By Sonia Krisnan
Timber-based companies in Malaysia are facing an uphill task to underwrite their risks as insurers are shunning them due to past claims ratio for the sector.
The companies are having issues in getting underwriting for their properties, workmen's compensation claims and fire risks, one timber-based company representative told a recent dialoque organised by the Malaysian Timber Industry Board (MTIB).
When contacted, insurers say they are more careful and selective in underwriting risks from timber-based companies as the experience in insuring the sector has generally not improved despite insurers introducing risk improvement measures over the years.
"We're very selective, unless proper risk management and prevention are in place," Syarikat Takaful Malaysia Bhd (Takaful Malaysia) group managing director, Datuk Mohamed Hassan Md Kamil, told The Malaysian Reserve.
In an email reply, Overseas Assurance Corp (M) Bhd chief executive officer Ng Kok Kheng said that the timber industry needs to seriously look at its own operations and find ways to actually reduce its bad claims incidents.
"Although the inherent fire risk is said to be high, not much effort has been taken by industry players to reduce this hazard," he said.
Without providing any figures, a spokesman for the General Insurance Association of Malaysia (PIAM) said that the "losses are beyond tolerance".
Malaysia's timber and timber products growth is projected to grow 6.5% this year compared to its record of RM19.49 billion in 2009, according to a survey by Malaysian Timber Industry Board.
Another general insurer said Malaysia has seen foreign investments in the sector and at least they bring in their better technology and risk management thinking.
"Locals should try to learn from them or take the advice of risk engineers on how they can improve the safety of their operations," he said.
On the insurers' side, Mohamed Hassan said the insurance companies are also finding it tougher to get reinsurance support for wood-based companies.
Insurance companies generally parcel out risks to reinsurance companies like Malaysian Reinsurance Bhd and Swiss Reinsurance Company as part of their risk management strategy.
Another issue faced by insurers are the rates at work in the present market.
"Rates are thin, risks are high. As an insurer, obviously, I would like to see an upward movement of rates," he said. In the past, Mohamed Hassan said Takaful Malaysia has actually declined business coming its way from woodbased companies.
[The Malaysian Reserve, 7 Feb 2011]
Sunday, February 13, 2011
Tuesday, May 11, 2010
Manulife eyes smaller insurers
By Ishun P. Ahmad
Manulife Insurance Bhd, which has been on an organic growth path in the last five years, is now looking at buying smaller insurers as one of the ways to expand its market share and business.
“There will be consolidation and Manulife will be one of the consolidators,” said Manulife Insurance’s chief executive officer Kevin McWhinney.
He told The Malaysian Reserve in a recent exclusive interview that the insurance firm, whose listed parent is Manulife Holdings Bhd, is on the look out for an opportunity like buying into insurance companies that works well for its shareholders and be good for policy holders.
When asked if Manulife is open to buying insurance companies, McWhinney replied if the right opportunity presents itself, Manulife has the resources, capital, and the knowhow to integrate companies.
A case in point was when Manulife purchased John Hancock back in 2005.
“With the introduction of risk-based capital, there are players in the market today that have a decision to make whether if they would want to inject more capital into their companies or continue with their insurance business, if that is not their core business they will exit the market and concentrate on their core business. And so definitely those opportunities will present themselves, especially in the next couple of years,” said McWhinney.
According to McWhinney, Manulife has major initiatives to double its 2,000 strong agency force in the next three years with a record increase of 500 agents added in the last 15 months.
Apart from increasing its agency numbers, he said Manulife is looking to have more full time agents, that will have a multiplying effect on productivity and professionalism.
“Feeling the pickup in the market confidence and people interest to join Manulife, we are training people to be more full time professional advisors,” said McWhinney.
Furthermore, Manulife is also looking at growing its distribution by strengthening its agency force through increasing professionalism and productivity. “Last year 2009, Manulife experienced a 25% increase year-on-year, 1Q 2010 over 1Q 2009, on the agency side, which is already doubled the amount of production with overall sales up by 30%,” said McWhinney.
As of 3Q 2009, he said Manulife was at number 12 in terms of market share, and anticipates to move up two notches to 10th place in 2010.
The insurance firm is looking to step up more regional support centres and is actively looking at Kuching for its growing and young population, Penang Island for its mass affluent market, and Kota Kinabalu to increase its presence in East Malaysia.
“The investment is in the hiring of people, agents, and managers in the regional centres,” said McWhinney in regards to the cost of setting up the support centres.
Manulife has currently six of these centres that are also equipped with training facilities each located in Bukit Mertajam, Ipoh, PJ, KL, Johor, and Sibu.
McWhinney said Manulife will continue to focus on three segments that matter most to Malaysians, namely products relating to retirement plan, medical emergencies, and children's education plan. Furthermore, he said Manulife would also look into underserved markets like the Bumiputera market that has a very high potential due to its extremely low penetration rate as well as the underserved markets in the rural areas.
McWhinney commented that the industry has to deal with the high turnover of agents mainly due to the fact that the bulk are part timers and are more likely to be discouraged and less motivated. Malaysia has about 75,000 licensed agents, high in proportion to the country’s 27 million population.
McWhinney said the main challenge is to ensure insurance careers are a fulltime job and not seen as part time, adding that Manulife is tackling this issue head on, and believes in producing caring and professional advisors rather that “you get somebody paddle you a product“.
“Industrywide, we see agents that come and try out the business for a short period of time and because they don’t give it their full commitment, they may get discourage quickly and just return to their fulltime job and don’t pursue it,” he said.
[The Malaysian Reserve, 12 May 2010, page 1]
Manulife Insurance Bhd, which has been on an organic growth path in the last five years, is now looking at buying smaller insurers as one of the ways to expand its market share and business.
“There will be consolidation and Manulife will be one of the consolidators,” said Manulife Insurance’s chief executive officer Kevin McWhinney.
He told The Malaysian Reserve in a recent exclusive interview that the insurance firm, whose listed parent is Manulife Holdings Bhd, is on the look out for an opportunity like buying into insurance companies that works well for its shareholders and be good for policy holders.
When asked if Manulife is open to buying insurance companies, McWhinney replied if the right opportunity presents itself, Manulife has the resources, capital, and the knowhow to integrate companies.
A case in point was when Manulife purchased John Hancock back in 2005.
“With the introduction of risk-based capital, there are players in the market today that have a decision to make whether if they would want to inject more capital into their companies or continue with their insurance business, if that is not their core business they will exit the market and concentrate on their core business. And so definitely those opportunities will present themselves, especially in the next couple of years,” said McWhinney.
According to McWhinney, Manulife has major initiatives to double its 2,000 strong agency force in the next three years with a record increase of 500 agents added in the last 15 months.
Apart from increasing its agency numbers, he said Manulife is looking to have more full time agents, that will have a multiplying effect on productivity and professionalism.
“Feeling the pickup in the market confidence and people interest to join Manulife, we are training people to be more full time professional advisors,” said McWhinney.
Furthermore, Manulife is also looking at growing its distribution by strengthening its agency force through increasing professionalism and productivity. “Last year 2009, Manulife experienced a 25% increase year-on-year, 1Q 2010 over 1Q 2009, on the agency side, which is already doubled the amount of production with overall sales up by 30%,” said McWhinney.
As of 3Q 2009, he said Manulife was at number 12 in terms of market share, and anticipates to move up two notches to 10th place in 2010.
The insurance firm is looking to step up more regional support centres and is actively looking at Kuching for its growing and young population, Penang Island for its mass affluent market, and Kota Kinabalu to increase its presence in East Malaysia.
“The investment is in the hiring of people, agents, and managers in the regional centres,” said McWhinney in regards to the cost of setting up the support centres.
Manulife has currently six of these centres that are also equipped with training facilities each located in Bukit Mertajam, Ipoh, PJ, KL, Johor, and Sibu.
McWhinney said Manulife will continue to focus on three segments that matter most to Malaysians, namely products relating to retirement plan, medical emergencies, and children's education plan. Furthermore, he said Manulife would also look into underserved markets like the Bumiputera market that has a very high potential due to its extremely low penetration rate as well as the underserved markets in the rural areas.
McWhinney commented that the industry has to deal with the high turnover of agents mainly due to the fact that the bulk are part timers and are more likely to be discouraged and less motivated. Malaysia has about 75,000 licensed agents, high in proportion to the country’s 27 million population.
McWhinney said the main challenge is to ensure insurance careers are a fulltime job and not seen as part time, adding that Manulife is tackling this issue head on, and believes in producing caring and professional advisors rather that “you get somebody paddle you a product“.
“Industrywide, we see agents that come and try out the business for a short period of time and because they don’t give it their full commitment, they may get discourage quickly and just return to their fulltime job and don’t pursue it,” he said.
[The Malaysian Reserve, 12 May 2010, page 1]
Deposit insurance limit to be increased
By Bhupinder Singh
The Perbadanan Insurans Deposit Malaysia (PIDM), which administers the deposit insurance system, is proposing to increase the deposit insurance limit from RM60,000 per deposit per member bank to RM250,000 per deposit per member bank effective January 2011.
The PIDM plans to advance a legislative package to the tabled in Parliament for debate and enactment before year-end as part of government backed measures to enhance financial consumer protection in the country.
