Allianz Malaysia Eyeing Takaful License

Allianz Malaysia Bhd - which has been looking to secure an Islamic insurance or takaful business for several years, will begin negotiations to acquire up to 100% equity interest HSBC Amanah Takaful (M) Bhd.

Allianz Malaysia, a subsidiary of Germany-based financial services giant Allianz SE, told Bursa Malaysia on Friday that Bank Negara, via its letter dated Oct 26, stated it had no objection in principle for the company to begin negotiations with HSBC Amanah Takaful’s shareholders.

The shareholders of the takaful operator, which was set up in 2006, include HSBC Insurance (Asia Pacific) Holdings Ltd (49% stake), JAB Capital Bhd (formerly Jerneh Asia Bhd) (31%) and the Employees Provident Fund Board (20%), which is also a substantial shareholder in Allianz.

The central bank’s approval is subject to all parties concluding negotiations within six months from the date of its letter.

The parties concerned will still have to obtain the prior written approval from Bank Negara or the Finance Minister on the recommendation of the central bank, before entering into any agreement to effect any acquisition.

Allianz Malaysia chief executive officer Zakri Mohd Khir was reported early last year to say that it had been approached by takaful operators in the past but the asking price to acquire the business was too high. “Most takaful companies ib Malaysia are overpriced,” he was quoted as saying. 

Allianz shares closed unchanged on Friday at RM10.18, giving it a market value of more than RM1.7bil.

Life Insurance Agents Cheat For Fee

Singapore - The practice of insurance agents getting a fee for referring patients to either doctors or medical concierges has triggered a warning from the Life Insurance Association Singapore (LIA Singapore).

Industry sources told The Business Times that an advisory against such practice, which has gained ground, was released to LIA members a few months ago.In response to queries, the association's executive director Pauline Lim said LIA was of the view that such arrangements are not ethical and should not be pursued.

Without giving any details such as the number of cases the association has been alerted to, she said that "our members have been advised of the association's view accordingly".

She did, however, point out that if such practices add another layer to healthcare costs in Singapore, it would further escalate rising costs, which would be contrary to LIA's efforts to address and mitigate the situation through collaboration with other stakeholders from the healthcare industry and the authorities.

Checks by BT found two known cases.

At least two AIA agents had called up The Medical Concierge Group (TMCG) earlier this year to negotiate deals to refer patients to its doctors, in return for a cash fee that was a percentage of the patient's medical bill - a common practice for referring patients to doctors.

Daniel Choo, chief executive of TMCG, a fixed fee medical concierge, said that he turned the two agents away before the conversation could get any further.

At least two doctors have been blacklisted by the group for trying to entice TMCG staff into referring patients to them, he said, adding that such fee arrangements could go as high as 30 per cent of a referred patient's medical bill.

AIA Singapore said in a statement that it was opposed to and did not condone the practice of introducing policyholders to medical specialists for a referral fee.

"All AIA financial services consultants (FSCs) and financial advisory partners are disallowed from engaging in such business practices, and we expect all representatives to abide by and uphold the code of ethics and professionalism set. This is a serious matter and swift action will be taken against any individual found upon investigations to be involved in such unethical business practices."

At Prudential, when asked if there were explicit company policies in place addressing such conduct, a spokeswoman said that the insurer had "an existing policy that does not allow its financial consultants to work with third-party administrators resulting in consumers taking on higher healthcare costs unnecessarily" and that it reviews "appropriate disciplinary actions on a case-by-case basis".

Likewise, Aviva, Income and Great Eastern Life have all said that they do not condone such practices, while AXA Life declined comment when queried.

Income said that it has reiterated to all its advisers that such practices are unethical, while Great Eastern said that there has not been any such case and that it would not hesitate to take "strict disciplinary action against errant representatives".

Just like how healthcare agents get a cut for referring medical tourists to doctors, similar transactions involving insurance agents are within the boundaries of the law, an industry veteran pointed out.

The trend had "surfaced sporadically in the mid-2000s" but has now become more prevalent, he said, adding that only a small group of agents or advisers do so in the wider industry.

This group is typically made up of those who deal with foreigners or medical tourists, although observers noted that in recent times, such transactions have spilled over into the area of IP and IP rider policyholders.

Said Ms Lim: "LIA Singapore's priority is to ensure that policyholders' interests are managed with utmost integrity and that representatives of the life insurance industry conduct themselves with professionalism at all times."

Allianz Malaysia - Innovative & Progressive

There is a huge potential for insurance companies to provide insurance policies for the underserved disabled community, said Women, Family and Community Development Minister Datuk Seri Rohani Abdul Karim.

While the ministry does not provide an estimation of the size of the insurance market for the disabled, she said the potential is huge as there are very limited offerings and insurance plans for them.

Allianz Malaysia Bhd is the only insurance company in the country that provides insurance policies for the disabled community, Rohani told Parliament during the question-and-answer session yesterday, when she was asked about steps taken by the government to ensure that the disabled can buy insurance at affordable rates.

“The ministry has been engaging with Bank Negara [Malaysia] and [the] Life Insurance Association of Malaysia (LIAM) on the matter to provide the disabled community with suitable insurance products,” she told reporters at the Parliament lobby later.

