if it can’t figure out itself”.

Where Are You Heading

Billy Graham is now 94 years-old with Parkinson's disease. Leaders in Charlotte, North Carolina invited their favourite son, Billy Graham, to a luncheon in his honour.

 

Billy initially hesitated to accept the invitation because he struggles with Parkinson's disease. But the Charlotte leaders said, 'We don't expect a major address. Just come and let us honour you.' So he agreed.

After wonderful things were said about him, Dr. Graham stepped to the rostrum, looked at the crowd, and said, "I'm reminded today of Albert Einstein, the great physicist who this month has been honoured by Time magazine as the Man of the Century.

Einstein was once traveling from Princeton on a train when the conductor came down the aisle, punching the tickets of every passenger. When he came to Einstein, Einstein reached in his vest pocket. He couldn't find his ticket, so he reached in his trouser pockets.

It wasn't there.  He looked in his briefcase but couldn't find it. Then he looked in the seat beside him. He still couldn't find it.

 

 "The conductor said, 'Dr. Einstein, I know who you are. We all know who you are. I'm sure you bought a ticket. Don't worry about it.' "Einstein nodded appreciatively. The conductor continued down the aisle punching tickets.

 

As he was ready to move to the next car, he turned around and saw the great physicist down on his hands and knees looking under his seat for his ticket.

"The conductor rushed back and said, 'Dr. Einstein, Dr. Einstein, don't worry, I know who you are; no problem. You don't need a ticket. I'm sure you bought one.'

Einstein looked at him and said, "Young man, I too, know who I am. What I don't know is where I'm going.”

Having said that Billy Graham continued, "See the suit I'm wearing? It's a brand new suit. My children and my grandchildren are telling me I've gotten a little slovenly in my old age. I used to be a bit more fastidious. So I went out and bought a new suit for this luncheon and one more occasion. You know what that occasion is? This is the suit in which I'll be buried.

 

But when you hear I'm dead, I don't want you to immediately remember the suit I'm wearing. I want you to remember this:

 

I not only know who I am. I also know where I'm going."

 

May your troubles be less, your blessings more, and may nothing but happiness, come through your door. "Life without God is like an unsharpened pencil - it has no point."

Amen & Peace My Friends

And may each of us have lived our lives so that when our ticket is punched we don't have to worry about where we are going. Even at 94 years old, and with Parkinson's Disease, he can still deliver a powerful sermon!