The government deposit guarantee will lapse at the end of this year and the new guarantee limit proposed by PIDM will replace it as the higher limit level will provide protection to 99% of depositors.
The premium is paid by the financial institutions annually and the PIDM collected some RM131.8 million in premiums at the end of last year when its total Deposit Insurance Funds amounted to RM369.9 million, with the Conventional Deposit Insurance Fund totaling RM320.9 million and the Islamic Deposit Insurance Fund of RM49.0 million.
The PIDM intends to develop legislation to introduce an explicit Insurance Compensation Scheme (ICS) for insurance and takaful policy holders as well.
The ICS, which will be administered by PIDM, is a scheme designed to protect policy holders from the loss of their policy claims or insured benefits in the unlikely event of a failure of an insurance or takaful company.
Hence, the ICS will ensure policy holders of the 14.4 million or so policies in force till the end of 2009, be it insurance and takaful products, will also enjoy the same level of protection provided by PIDM to depositors of commercial banks and Islamic banks.
“The proposed ICS will enhance financial consumer confidence and promote consumer demand for insurance and takaful products,' PIDM said in a statement yesterday.
PIDM will hold discussions with the various stakeholders on the ICS before its tabled to the government.
[The Malaysian Reserve, 12 May 2010, page 1]
The Perbadanan Insurans Deposit Malaysia (PIDM), which administers the deposit insurance system, is proposing to increase the deposit insurance limit from RM60,000 per deposit per member bank to RM250,000 per deposit per member bank effective January 2011.
The PIDM plans to advance a legislative package to the tabled in Parliament for debate and enactment before year-end as part of government backed measures to enhance financial consumer protection in the country.
The government deposit guarantee will lapse at the end of this year and the new guarantee limit proposed by PIDM will replace it as the higher limit level will provide protection to 99% of depositors.
The premium is paid by the financial institutions annually and the PIDM collected some RM131.8 million in premiums at the end of last year when its total Deposit Insurance Funds amounted to RM369.9 million, with the Conventional Deposit Insurance Fund totaling RM320.9 million and the Islamic Deposit Insurance Fund of RM49.0 million.
The PIDM intends to develop legislation to introduce an explicit Insurance Compensation Scheme (ICS) for insurance and takaful policy holders as well.
The ICS, which will be administered by PIDM, is a scheme designed to protect policy holders from the loss of their policy claims or insured benefits in the unlikely event of a failure of an insurance or takaful company.
Hence, the ICS will ensure policy holders of the 14.4 million or so policies in force till the end of 2009, be it insurance and takaful products, will also enjoy the same level of protection provided by PIDM to depositors of commercial banks and Islamic banks.
“The proposed ICS will enhance financial consumer confidence and promote consumer demand for insurance and takaful products,' PIDM said in a statement yesterday.
PIDM will hold discussions with the various stakeholders on the ICS before its tabled to the government.
[The Malaysian Reserve, 12 May 2010, page 1]
Friday, March 19, 2010
Takaful Ikhlas eyes rental, property investments
By Alfean Hardy
Takaful Ikhlas Sdn Bhd, which has invested RM97 million on two tower blocks in Bangsar South, Kuala Lumpur, is targeting similar investments going forward given the long-term sustainability of rental income for revenue generation, its president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said.
The Islamic insurance firm used RM87 million of its policy holders’ funds to buy the commercial property and another RM10 million was invested in renovating both towers. The company has more than a million individual and group policy holders to date.
The unit of main boardlisted MNRB Holdings Bhd moved into all of Ikhlas Point Tower 11A and three floors of Ikhlas Point Tower 11 on Feb 1, 2010. Covering a built-up area of 99,286 sq ft in total, some 32,000 plus sq ft in one of the towers have been earmarked for rental/future expansion.
Speaking at a media briefing in Kuala Lumpur last Thursday, Syed Moheeb said, essentially, the buildings were not Takaful Ikhlas’s.
"These buildings were paid by policy holders’ funds coming from our risk fund. So, inevitably, the policy holders are the owners of the buildings, we’re merely renting it from them.
"We chose this strategy because we wanted to ensure rental income to policy holders and, over the last few years, one of the better revenue generating strategies is rental income, which is more sustainable over the long-term," he said.
Going forward, he said Takaful Ikhlas would make use of either shareholders’ funds or policy holders’ funds to purchase buildings and then rent them out to generate rental income.
"By doing this, we will slowly acquire property. Eventually, we also want to house all our branches in our own buildings. We’re not sure yet whether we will use funds from our shareholders or from our policy holders (when we buy these buildings)," he said, adding that Takaful Point was the firm’s first property investment.
Syed Moheeb said Takaful Ikhlas could have ventured into property investment earlier, but he felt that the firm needed to ensure that, whatever it bought, would have made an impact to investment income.
"The fact that (the two towers) have a capital appreciation of more than 20% indicates that this was a good decision.
"Among some of the things that we’re looking at will be rentable office premises and it won’t be anything else at this point in time. Our investment policy has been very cautious and has been more towards capital preservation and, in any thing that we do, we have to make sure that we don’t have to answer to any bad decisions later on," he said.
Syed Moheeb said Takaful Ikhlas was currently looking at housing two new branches in Klang, Selangor, and Kuala Terengganu, Terengganu, by middle of the year in new properties.
"At this point in time we haven’t identified yet any properties yet (for these two new branches). If you look at the 10 branches that we have currently, these are the areas that we would be looking to make investment opportunities," he said.
The Islamic insurer currently has branches in Kota Baru, Johor Baru, Sungai Petani, Ipoh, Kuching and Kota Kinabalu in Kelantan, Johor, Kedah, Perak, Sarawak and Sabah respectively. Asked on how much would be set aside for Takaful Ikhlas’s property buy war chest going forward, Syed Moheeb said the company’s investment strategy was set by the board, which decides how much went into equities, governmentbacked securities and others.
"Where property is concerned, we’re looking at not more than 20%. In the shorter term at least, until our financial year ending Mar 31, 2011, we will cap this at 20%," he said.
(This story appeared in The Malaysian Reserve on 1 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh, at http://islamicfinanceasia.blogspot.com/)
Takaful Ikhlas Sdn Bhd, which has invested RM97 million on two tower blocks in Bangsar South, Kuala Lumpur, is targeting similar investments going forward given the long-term sustainability of rental income for revenue generation, its president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said.
The Islamic insurance firm used RM87 million of its policy holders’ funds to buy the commercial property and another RM10 million was invested in renovating both towers. The company has more than a million individual and group policy holders to date.
The unit of main boardlisted MNRB Holdings Bhd moved into all of Ikhlas Point Tower 11A and three floors of Ikhlas Point Tower 11 on Feb 1, 2010. Covering a built-up area of 99,286 sq ft in total, some 32,000 plus sq ft in one of the towers have been earmarked for rental/future expansion.
Speaking at a media briefing in Kuala Lumpur last Thursday, Syed Moheeb said, essentially, the buildings were not Takaful Ikhlas’s.
"These buildings were paid by policy holders’ funds coming from our risk fund. So, inevitably, the policy holders are the owners of the buildings, we’re merely renting it from them.
"We chose this strategy because we wanted to ensure rental income to policy holders and, over the last few years, one of the better revenue generating strategies is rental income, which is more sustainable over the long-term," he said.
Going forward, he said Takaful Ikhlas would make use of either shareholders’ funds or policy holders’ funds to purchase buildings and then rent them out to generate rental income.
"By doing this, we will slowly acquire property. Eventually, we also want to house all our branches in our own buildings. We’re not sure yet whether we will use funds from our shareholders or from our policy holders (when we buy these buildings)," he said, adding that Takaful Point was the firm’s first property investment.
Syed Moheeb said Takaful Ikhlas could have ventured into property investment earlier, but he felt that the firm needed to ensure that, whatever it bought, would have made an impact to investment income.
"The fact that (the two towers) have a capital appreciation of more than 20% indicates that this was a good decision.
"Among some of the things that we’re looking at will be rentable office premises and it won’t be anything else at this point in time. Our investment policy has been very cautious and has been more towards capital preservation and, in any thing that we do, we have to make sure that we don’t have to answer to any bad decisions later on," he said.
Syed Moheeb said Takaful Ikhlas was currently looking at housing two new branches in Klang, Selangor, and Kuala Terengganu, Terengganu, by middle of the year in new properties.
"At this point in time we haven’t identified yet any properties yet (for these two new branches). If you look at the 10 branches that we have currently, these are the areas that we would be looking to make investment opportunities," he said.
The Islamic insurer currently has branches in Kota Baru, Johor Baru, Sungai Petani, Ipoh, Kuching and Kota Kinabalu in Kelantan, Johor, Kedah, Perak, Sarawak and Sabah respectively. Asked on how much would be set aside for Takaful Ikhlas’s property buy war chest going forward, Syed Moheeb said the company’s investment strategy was set by the board, which decides how much went into equities, governmentbacked securities and others.
"Where property is concerned, we’re looking at not more than 20%. In the shorter term at least, until our financial year ending Mar 31, 2011, we will cap this at 20%," he said.
(This story appeared in The Malaysian Reserve on 1 March 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh, at http://islamicfinanceasia.blogspot.com/)
Sunday, August 2, 2009
Factory bus operators fume over insurance ‘risk’: The Star
Bus operators ferrying factory workers are fuming with insurance firms for classifying them in the “high risk” category with express and tour buses.