“We are happy with Allianz as they are the first to offer insurance plans for the disabled community. We hope there will be more insurance companies coming on board, not only on the potential of this segment but also as their corporate social responsibilities,” she added.

Currently, there are 400,000 registered disabled in the country.

The estimated penetration rate of insurance for the disabled is said to be as low as 0.1%.

She said the government will continue to hold discussions with insurance companies and the LIAM to explore other insurance products for the disabled, like savings or endowment plans, and plans that are not limited to protection regarding death and accident.

Indonesia Life Insurance Challenges

For insurance companies, wealth management in Indonesia presents one of the biggest opportunities across Asia. With an expanding middle class and small-to-medium business community, combined with relatively limited penetration to date, annual growth rates for most providers are in the low double-digits – and nearing 20% for some.

Further, more affluent and HNW individuals are realising the need for all kinds of insurance.

There are several key ways to enhance and evolve the proposition. These include more focus on the protection, distribution and transfer of wealth, especially since the majority of wealth still gets lost between the first and third generations.

There is also a need for a more global – or at least ASEAN – solution to be provided in Indonesia. This involves, for example more tailored customer servicing models, with a digital interface increasingly required.

Raising the bar

 But however big the potential, a common challenge for insurance companies and distributors alike stems from talent.

Indeed, practitioners tend to agree that the biggest gap in the Indonesian insurance market is probably the quality of advice – which applies to banks as well as agency forces.

A consequence of this shortage of capable and experience individuals to advise customers, is poaching, as firms try to build their businesses. And the fact that the growth in base salaries of around 10% per year is among the highest among many financial institutions (and even some no financial firms), it creates an incentive among agents and advisers to move regularly.

There is also a lot of switching of customers from one bank to the next, based on their search for a particular product, given that there are so many varieties of insurance.

The conversation between the banker and customer, therefore, needs to focus on what they already have and what they want, to ensure they can find the right match to fill the gap.

Yet whether distributors can do this effectively comes back to resolving the talent challenge. It also depends on agents improving the way they offer products – as part of a move from a product-push approach to one led by advisory-based selling. To support this, there need to be more products specifically created for different client segments.

Further, it requires greater awareness among customers that insurance is something they need.

Digital drivers

Indeed, when looking a decade or so in the future, digital is expected to create the biggest impact in terms of distribution, education and penetration more broadly.

For the mass market, with only 50 million or so Indonesians having a bank account, new solutions are needed to service and support the other 125 million people in the country who are potential customers, but are much less accessible.

Beyond human resources, for example, more data and information is also required within the Indonesia landscape, to help customers better understand what they are buying, plus ensure it fits their needs.

For affluent and HNW clients, meanwhile, technology can be leveraged to enhance the simplicity of the product, payment, underwriting and claims processes.

However, despite the potential for growth in digital channels, the agency channel is expected to remain as the mainstay for insurance distribution in Indonesia for the next five to 10 years, followed by bancassurance.

Practitioners doubt whether regulation and developments in relation to consumer behaviour will move quickly enough within this timeframe.

Product development

When looking at which solutions represent the biggest opportunity for insurers in Indonesia, for the time being, the market is dominated by unit-linked plans – often sold with medical cover as the driver.

To develop and broaden the offering, more of a segment-oriented approach is required, with products that fit the capability of the specific distribution channel.

This can be achieved in the private banking and priority segments via needs-based conversations between advisers and clients, followed by product design which is tailored accordingly.

In relation to innovation, Shariah funds also present an opportunity for customers to get 100% exposure to foreign assets. While traditional unit-linked products only allow fund managers to get a maximum to foreign assets of 20%.

Zurich Launched Bancassurance Indonesia

Zurich Topas Life, the insurance subsidiary of Mayapada Group, and Bank CTBC Indonesia, the local arm of Taiwanese CTBC Bank, announced on Tuesday (25/10) that they have introduced two bancassurance products that will provide life insurance products to borrowers.

Bancassurance, or bank insurance, is a partnership between a commercial lender and an insurance company, where the insurer takes advantage of the bank's sales channel to sell its products.

Zurich and Bank CTBC – previously known as Bank Chinatrust Indonesia – introduced credit life insurance products ProteksiKu and ProteksiKu Tetap that specifically target owners of small and medium enterprises.

The products are life insurance policies designed to pay off loans if the debtor dies.
ProteksiKu offers insurance premiums and insurance benefits that can be adjusted in accordance with the amount of money borrowed by a client of Bank CTBC, while ProteksiKu Tetap offers life insurance benefits in three scenarios: benefits equivalent to 50 percent; 75 percent and 100 percent of the debtor's loan value.

"Different compared to large corporations, SMEs have high dependency on their owners. With the credit life insurance products, SMEs can be more focused on developing their businesses without having to worry about outstanding loans if something unwanted happens to the owners, who are also borrowers," Zurich Topas Life president director Peter Huber said.

Both products are accessible at all Bank CTBC Indonesia offices in Jakarta, Bekasi (West Java) and Tangerang (Banten).

The lender's global parent CTBC Bank, operates 150 branch offices in Taiwan and more than 100 in several other countries, including the United States, Canada, Japan, India, Indonesia, the Philippines, Thailand, Vietnam, Hong Kong, Singapore, Myanmar, Malaysia, Australia and China.