Selangor Workers Bus Operators Association president Jackie Chew Soo Mee said factory buses should not be classified in that category, reports The Star ( July 31, 2009).
"Our operators have a set timetable and the distance is within a district or the next town. Our daily mileage is much lower and the condition of factory buses over a period of time is much better compared to express buses," she said.
THE REPORT GOES ON:
Chew suggested that insurance companies create a new scheme to accommodate factory buses in order not to burden operators. Of the 100 factory bus operators in Selangor, half are members of the association.
"With the tough economic period, factory bus operators should not be burdened further. If the new insurance structure is not created, several of our operators will be forced to wind up," she said at the association’s first annual general meeting (AGM).
Chew said the association would appeal to the General Insurance Association of Malaysia (PIAM), Bank Negara and Finance Ministry to create a new insurance scheme for factory bus operators.
She said buses over 12 years old were not allowed to take out comprehensive insurance, with such operators having to buy third party insurance with loading.
Road Transport Department director-general Datuk Solah Mat Hassan, who opened the AGM on behalf of Transport Minister Datuk Seri Ong Tee Keat, said discussions on the insurance scheme was going on with PIAM.
Selangor Workers Bus Operators Association president Jackie Chew Soo Mee said factory buses should not be classified in that category, reports The Star ( July 31, 2009).
"Our operators have a set timetable and the distance is within a district or the next town. Our daily mileage is much lower and the condition of factory buses over a period of time is much better compared to express buses," she said.
THE REPORT GOES ON:
Chew suggested that insurance companies create a new scheme to accommodate factory buses in order not to burden operators. Of the 100 factory bus operators in Selangor, half are members of the association.
"With the tough economic period, factory bus operators should not be burdened further. If the new insurance structure is not created, several of our operators will be forced to wind up," she said at the association’s first annual general meeting (AGM).
Chew said the association would appeal to the General Insurance Association of Malaysia (PIAM), Bank Negara and Finance Ministry to create a new insurance scheme for factory bus operators.
She said buses over 12 years old were not allowed to take out comprehensive insurance, with such operators having to buy third party insurance with loading.
Road Transport Department director-general Datuk Solah Mat Hassan, who opened the AGM on behalf of Transport Minister Datuk Seri Ong Tee Keat, said discussions on the insurance scheme was going on with PIAM.
RHB Insurance Eyes RM1.2 Million Premiums From Maid Protector Policy
RHB Insurance Bhd is targeting RM1.2 million in premiums from its latest product, Maid Protector Insurance plan, within the first year of its launch.
RHB group managing director, Datuk Tajuddin Atan, said the premium would be as low as RM60 to RM95 per year.
"This product, which will be offered to only legal foreign maids, will receive an encouraging response from Malaysians who employ maids.
"As at May 2009, a total of 300,000 foreign maids are working in Malaysia," he told a media briefing after the launch of the product here Thursday.
The plan is offered jointly by RHB Insurance and Pos Malaysia Bhd.
It will provide employers with an attractive and competitive protection plan for domestic workers.
The product will provide insurance coverage for maids in the event that they meet with an accident or death, or in the event that an unwanted accident or damage happens to a third party due to negligence of the maids.
Tajuddin said the company was leveraging on Pos Malaysia Bhd's network to offer this product.
The plan will be available at 13 general post offices tomorrow and 671 other post offices nationwide from Aug 15.
The employers can opt for the 12-month or 24-month policy. -- BERNAMA
RHB group managing director, Datuk Tajuddin Atan, said the premium would be as low as RM60 to RM95 per year.
"This product, which will be offered to only legal foreign maids, will receive an encouraging response from Malaysians who employ maids.
"As at May 2009, a total of 300,000 foreign maids are working in Malaysia," he told a media briefing after the launch of the product here Thursday.
The plan is offered jointly by RHB Insurance and Pos Malaysia Bhd.
It will provide employers with an attractive and competitive protection plan for domestic workers.
The product will provide insurance coverage for maids in the event that they meet with an accident or death, or in the event that an unwanted accident or damage happens to a third party due to negligence of the maids.
Tajuddin said the company was leveraging on Pos Malaysia Bhd's network to offer this product.
The plan will be available at 13 general post offices tomorrow and 671 other post offices nationwide from Aug 15.
The employers can opt for the 12-month or 24-month policy. -- BERNAMA
Finding the right pension model
While the Securities Commission (SC) says it is in the midst of finding successful private pension fund models that best fit Malaysia, fund managers want the models to be transparent and give investors the right to choose their fund managers. Financial planners, meanwhile, say the proposed funds should provide some form of incentives to ensure its successful implementation, reports The Star ( July 25, 2009).
Fortress Capital Asset Management (M) Sdn Bhd chief executive officer Thomas Yong said the proposed pension fund should be liberalised similar to models in many developed nations that allowed savers to choose whom they wished to manage their savings nests.
"If the fund is sufficiently liberalised like that in Australia, savers will have the choice of who manages their investments and what they invest in. While the message is clear that everyone including the self-employed should save for the long term, the issue is who should decide how these savings are managed.
"Should the savers be allowed to decide, with the fund providing adequate disclosures and information, or should the fund decide arbitrarily based on some national average," ,” he told the newspaper.
THE REPORT GOES ON:
In any case, he felt the regulatory framework and disclosure standards must first be put in place to ensure effective transparency and liberalisation. A fund manager, who wished to remain anonymous, said the SC while scouting for suitable fund models should ensure investors would be kept informed of the performance of the pension funds managed by all participating fund managers.
“It is not sufficient that the funds’ performance only be disclosed to the regulators, as this will cause doubts among the retirees and the self-employed,” he added.
To ensure the success of such funds, the SC also needed to have asset allocation limits and determine the type of investment instruments permitted for the fund, apart from an appropriate ceiling on fees that fund managers may charge, said Yong. The SC, as the regulator of the proposed funds, is currently gathering input from various jurisdictions to ensure the adoption of successful private pension fund models.
Malaysia is set to have private pension funds by the middle of next year and several fund managers have shown keen interest to manage these funds.
Great Vision Advisory Group head of tax and financial planning Datuk Chua Tia Guan said the funds should not be too flexible to enable contributors to withdraw a lump sum upon retirement as it would easily be exhausted in a short period as in the case of Employees Provident Fund (EPF) withdrawals.
“The government should also provide tax break for the participants of the private pension funds in addition to the current tax relief given on insurance and EPF of RM6,000.
“In Singapore, the government provides tax relief for those who participate in the Supplementary Retirement Scheme, which was introduced many years ago, in addition to the Central Provident Fund,” Chua noted.
He added that proper studies should also be conducted to ensure the funds did not experience similar fate as the disastrous insurance annuity scheme introduced years back. A licensed financial planner said it was meaningless for existing EPF contributors to invest in pension funds unless certain tax benefits were provided.
Licensed financial adviser Jeremy Tan of Standard Financial Planner Sdn Bhd, on the other hand, said the launching of these funds would not be an issue as there was sufficient existing regulatory supervising and monitoring of legitimate investment schemes in the country.
Fortress Capital Asset Management (M) Sdn Bhd chief executive officer Thomas Yong said the proposed pension fund should be liberalised similar to models in many developed nations that allowed savers to choose whom they wished to manage their savings nests.
"If the fund is sufficiently liberalised like that in Australia, savers will have the choice of who manages their investments and what they invest in. While the message is clear that everyone including the self-employed should save for the long term, the issue is who should decide how these savings are managed.
"Should the savers be allowed to decide, with the fund providing adequate disclosures and information, or should the fund decide arbitrarily based on some national average," ,” he told the newspaper.
THE REPORT GOES ON:
In any case, he felt the regulatory framework and disclosure standards must first be put in place to ensure effective transparency and liberalisation. A fund manager, who wished to remain anonymous, said the SC while scouting for suitable fund models should ensure investors would be kept informed of the performance of the pension funds managed by all participating fund managers.
“It is not sufficient that the funds’ performance only be disclosed to the regulators, as this will cause doubts among the retirees and the self-employed,” he added.
To ensure the success of such funds, the SC also needed to have asset allocation limits and determine the type of investment instruments permitted for the fund, apart from an appropriate ceiling on fees that fund managers may charge, said Yong. The SC, as the regulator of the proposed funds, is currently gathering input from various jurisdictions to ensure the adoption of successful private pension fund models.
Malaysia is set to have private pension funds by the middle of next year and several fund managers have shown keen interest to manage these funds.
Great Vision Advisory Group head of tax and financial planning Datuk Chua Tia Guan said the funds should not be too flexible to enable contributors to withdraw a lump sum upon retirement as it would easily be exhausted in a short period as in the case of Employees Provident Fund (EPF) withdrawals.
“The government should also provide tax break for the participants of the private pension funds in addition to the current tax relief given on insurance and EPF of RM6,000.
“In Singapore, the government provides tax relief for those who participate in the Supplementary Retirement Scheme, which was introduced many years ago, in addition to the Central Provident Fund,” Chua noted.
He added that proper studies should also be conducted to ensure the funds did not experience similar fate as the disastrous insurance annuity scheme introduced years back. A licensed financial planner said it was meaningless for existing EPF contributors to invest in pension funds unless certain tax benefits were provided.
Licensed financial adviser Jeremy Tan of Standard Financial Planner Sdn Bhd, on the other hand, said the launching of these funds would not be an issue as there was sufficient existing regulatory supervising and monitoring of legitimate investment schemes in the country.
OCBC ties up with Great Eastern to offer bancassurance products
OCBC Bank (Malaysia) Bhd aims to be among the leading players in the bancassurance market following its partnership deal with Great Eastern Life Assurance (Malaysia) Bhd.
It aims to capture a 10%-15% share of the regular life insurance market in order to become a significant player in the field.
However, it did not reveal its current market share, saying that there were no accurate figures for the segment at the moment. OCBC which started operations in the bancassurance field under several partnerships six years ago, will market two Great Eastern bancassurance products, MaxMoney Plus and MaxMoney Back, beginning today (yesterday), said OCBC Bank director and chief executive officer, Jeffrey Chew Sun Teong.
He said this during a press conference following the launch of the products in Kuala Lumpur yesterday. MaxMoney Plus is expected to generate RM12 million in premiums by year-end, while MaxMoney Back is expected to garner about RM6 million.
Another product is expected to be launched next month. Meanwhile, Great Eastern Life Assurance (Malaysia) Bhd director and chief executive officer Koh Yaw Hui, said the tie-up will help Great Eastern to achieve its target of total weighted new business premiums of RM800 million this year. He said with a network of 29 branches throughout Malaysia, OCBC Bank's ability to mine its customer base rendered significant market potential for Great Eastern making personal visits to bank branches was still common.
Koh said the bancassurance arrangement with OCBC Bank was made possible through a combination of both the government's recent liberalisation initiatives and a strong partnership forged between the two companies over the past seven years.
In Malaysia, bancassurance forms about half of the new premiums collected annually in the life insurance market with more than 90% from single premium, he said.
He said Great Eastern also planned to expand its network of branches. In the Klang Valley, which contributes 38% to Great Eastern's business, there are plans to set up a big branch office in Mutiara Damansara, Petaling Jaya, he said. Its presence is more focussed in Kuala Lumpur at the moment. It also expects to open up branches in the states. — Bernama
It aims to capture a 10%-15% share of the regular life insurance market in order to become a significant player in the field.
However, it did not reveal its current market share, saying that there were no accurate figures for the segment at the moment. OCBC which started operations in the bancassurance field under several partnerships six years ago, will market two Great Eastern bancassurance products, MaxMoney Plus and MaxMoney Back, beginning today (yesterday), said OCBC Bank director and chief executive officer, Jeffrey Chew Sun Teong.
He said this during a press conference following the launch of the products in Kuala Lumpur yesterday. MaxMoney Plus is expected to generate RM12 million in premiums by year-end, while MaxMoney Back is expected to garner about RM6 million.
Another product is expected to be launched next month. Meanwhile, Great Eastern Life Assurance (Malaysia) Bhd director and chief executive officer Koh Yaw Hui, said the tie-up will help Great Eastern to achieve its target of total weighted new business premiums of RM800 million this year. He said with a network of 29 branches throughout Malaysia, OCBC Bank's ability to mine its customer base rendered significant market potential for Great Eastern making personal visits to bank branches was still common.
Koh said the bancassurance arrangement with OCBC Bank was made possible through a combination of both the government's recent liberalisation initiatives and a strong partnership forged between the two companies over the past seven years.
In Malaysia, bancassurance forms about half of the new premiums collected annually in the life insurance market with more than 90% from single premium, he said.
He said Great Eastern also planned to expand its network of branches. In the Klang Valley, which contributes 38% to Great Eastern's business, there are plans to set up a big branch office in Mutiara Damansara, Petaling Jaya, he said. Its presence is more focussed in Kuala Lumpur at the moment. It also expects to open up branches in the states. — Bernama
Zainuddin: From humble beginnings to moving mountains
By Alfean Hardy
Options were not plentiful if you were a secondary school graduate in Rembau, Negri Sembilan, in the late 70s. According to HSBC Amanah Takaful (Malaysia) Sdn Bhd executive director and chief executive officer Zainuddin Ishak, the most most people could look forward to was working in a factory in Senawang.
"My father was a rubber tapper and my mother a housewife. There were eight of us in the family and life at that time was borderline poverty or poverty. I went to a kampung school in Rembau and graduated from a secondary school that was also in Rembau," he told The Malaysian Reserve recently.
With no career advisers around to guide an impressionable youth from a large family, perhaps that was where Zainuddin would have ended up. It was sound advice from his eldest brother, a former Institut Teknologi Mara (ITM) student, that changed his life. "He advised me to take up an insurance qualificaion. He told me it was a very difficult course, an external course with the professional papers coming from the UK.
"He said that amongst his friends who managed to clear some of the papers, and not the full syllabus, made it big time in the insurance industry. So, I said to myself, it sounds good, make money, why not," he added. This, Zainuddin said, was in 1984.
"To cut a long story short, I got accepted into ITM (now known as Universiti Teknologi Malaysia, or UITM). Prior to doing the associate (paper), you had to sit for the certificate. "There were 80 of us in that batch class of 1984 sitting for the certificate. Only 30 went on to do the associate. Of that, only four of us made it through," he added.
Zainuddin said, those who did not clear the associate papers could still get a decent job. For him, though, the challenge of being able to take on a difficult endeavour was a prime motivator and it was this drive within him, he felt, that helped him make it all the way through. "I made it, not because I'm clever, but because I've always had the tenacity and the stamina to complete any task placed before me. I guess that's my strong point. The more difficult it is, the more determined I am to clear the hurdles," he said.
The start of a long and fruitful career in the industry began in 1989, as a management trainee at Aviva with the possibility of getting a full time job within six months. Unfortunately for Zainuddin, this opportunity came at the tail end of a recession, which spelled stiff competition for a permanent position. "When I first joined the industry, because (of the) recession, there were a lot of unemployed people in the industry. There was big competition to get a permanent position (in Aviva) but the internship gave me the opportunity to work in a world-class organisation.
"My first real job was after that, as a full executive, was with a company owned by Kompleks Kewangan in the early 1990s called Trust International Insurance (TII), developing a bancassurance channel for the company. "I got my exposure in sales in the insurance industry," he added. That break with TII was pivotal for Zainuddin. After three years, he went on to join Norwich Winterthur before moving on to Malaysia National Insurance Bhd (MNI) and eventually to American National Insurance, which was owned by the New Straits Times Press Bhd (NSTP) group at the time. "I stayed there for a long while. What changed was the company. Because of a series of acquisitions, from NSTP to Bank of Commerce to CIMB, I stayed with one company that changed its shareholders until I became chief executive officer of CIMB Bank Aviva Takaful," he added.
All in all, Zainuddin stayed with the firm for almost 14 years, slowly and steadily moving up the ranks every two years or so. Eventually, though, it was the challenge of something new that attracted him to make the change in mid-January 2009. "If you look at the takaful industry, there are various stages of maturities amongst the eight companies here. HSBC clearly has gone through its crucial, formative stage.
"When you're at the formative stage, it's good to have internal people because you understand the people and the culture.
"When you want to take it to the next stage, you need to get outside people and bring in the industry expertise to come in and take a company to the next level. "I felt that this was a good time for me to come in and bring the company to that next level. HSBC is an admired brand and it gives you more opportunities and avenues to grow," he said. Formed in 2006, HSBC Takaful is a joint venture (JV) that is 49%-owned by HSBC Insurance (Asia Pacific) Holdings Ltd, 31%-owned by Jerneh Asia Bhd and 20%-owned by the Employees Provident Fund (EPF).
To Zainuddin, his challenge for this relatively new venture was to take it to the next level. "In everything, nothing is ever good enough. Every day is a challenge, nothing is ever good enough. Every day you're looking at opportunities to improve from yesterday.
"We're always improving. It's always the next level, it's always a moving target. You've got lots of room to improve. Every day is about improving what we are today," he said.
"Another challenge is to bring takaful to the HSBC world because Malaysia is the first takaful outfit (within the group) and vice versa. "We need, (and) the industry certainly needs, big names like HSBC to champion takaful so that it will make takaful very prominent. That's my challenge, how to fulfill the vision, the set of targets, etc," he added.
The task for the boy from Rembau is certainly a challenging one, what with a very competitive industry and a global economy that has a bad case of the flu but, somehow, you sense that, with his drive, determination and desire to succeed, Zainuddin will certainly move mountains to get the job done.
(This story appeared in The Malaysian Reserve on July 22, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Prudential’s biggest ad campaign
Prudential Assurance Malaysia Bhd has allocated RM7mil for its biggest advertising campaign to-date to promote its new medical insurance plan, PRUhealth, reports The Star (July 18, 2009).
According to chief marketing officer Thomas Wong, the campaign starting July 20 via television, radio, print and outdoor advertising, is expected to generate a considerable amount of interest for the unique medical insurance plan, which rewards policyholders for staying healthy by giving them no claims bonus.
“We expect to secure a large proportion of new and existing customers for this first of its kind product in the market,” he said. One of the biggest medical insurers in Malaysia, Prudential paid a third of the industry’s medical costs last year, which amounted to RM900mil, the newspaper reported.
According to chief marketing officer Thomas Wong, the campaign starting July 20 via television, radio, print and outdoor advertising, is expected to generate a considerable amount of interest for the unique medical insurance plan, which rewards policyholders for staying healthy by giving them no claims bonus.
“We expect to secure a large proportion of new and existing customers for this first of its kind product in the market,” he said. One of the biggest medical insurers in Malaysia, Prudential paid a third of the industry’s medical costs last year, which amounted to RM900mil, the newspaper reported.
Wednesday, July 15, 2009
MMIP insurance covers now available at Pos Malaysia outlets
The Persatuan Insurans Am Malaysia (Piam) last week announced that Malaysian Motor Insurance Pool (MMIP) insurance covers will be available to the public at Pos Malaysia outlets, confirming an earlier report by The Malaysian Reserve.
With effect from July 10, it said private car and motorcycle owners can purchase MMIP's insurance covers from Pos Malaysia outlets throughout the country including Sabah and Sarawak.
In order to immediately address accessibility problems in Sabah and Sarawak, it said insurance for taxis and buses will also be made available from the same day, while those in Peninsula Malaysia from July 24.
"In the current scenario where the motor insurance market is experiencing high loss experience, many insurers have either declined or are scaling back on underwriting risks especially third party insurance. As such, an increasing number of motorists are turning to the MMIP for insurance cover," Piam said in the statement.
On July 23, The Malaysian Reserve reported that the central bank was on the verge of appointing Pos Malaysia Bhd as the agent for motorists to buy motor insurance from the industry pool, now that most insurers have declined to underwrite directly that segment of the insurance market.
It was reported that Pos Malaysia, the national postal services provider which has been in the red for financial years 2007 and 2008, will secure the contract to ensure that motorists are able to secure the third party insurance cover.
In the past weeks, more and more motorists found themselves turned away by their insurer when they wanted to renew their third party cover. Instead, they were told to shop around at other insurance companies that may still underwrite that segment, but to little avail as most general insurers and takaful operators have stopped underwriting directly the risk due to the segment's high loss experience.
In light of the increasing difficulty, Bank Negara Malaysia (BNM) which regulates the insurance and takaful industry had turned to Pos Malaysia to act as an agent on behalf of the motor insurance pool, the insurer of the last resort.
In its statement, Piam said in order to provide convenience and accessibility to the public, MMIP and Pos Malaysia have formed a strategic partnership to capitalise on Pos Malaysia's extensive network of offices throughout the country, in both the urban and rural areas. Pos Malaysia has 684 outlets nationwide which will provide MMIP insurance with 578 outlets in Peninsula Malaysia and 106 in Sabah and Sarawak, it said.
Furthermore, it said Pos Malaysia already has the necessary experience, human resources and IT facilities in place to provide the MMIP's insurance covers.
"This service will be an extension of the existing insurance renewal service that is already available at Pos Malaysia outlets as it currently acts as agents for eight insurance companies and three takaful operators," it said. In addition to insurance renewal, it said Pos Malaysia also offers the renewal of road tax for private vehicles on behalf of Road Transport Department. The MMIP was formed in 1992 to ensure that all vehicles on the road would not be without access to the minimum motor insurance cover required by law.
The MMIP also provides insurance for vehicles that are considered high risks and are unable or have difficulty in securing motor insurance from the normal market.
The liabilities and expenses of the MMIP are shared equally by all the 33 general insurance companies. Currently, the MMIP utilises the branch office networks of two insurers, Multi-Purpose Insurans Bhd and Uni Asia General Insurance Bhd, who serve as the servicing insurers for MMIP. Both these servicing insurers will continue to provide MMIP insurance covers together with the Pos Malaysia outlets.
(This story appeared in The Malaysian Reserve on July 13, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
With effect from July 10, it said private car and motorcycle owners can purchase MMIP's insurance covers from Pos Malaysia outlets throughout the country including Sabah and Sarawak.
In order to immediately address accessibility problems in Sabah and Sarawak, it said insurance for taxis and buses will also be made available from the same day, while those in Peninsula Malaysia from July 24.
"In the current scenario where the motor insurance market is experiencing high loss experience, many insurers have either declined or are scaling back on underwriting risks especially third party insurance. As such, an increasing number of motorists are turning to the MMIP for insurance cover," Piam said in the statement.
On July 23, The Malaysian Reserve reported that the central bank was on the verge of appointing Pos Malaysia Bhd as the agent for motorists to buy motor insurance from the industry pool, now that most insurers have declined to underwrite directly that segment of the insurance market.
It was reported that Pos Malaysia, the national postal services provider which has been in the red for financial years 2007 and 2008, will secure the contract to ensure that motorists are able to secure the third party insurance cover.
In the past weeks, more and more motorists found themselves turned away by their insurer when they wanted to renew their third party cover. Instead, they were told to shop around at other insurance companies that may still underwrite that segment, but to little avail as most general insurers and takaful operators have stopped underwriting directly the risk due to the segment's high loss experience.
In light of the increasing difficulty, Bank Negara Malaysia (BNM) which regulates the insurance and takaful industry had turned to Pos Malaysia to act as an agent on behalf of the motor insurance pool, the insurer of the last resort.
In its statement, Piam said in order to provide convenience and accessibility to the public, MMIP and Pos Malaysia have formed a strategic partnership to capitalise on Pos Malaysia's extensive network of offices throughout the country, in both the urban and rural areas. Pos Malaysia has 684 outlets nationwide which will provide MMIP insurance with 578 outlets in Peninsula Malaysia and 106 in Sabah and Sarawak, it said.
Furthermore, it said Pos Malaysia already has the necessary experience, human resources and IT facilities in place to provide the MMIP's insurance covers.
"This service will be an extension of the existing insurance renewal service that is already available at Pos Malaysia outlets as it currently acts as agents for eight insurance companies and three takaful operators," it said. In addition to insurance renewal, it said Pos Malaysia also offers the renewal of road tax for private vehicles on behalf of Road Transport Department. The MMIP was formed in 1992 to ensure that all vehicles on the road would not be without access to the minimum motor insurance cover required by law.
The MMIP also provides insurance for vehicles that are considered high risks and are unable or have difficulty in securing motor insurance from the normal market.
The liabilities and expenses of the MMIP are shared equally by all the 33 general insurance companies. Currently, the MMIP utilises the branch office networks of two insurers, Multi-Purpose Insurans Bhd and Uni Asia General Insurance Bhd, who serve as the servicing insurers for MMIP. Both these servicing insurers will continue to provide MMIP insurance covers together with the Pos Malaysia outlets.
(This story appeared in The Malaysian Reserve on July 13, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Stronger growth seen for insurance
The insurance industry is poised to show improvement in performance in the second half of the year on the back of the recovery in the country’s export sector. Many insurance players are optimistic the performance for the second half will be better than the first half of the year underpin by the pick-up in economic activities spurring stronger export growth, reports The Star (July 11, 2009).
Great Eastern Life Assurance (Malaysia) Bhd director and chief executive officer Koh Yaw Hui told the newspaper: "All recent economic indicators suggest that the worst is over as the most affected export industry has been seen picking up and many companies have started recruiting.
"We expect the life insurance industry for the second half of the year to do much better than the first half. Personally, I think this year, the industry should end up having double-digit growth."
The growth driver that will steer the industry in the second half, it quoted general insurer LPI Capital Bhd chief executive officer Tee Choon Yeow will be the export and construction sectors.
The growth in the export industry, he adds, will help in the development of the marine and manufacturing sectors, which in turn will create greater demand for marine insurance as well as fire insurance, it added.
Manulife Holdings Bhd Group CEO Michael Chan was quoted as saying he is positive of the outlook for the insurance for the second half as insurance plays a very important role in one’s financial planning portfolio regardless of the economic cycles.
“Manulife’s insurance business showed strong growth in the second quarter as we launched new products and new agency performance management standards.
“We expect to see continued improvement in the second half as we roll out more new products, further drive the agency performance management standards and continue with our recruitment programmes,” Chan adds.
THE REST OF THE STORY:
Koh says Great Eastern has done very well in the first half of the year registering more than RM360mil in total weighted new business premium, which was more than 50% growth compared with the similar period last year in line with economic improvement.
Riding on the momentum of its strong first half result, he adds the company should continue to do well in the second half and meet its goal of RM800mil in total weighted new business premium for this year.
Based on the company’s first six months results, Tee points out that Lonpac is still optimistic of meeting its target of 15% growth in gross premiums by year-end.
Despite operating in a competitive and challenging environment, it turned in an impressive underwriting surplus of RM35.5mil representing a significant jump of 55.7% over the corresponding period of 2008. It also recorded underwriting surplus in all classes of insurance for the period.
Tee attributed the improved performance to prudent underwriting which has help it achieve profit and premium growth year on year.
He stress for insurers to improve performance amid the tough economic environment, they need to also display a high degree of transparency, corporate governance and professionalism.
According to Bank Negara’s statistics, gross premiums for general insurance last year stood at RM9.73bil against RM9.07bil in 2007. Net premiums for the period was also higher at about RM9bil as oppose to RM8.2bil (in 2007).
The Life Insurance Association of Malaysia (LIAM), in releasing its latest figures, says the industry delivered a strong first quarter (January-March) performance with new business sales growing by 14% on weighted premium basis.
Weighted premium is calculated as 10% of single premium plus 100% of regular premium.
The growth, LIAM says, was contributed by a strong performance in regular premium sales which went up by 24% compared to the same period last year.
Single premium business, however, registered a decline of 43% due to the global financial crisis and the decline in interest rate.
By class of business, investment-linked business, normally perceived as savings related products, registered a sharp decline of 23% by weighted premium.
The sale of single premium investment-linked declined from RM584mil in the first quarter of 2008 to a mere RM48mil in the corresponding period in 2009.
Traditional business, normally perceived as protection related products, on the other hand registered a strong growth of 43% during the period as opposed to similar quarter last year.
The sales of group insurance business remained fairly static with total premium of RM652mil compared to RM653mil a year earlier, LIAM says.
Key growth drivers
Koh said the two key growth drivers for the industry for the second half will still be the distribution channel as well as products.
“For us, the second half of the year will be an exciting period. Apart from continuing with our strategy to further enhance the productivity and professionalism of our 17,000 agency force, we will be distributing our products through the bancassurance channel under the financial sector liberalisation plan.
“Great Eastern is now able to have bancassurance tie-up with all the banks including foreign banks in Malaysia and hope to sell its first policy within the next one to two months,” he adds.
As far as distribution channel is concern, Koh says bancassurance is set to grow faster after the liberalisation as there is now no restriction of insurance companies tying up with banks to enhance their sales.
On the possible and likely challenges for the industry, Tee says it is the increasing claim trends from motorists, especially on bodily injury as well as from motor theft.
“We believe that the most important step that needs to be taken to address these issues is to practice prudential underwriting and to have in place strong claims management and underwriting processes,” he adds.
Koh says one of the challenges is for agents to advise consumers on the importance of financial planning to meet their future goals since people tend to be very prudent in their spending during the current difficult times.
As such, it is important that agents are professional and have the required knowledge and competency to play that role, he explains.
Chan views the state of the economy as a challenge for the industry. “The positive news is that the Government has announced numerous stimulus plans to help drive economic growth but the pace of growth may be impacted by external factors among which is the recovery of our export markets.
“Also, equity markets have not stabilised and should they continue to be volatile, it will impact investment income for insurers,” Chan says.
Great Eastern Life Assurance (Malaysia) Bhd director and chief executive officer Koh Yaw Hui told the newspaper: "All recent economic indicators suggest that the worst is over as the most affected export industry has been seen picking up and many companies have started recruiting.
"We expect the life insurance industry for the second half of the year to do much better than the first half. Personally, I think this year, the industry should end up having double-digit growth."
The growth driver that will steer the industry in the second half, it quoted general insurer LPI Capital Bhd chief executive officer Tee Choon Yeow will be the export and construction sectors.
The growth in the export industry, he adds, will help in the development of the marine and manufacturing sectors, which in turn will create greater demand for marine insurance as well as fire insurance, it added.
Manulife Holdings Bhd Group CEO Michael Chan was quoted as saying he is positive of the outlook for the insurance for the second half as insurance plays a very important role in one’s financial planning portfolio regardless of the economic cycles.
“Manulife’s insurance business showed strong growth in the second quarter as we launched new products and new agency performance management standards.
“We expect to see continued improvement in the second half as we roll out more new products, further drive the agency performance management standards and continue with our recruitment programmes,” Chan adds.
THE REST OF THE STORY:
Koh says Great Eastern has done very well in the first half of the year registering more than RM360mil in total weighted new business premium, which was more than 50% growth compared with the similar period last year in line with economic improvement.
Riding on the momentum of its strong first half result, he adds the company should continue to do well in the second half and meet its goal of RM800mil in total weighted new business premium for this year.
Based on the company’s first six months results, Tee points out that Lonpac is still optimistic of meeting its target of 15% growth in gross premiums by year-end.
Despite operating in a competitive and challenging environment, it turned in an impressive underwriting surplus of RM35.5mil representing a significant jump of 55.7% over the corresponding period of 2008. It also recorded underwriting surplus in all classes of insurance for the period.
Tee attributed the improved performance to prudent underwriting which has help it achieve profit and premium growth year on year.
He stress for insurers to improve performance amid the tough economic environment, they need to also display a high degree of transparency, corporate governance and professionalism.
According to Bank Negara’s statistics, gross premiums for general insurance last year stood at RM9.73bil against RM9.07bil in 2007. Net premiums for the period was also higher at about RM9bil as oppose to RM8.2bil (in 2007).
The Life Insurance Association of Malaysia (LIAM), in releasing its latest figures, says the industry delivered a strong first quarter (January-March) performance with new business sales growing by 14% on weighted premium basis.
Weighted premium is calculated as 10% of single premium plus 100% of regular premium.
The growth, LIAM says, was contributed by a strong performance in regular premium sales which went up by 24% compared to the same period last year.
Single premium business, however, registered a decline of 43% due to the global financial crisis and the decline in interest rate.
By class of business, investment-linked business, normally perceived as savings related products, registered a sharp decline of 23% by weighted premium.
The sale of single premium investment-linked declined from RM584mil in the first quarter of 2008 to a mere RM48mil in the corresponding period in 2009.
Traditional business, normally perceived as protection related products, on the other hand registered a strong growth of 43% during the period as opposed to similar quarter last year.
The sales of group insurance business remained fairly static with total premium of RM652mil compared to RM653mil a year earlier, LIAM says.
Key growth drivers
Koh said the two key growth drivers for the industry for the second half will still be the distribution channel as well as products.
“For us, the second half of the year will be an exciting period. Apart from continuing with our strategy to further enhance the productivity and professionalism of our 17,000 agency force, we will be distributing our products through the bancassurance channel under the financial sector liberalisation plan.
“Great Eastern is now able to have bancassurance tie-up with all the banks including foreign banks in Malaysia and hope to sell its first policy within the next one to two months,” he adds.
As far as distribution channel is concern, Koh says bancassurance is set to grow faster after the liberalisation as there is now no restriction of insurance companies tying up with banks to enhance their sales.
On the possible and likely challenges for the industry, Tee says it is the increasing claim trends from motorists, especially on bodily injury as well as from motor theft.
“We believe that the most important step that needs to be taken to address these issues is to practice prudential underwriting and to have in place strong claims management and underwriting processes,” he adds.
Koh says one of the challenges is for agents to advise consumers on the importance of financial planning to meet their future goals since people tend to be very prudent in their spending during the current difficult times.
As such, it is important that agents are professional and have the required knowledge and competency to play that role, he explains.
Chan views the state of the economy as a challenge for the industry. “The positive news is that the Government has announced numerous stimulus plans to help drive economic growth but the pace of growth may be impacted by external factors among which is the recovery of our export markets.
“Also, equity markets have not stabilised and should they continue to be volatile, it will impact investment income for insurers,” Chan says.
Thursday, July 9, 2009
Exim Bank to introduce takaful products next yr
Export-Import Bank of Malaysia Bhd (Exim Bank) is poised to expand its reach further by offering better options to customers via the introduction of Shariah-compliant products.
Islamic financing has been identified as a new area of growth for the bank in view that Malaysia is expanding trade involving the Organisation of Islamic Countries (OIC) member states.
The bank has envisaged that by end-2009, it would have sufficient Shariah-compliant banking products to cater for the needs of its growing global customers, said managing director/CEO Mohd Fauzi Rahmat.
"We are also planning to introduce takaful (Islamic insurance) products by next year," he said in a statement on Monday.
Exim Bank supports the financing needs of Malaysian companies and investors with operations in four continents across two dozen countries worldwide. Asean and Middle East will continue to be major contributors to the bank's portfolio with about two-third of its exposures while Africa, Europe and Asia Pacific make up the rest.
According to Fauzi, the bank is committed to continue its drive to support local exporters and investors extending their international business by providing banking facilities and insurance coverage particularly those that significantly contribute to the extension and enlargement of Malaysia's export volume, value and markets.
While the bank recognise that 2009 would be more a challenging year amidst global economic uncertainties, it would continue to provide support to its existing and potential customers and partners who are willing to take the challenge and participate in the still significant global trade and investments and to be ready for future businesses when the economy picks up.
In 2008, Exim Bank approved a total of RM460.3 million direct loans and guarantees to customers in various sectors including construction, investment, manufacturing and commodity trading.
In addition, the Export Credit Refinancing, extended via participating financial institutions and by far the single largest product of the bank by volume, contributed a total of RM9.5 billion in loan disbursements compared with RM8.4 billion in the previous year.
In trade credit insurance, it has a total of RM2.43 billion business in force in 2008, against RM2.78 billion in 2007. As for commercial and political risk insurance business, the bank approved RM120 million worth of business last year reflecting it cautious approach in light of the global economic crisis.
The total Malaysian exports insured for 2008 amounted to RM2.55 billion and is spread over 72 countries primarily across Asia and Africa.
"Exim Bank maintained a positive and stable performance for both banking and insurance businesses although a more selective approach has been adopted to respond to the current global economic situation," Fauzi said.
To strengthen its capacity to undertake more businesses, the shareholders' funds of Exim Bank has increased to RM2.8 billion in 2008 from RM839 million a year ago. This would go a long way in ensuring that Exim Bank continues to thrive as a vibrant and active Development Financial Institution for Malaysian exporters and investors over the medium and long-term.
(This story appeared in The Malaysian Reserve on July 8, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Takaful Malaysia eyes 50% market share in 2-3 years
By T Vignesh
Syarikat Takaful Malaysia Bhd (Takaful Malaysia) expects to capture slightly more than half of the takaful industry's total asset market share in the next two to three years despite the current economic crisis. Managing director Datuk Mohamad Hassan said the industry's total assets have reached RM12 billion and the company's share currently stands at RM4.05 billion.
"We are confident of achieving slightly more than the current takaful market rate, which is between 22% and 25% per annum," he told reporters after a signing ceremony with Standard Financial Planner Sdn Bhd (SFP) in Kuala Lumpur yesterday.
Takaful Malaysia became the first in the takaful industry to add professional financial advisors to its existing portfolio of distribution channels following the appointment of SFP to market its products. SFP has a nationwide network of more than 300 representatives of whom 75 are licensed financial advisors with Bank Negara Malaysia.
Mohamad Hassan said that this will enhance the penetration of the company's family and general insurance products into the middle-upper Malaysian market, thereby makes Takaful Malaysia's products more accessible to a wider customer base.
He said the company is confident of the selection of SFP due to its position as a market leader and largest independent financial advisory group in Malaysia. S FP is also the first financial planning group in Malaysia to hold both Financial Advisors (FA) and Corporate Unit Trust Advisor (CUTA) licences.
At the signing ceremony, SFP's CEO Alfred Sek said the past ten years have witnessed fresh changes to the financial planning industry and its delivery of financial advice in Malaysia.
He said that Takaful Malaysia will greatly benefit from this arrangement as its potential customers will develop full confidence in the products offered, through high quality independent advice from these Financial Advisors.
Meanwhile, Takaful Malaysia has plans to undertake a rebranding exercise to reflect its fresh characteristics in conjunction with its 25th anniversary this year.
(This story appeared in The Malaysian Reserve on July 8, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Syarikat Takaful Malaysia Bhd (Takaful Malaysia) expects to capture slightly more than half of the takaful industry's total asset market share in the next two to three years despite the current economic crisis. Managing director Datuk Mohamad Hassan said the industry's total assets have reached RM12 billion and the company's share currently stands at RM4.05 billion.
"We are confident of achieving slightly more than the current takaful market rate, which is between 22% and 25% per annum," he told reporters after a signing ceremony with Standard Financial Planner Sdn Bhd (SFP) in Kuala Lumpur yesterday.
Takaful Malaysia became the first in the takaful industry to add professional financial advisors to its existing portfolio of distribution channels following the appointment of SFP to market its products. SFP has a nationwide network of more than 300 representatives of whom 75 are licensed financial advisors with Bank Negara Malaysia.
Mohamad Hassan said that this will enhance the penetration of the company's family and general insurance products into the middle-upper Malaysian market, thereby makes Takaful Malaysia's products more accessible to a wider customer base.
He said the company is confident of the selection of SFP due to its position as a market leader and largest independent financial advisory group in Malaysia. S FP is also the first financial planning group in Malaysia to hold both Financial Advisors (FA) and Corporate Unit Trust Advisor (CUTA) licences.
At the signing ceremony, SFP's CEO Alfred Sek said the past ten years have witnessed fresh changes to the financial planning industry and its delivery of financial advice in Malaysia.
He said that Takaful Malaysia will greatly benefit from this arrangement as its potential customers will develop full confidence in the products offered, through high quality independent advice from these Financial Advisors.
Meanwhile, Takaful Malaysia has plans to undertake a rebranding exercise to reflect its fresh characteristics in conjunction with its 25th anniversary this year.
(This story appeared in The Malaysian Reserve on July 8, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Wednesday, July 8, 2009
Axa Affin sees plenty of potential post liberalisation
By Alfean Hardy
Axa Affin Life Insurance Bhd, a local-international joint venture (JV), sees a lot of potential for itself going forward in the new climate of liberalisation in the finance and insurance sectors, and is making plans to tap into these opportunities, its chief marketing officer Nicholas Kua Choo Ming said.
Despite being a relatively young start-up, Axa Affin sees a lot of opportunities to tap into going forward.
"When the liberalisation was announced, there were reports that spoke of opportunities for foreign players and that local players would feel more pressure," Kua said. "For Axa Affin, we see it as an opportunity. Granted that we're a start-up and we're entering into a new era of liberalisation, (but) we have a head start over new entrants coming in.
"We are already operating and, with our business model, we can outpace our competitors in terms of growth and emerge stronger and in a better position," he told The Malaysian Reserve in Kuala Lumpur recently.
Axa Affin is 51%-owned by local giant Affin Holdings Bhd and 49%-owned by global financial protection and wealth management giant Axa Group. The JV was incorporated in early 2006. Previously, both parties had been collaborating in the general insurance area for many years. Under the liberalisation of the finacial sector announced in April 2009, foreign equity participation in insurance and takaful JVs was raised to 70%. In addition, locally-incorporated foreign insurance and takaful companiess are now allowed to establish branches nationwide without restriction, while the restriction for such firms to enter into bancassurance/bancatakaful arrangements with banking institutions have also been lifted. Axa Affin's strengths, Kua said, stemmed from having strong parents.
"We're part of a very strong group, the Axa Group, which is a leading global player, and we have a strong shareholder in Affin," he said. "We are able to leverage on Axa's expertise and its robust business platform. We have access to eight other operating entities in Asia like China, India and Hong Kong. "Whether it's product innovation, distribution management and customer services, we have best practices that we can follow," he said.
"As part of the LTAT Group, Affin's business is across almost the entire Malaysian landscape and there are major opportunities to work with local groups, either via their group insurance or banking group," he said, adding that about half of Affin Bank's 80-plus branches already have dedicated Axa Affin advisers attached to them, making it the only bancassurance relationship of its kind currently. "And, as Affin expands, we will expand with them," he said.
Kua said one of the challenges going forward was building its distribution channel, which mostly consisted of its agency force and its bancassurance relationship with Affin Bank and other bank partners. "One of the challenges is growing our agency manpower. We're above 300 now and we aim to hit the 1,000 threshold by the end of the year," he said. He also said that the firm is upgrading the capabilities of its agency force to eventually see a fully professional force. The target time frame is by 2012, to coincide with Axa's global aspirations to be the preferred company of choice by then. Kua said Axa Affin was also able to sign up with other banks under a multi-provider bancassurance model.
"We are currently working with three or four other partners. With liberalisation, the key now is how we work with these banks (who have other providers as well) and make ourselves the preferred provider," he said. "Axa, on a regional basis, has always believed in a multi-distribution platform. The same is true whether we're in Thailand, the Philippines, Hong Kong or Indonesia. "We have both bank partners and the agency force. The blue print is there, (and) the business model is there in every entity that we enter into," Kua said.
(This story appeared in The Malaysian Reserve on July 8, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER, appearing on alternate Wednesdays)
Insurers may be forced to cut costs, outsource
European insurers such as Allianz SE and Axa SA may be forced to cut costs, outsource more functions and boost revenue from emerging markets to maintain earnings growth as the recession in their home markets deepens, consulting firm Accenture Ltd sai, reports Bloomberg.
Insurers may gain from moving asset management, claims handling and the underwriting of insurance risks outside the company, Thomas Meyer, the Zurich-based managing director for Accenture’s insurance practice in Europe, Africa and Latin America, said in a telephone interview.
"Insurance is a 300-year-old industry and it hasn’t changed that much since its inception, with the average insurer still handling about 85% of its operations that create value inhouse," Meyer told the news agency.
In contrast, "car manufacturers nowadays only handle about 15% themselves," he said. Almost 16,000 people have been fired by insurers worldwide since the start of the financial crisis as they seek to trim costs to offset slower earnings growth.
Global life and non-life insurance premiums fell in real terms last year for the first time since 1980, Swiss Reinsurance Co, the world’s second-largest reinsurer, said last month. The industry has written down US$243 million (RM862.34 million) on credit and investment losses since the start of 2007.
"While the financial crisis will lead to declining premium income in developed and saturated markets, emerging markets such as China, India and Brazil will offer opportunities to grow," Meyer said. British insurers are among companies that have announced moves to outsource some services. Aviva plc reduced its workforce by 3,000, or 6%, and said it was scaling back operations that had been outsourced to India.
Insurers may gain from moving asset management, claims handling and the underwriting of insurance risks outside the company, Thomas Meyer, the Zurich-based managing director for Accenture’s insurance practice in Europe, Africa and Latin America, said in a telephone interview.
"Insurance is a 300-year-old industry and it hasn’t changed that much since its inception, with the average insurer still handling about 85% of its operations that create value inhouse," Meyer told the news agency.
In contrast, "car manufacturers nowadays only handle about 15% themselves," he said. Almost 16,000 people have been fired by insurers worldwide since the start of the financial crisis as they seek to trim costs to offset slower earnings growth.
Global life and non-life insurance premiums fell in real terms last year for the first time since 1980, Swiss Reinsurance Co, the world’s second-largest reinsurer, said last month. The industry has written down US$243 million (RM862.34 million) on credit and investment losses since the start of 2007.
"While the financial crisis will lead to declining premium income in developed and saturated markets, emerging markets such as China, India and Brazil will offer opportunities to grow," Meyer said. British insurers are among companies that have announced moves to outsource some services. Aviva plc reduced its workforce by 3,000, or 6%, and said it was scaling back operations that had been outsourced to India.
Sunday, July 5, 2009
Perwakim submits memorandum on motor insurance rebates
PERWAKIM, an association of general insurance agents in Malaysia, has submitted a memorandum to Bank Negara protesting the central bank's proposal to give rebates on premiums for consumers that renew their motor insurance directly with insurance firms, reports Business Times.
They claim that the move, which takes effect from today, would adversely affect consumers, agents and the insurance industry in general.
Perwakim president Liza Lau said a copy of the memorandum was also handed to the office of Prime Minister Datuk Seri Najib Tun Razak, the Ministry of Finance and Ministry of Human Resources.
Lau led more than 50 agents in a peaceful picket in front of Bank Negara yesterday. The crowd dispersed after about two hours.
She said there are a total of 50,000 insurance agents nationwide of which 40 per cent are full-time agents.
Insurance agents earn a 10 per cent commission from the insurance companies.
They claim that the move, which takes effect from today, would adversely affect consumers, agents and the insurance industry in general.
Perwakim president Liza Lau said a copy of the memorandum was also handed to the office of Prime Minister Datuk Seri Najib Tun Razak, the Ministry of Finance and Ministry of Human Resources.
Lau led more than 50 agents in a peaceful picket in front of Bank Negara yesterday. The crowd dispersed after about two hours.
She said there are a total of 50,000 insurance agents nationwide of which 40 per cent are full-time agents.
Insurance agents earn a 10 per cent commission from the insurance companies.
Allianz to launch Islamic pension product in 2010
Allianz will launch its first Islamic annuity product next year, the head of its takaful unit said, tapping into a growing number of clients in the Middle East keen to add to their state pensions. It has long been hard for takaful - or syariah-compliant - insurers to sell such products, because of the lack of long-term Islamic bonds with which to match pension liabilities, Abdul Rahman Tolefat said on Wednesday, reports Reuters (July 3, 2009).
The German insurer's unit had lobbied banks to issue long-term debt and unnamed banks had now issued 25-year to 30-year sukuk, Tolefat said at a conference.
"This is really a promising industry, especially in the GCC (Gulf Cooperation Council) - people are looking for private pensions because state pension are not high enough," he said on the sidelines of the conference, the report added.
Allianz was one of the first Western insurance companies to venture into takaful, in which members contribute to a pool of funds which is used to indemnify participants who suffer a loss, much in the same way as with a mutual insurer.
Allianz Takaful already has a pension product which pays out over a pre-agreed number of years, but annuities that guarantee income until death are still an untapped market.
The German insurer's unit had lobbied banks to issue long-term debt and unnamed banks had now issued 25-year to 30-year sukuk, Tolefat said at a conference.
"This is really a promising industry, especially in the GCC (Gulf Cooperation Council) - people are looking for private pensions because state pension are not high enough," he said on the sidelines of the conference, the report added.
Allianz was one of the first Western insurance companies to venture into takaful, in which members contribute to a pool of funds which is used to indemnify participants who suffer a loss, much in the same way as with a mutual insurer.
Allianz Takaful already has a pension product which pays out over a pre-agreed number of years, but annuities that guarantee income until death are still an untapped market.
Sykt Takaful aims to be largest player
SYARIKAT Takaful Malaysia Bhd (STMB), which has RM4 billion in assets, aims to be the largest takaful insurer in the country in terms of assets within two years.
Group managing director, Datuk Hassan Kamil, said currently, STMB was in second position after Etiqa Takaful Bhd, which has 400,000 policyholders.
He said the company hoped to sign up at least 10 per cent more policyholders within a year of the launch of the one-stop Takaful myDesk in collaboration with Lembaga Tabung Haji.
"Through the Takaful myDesk, the company also hopes to achieve approximately RM1 million worth of contributions, also within the first year of operations," he told reporters after the launch of Takaful myDesk in Kuala Lumpur today.
Hassan said the contributions were expected to be much higher because the customers could also renew their motor policies, buy Takaful mySiswa (education plan) and Takaful myRawat (health insurance in preparation for them to go on haj).
He said the collaboration would also boost its presence with the establishment of Takaful myDesk at selected Tabung Haji (TH) branches nationwide in addition to its present 56 branches.
The TH branches are in Jalan Tun Razak (Kuala Lumpur), Penang, Pasir Puteh (Kelantan), Bagan Serai (Perak), Kuala Pilah (Negeri Sembilan), Kota Tinggi (Johor) and Bentong (Pahang), he said.
"It's a cost-effective distribution network. The partnership allows us to market our products through TH branches," he said.
Under the agreement, Hassan said, STMB would provide facilities such as computers, while TH the space to set up Takaful myDesk.
"We have been studying this proposal for the last six months where we actually identify together with TH the locations where we feel will have the maximum impact," he said.
Hassan said the set-up of MyDesk would be in stages. The TH Jalan Tun Razak branch started operation on June 1 while the Penang branch will commence on August 3.
"Hopefully in the next six months we will be able to cover all the locations," he said.
He said the cost was minimal because technically, what was needed was a computer and the connectivity.
"So, the person sitting at the desk will be online with our takaful system at the head office.
"They can actually issue the certificate and receipts on the spot," he said. - Bernama (22 June 2009)
Group managing director, Datuk Hassan Kamil, said currently, STMB was in second position after Etiqa Takaful Bhd, which has 400,000 policyholders.
He said the company hoped to sign up at least 10 per cent more policyholders within a year of the launch of the one-stop Takaful myDesk in collaboration with Lembaga Tabung Haji.
"Through the Takaful myDesk, the company also hopes to achieve approximately RM1 million worth of contributions, also within the first year of operations," he told reporters after the launch of Takaful myDesk in Kuala Lumpur today.
Hassan said the contributions were expected to be much higher because the customers could also renew their motor policies, buy Takaful mySiswa (education plan) and Takaful myRawat (health insurance in preparation for them to go on haj).
He said the collaboration would also boost its presence with the establishment of Takaful myDesk at selected Tabung Haji (TH) branches nationwide in addition to its present 56 branches.
The TH branches are in Jalan Tun Razak (Kuala Lumpur), Penang, Pasir Puteh (Kelantan), Bagan Serai (Perak), Kuala Pilah (Negeri Sembilan), Kota Tinggi (Johor) and Bentong (Pahang), he said.
"It's a cost-effective distribution network. The partnership allows us to market our products through TH branches," he said.
Under the agreement, Hassan said, STMB would provide facilities such as computers, while TH the space to set up Takaful myDesk.
"We have been studying this proposal for the last six months where we actually identify together with TH the locations where we feel will have the maximum impact," he said.
Hassan said the set-up of MyDesk would be in stages. The TH Jalan Tun Razak branch started operation on June 1 while the Penang branch will commence on August 3.
"Hopefully in the next six months we will be able to cover all the locations," he said.
He said the cost was minimal because technically, what was needed was a computer and the connectivity.
"So, the person sitting at the desk will be online with our takaful system at the head office.
"They can actually issue the certificate and receipts on the spot," he said. - Bernama (22 June 2009)
Insurance industry to undergo transformation
THE Malaysian insurance industry is undergoing a transformation to provide a strong foundation for a more resilient and competitive industry in support of Malaysia's economic development agenda.
Bank Negara Malaysia's (BNM) assistant governor, Datuk Muhammad Ibrahim, said Malaysia has implemented the risk-based capital framework this year and new product regulations. He said these developments were part of a broader move towards introducing a more principle-based regulatory regime that would allow greater flexibility for insurers to compete and improve performance.
"Later this year, BNM will consult the industry on risk management standards that insurers are expected to observe as part of this evolution," he said in his keynote address at the LOMA/LIMRA 17th Annual Strategic Issues Conference here today.
The conference, themed "The New Global Economy: Resilience in Challenging Times", is jointly organised with the Life Insurance Association of Malaysia. It aims to serve as a platform for captains of the financial services industries operating in Asia to discuss the latest movements in the industry.
Muhammad said the distribution channels for insurance products and services had also been broadened significantly with the development of bancassurance and financial advisers.
"This will contribute towards enhancing revenue and reducing costs, while enhancing consumer protection and improving the insurance penetration rate in Malaysia," he said. - Bernama (22 June 2009)
Bank Negara Malaysia's (BNM) assistant governor, Datuk Muhammad Ibrahim, said Malaysia has implemented the risk-based capital framework this year and new product regulations. He said these developments were part of a broader move towards introducing a more principle-based regulatory regime that would allow greater flexibility for insurers to compete and improve performance.
"Later this year, BNM will consult the industry on risk management standards that insurers are expected to observe as part of this evolution," he said in his keynote address at the LOMA/LIMRA 17th Annual Strategic Issues Conference here today.
The conference, themed "The New Global Economy: Resilience in Challenging Times", is jointly organised with the Life Insurance Association of Malaysia. It aims to serve as a platform for captains of the financial services industries operating in Asia to discuss the latest movements in the industry.
Muhammad said the distribution channels for insurance products and services had also been broadened significantly with the development of bancassurance and financial advisers.
"This will contribute towards enhancing revenue and reducing costs, while enhancing consumer protection and improving the insurance penetration rate in Malaysia," he said. - Bernama (22 June 2009)
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