Manulife’s ‘Hongkie’ finds a home in Malaysia

by Alfean Hardy
The insurance industry was the last thing on young Michael Chan Yui Ling's mind when he began his working career. For the Hong Kong Islander, the life of an accountant was what he wanted. Leading the operations of Manulife Holdings Bhd here was probably not something he would have imagined was in his future.
"I'm a Hongkie, a Hong Kong person. I was educated there, I met my wife there, my house is there, my car is there, I got my kids there.
"For the past 15 years, I've been doing a lot of regional projects for (parent company Manulife Financial Corp) but I've always been in Hong Kong. This is my first international assignment," he told The Malaysian Reserve recently.
As a graduate of Hong Kong Polytechnic University with an accountancy degree, Chan had set his sights on becoming an accountant. At no time had the idea of venturing into the insurance business crept into his mind.
"The shift was unplanned. After I graduated, I went to the government to become an accounting officer. Then I decided to see the commercial world in 1982 but, unfortunately, there was a market crash in 1983 and the company I was in was being wound up.
"At that time, because the market was bad, I needed a job. So, I got a job with a local insurance brokering firm, Everbest, and that's how I started my insurance career," he added.
After 10 years with the firm, Chan got a call from Manulife Hong Kong. "I was doing well at Everbest, being an accountant as well as taking care of its subisidiary, which later became a top broker for Manulife.
"And it was in 1991 that the Manulife group insurance vice president approached me and said 'why not join and see the other part of the business'.
"I told him I didn't want to join and that I was happy with my job and my company. But he was consistent. He talked to me consistently for 10 months. He was serious. He wanted someone to run their sales and marketing. Finally, I met their general manager for Asia and other people and I was impressed. I finally joined Manulife in 1992, Feb 15," he added.
Between that time and now, Chan has held three positions within the Manulife group.
"I was the head of sales and marketing for group insurance and pension. When group insurance was split between pensions and group life and health insurance, I headed (the latter) in 1999.
"In 2004, I was appointed head of agency for Manulife Hong Kong. I was there until 2009 when I was asked to run a country (operation). "It was something that I hadn't done before and it was a good development in my career. And I welcome that," he said.
Chan said he had been well prepared by his predecessors for how things were here. "Manulife in the Asian region is a very transparent operation and there's a lot of chance to talk to the senior management of other countries. I knew the management here well and I anticipated the situation before I came.
"I like the country, especially the clean air and the clean city. I like the food here. Malaysia is a good country because there are a lot of advantages because of the environment, the resources and there aren't too many people per area compared to my hometown where you see people every where.
All the time you see people," he said. Chan is here on his own, with his wife visiting regularly from Hong Kong. His eldest son is currently in a UK university, his second son is set to enter a university in Hong Kong this year and his daughter is in her last year of high school.
"My wife has promised that she will join me here once our daughter graduates," he said. Asked how long his posting was, Chan said that depended on his boss. "I hope I can stay here long. I love the country and I like the working team. If I can be longer here, I would be more happy to be here. I like it here," he added.

(This story appeared in The Malaysian Reserve on May 27, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on insurance & takaful called UNDERWRITER)

Rebates for direct insurance: Star

Come July 1, car owners who buy motor insurance directly from insurance companies without using the services of an agent will qualify for mandatory rebates, a move that could render agents redundant, reports The Star (May 18, 2009).
The move would see new customers being given a 5% rebate on their insurance if they buy it via channels such as the Internet, telemarketing, direct mailing or by walking into the insurance company. These customers would also get a 10% rebate for renewals in the second year, it added.
In a circular sent to the General Insurance Association of Malaysia (PIAM) dated April 17, Bank Negara said the rebates would only apply to actual owners of the vehicles. The circular added that Bank Negara had “no objections” to PIAM’s proposal for the mandatory rebates. This is understood to mean that the move would more likely be implemented than not, the report said.
THE REPORT GOES ON:
Veteran insurance agent Hardyal Singh hit out at PIAM, saying the association did not take the views of 40,000 agents (15,000 of them full-time) into consideration.
“It will clearly affect the livelihood of the agents. Full-time agents hire at least three to 30 employees at their agencies and these people will also be affected.
“Our main source of income is the 10% commission, so the 10% rebate is actually our commission being given to the customer. It offers no benefit to the insurance company but instead creates a socio-economic crisis by making people jobless.”
Hardyal, who was formerly Perak General Insurance Agents Association president, said he would be forming an ad hoc committee with some larger agents in Kuala Lumpur to speak out more on the matter.
It is understood that the circular was the outcome of correspondence and meetings between PIAM and Bank Negara on the association’s proposals towards self-regulation of the industry.
In the circular, the central bank said the rationale for mandatory rebates was to “promote the promulgation of alternative channels of distribution so as to increase the penetration of insurance to the masses”.
An industry source said the industry was heavily regulated, especially towards the ability of insurance companies to reward agents, and that PIAM’s proposals were for Bank Negara to allow some self-regulation.
“When Bank Negara came back to the table, it seemed that they were saying if insurance companies were willing to reward agents, then they could also provide this benefit to policyholders.”
The source added that the central bank’s move could be seen as a way to reduce the number of part-time agents but said full-time agents would now have to work harder and think up new ways to get business.
Consumer advocate Billy Toh said he was strongly against the move as he felt that agents could still play a role by explaining the insurance policy details to customers.
However, Federation of Malaysian Consumers Association secretary-general Muhammad Sha’ani Abdullah said “the move would reduce the opportunity for agents who try to get customers to buy other types of insurance together with motor insurance.”

AXA Affin sees great potential for local takaful biz

By Alfean Hardy
AXA Affin Life Insurance Bhd, which is 51%-owned by Affin Holdings Bhd, is bullish over the recent liberalisation of Malaysia's financial sector and sees a lot of potential for conventional insurance and, more specifically, in takaful, its chief marketing officer Nicholas Kua Choo Ming said.
Among the measures announced by the government were the issuing of two new family takaful licenses, the increase of foreign equity holdings to 70% on a case-by-case basis, no restrictions on locally incorporated foreign insurance firms/takaful operators establishing branches and the lifting of restrictions for such operators to enter into bancassurance/banctakaful arrangements with locally-based financial institutions.
The 49% balance in the company is held by global financial protection and wealth management giant AXA Group. The JV was incorporated in early 2006.
Speaking to The Malaysian Reserve last Friday, Kua said the local industry had been acknowledged as one of the more promising ones in the region.
"We are not at the level of maturity where you'd probably have a lot of difficulty in getting higher penetration of the market," he said.
"We're only at about 40% versus Singapore, which is already at 90%, and the like of Japan, which is at 200%. There are a lot of opportunities and the same optimism is felt throughout the whole industry. You have so many new entrants trying to grab a pie of the Malaysian market over the last two years alone.
"This tells you that foreign players continue to view Malaysia as a very promising market. You don't see the same type of activity in Singapore, Thailand and the Philippines, for instance," he added.
Kua said the liberalisation could probably see a lot more foreign players being keen on the local market, with an eye to seek out strategic partners with the local players.
"Then there's the new takaful licenses, which means more players into the market. This only shows that the regulator and the industry at large views the market as a very promising one.
"The same applies for AXA Affin as well. We wouldn't have formed the JV back then if we didn't see the opportunities in the market," he added. Kua said he was not surprised by the government's move to liberalise the financial and insurance sectors here.
"If you look at the region, Singapore has shown aspirations to grab a piece of the pie. Hong Kong is keen and Indonesia, of late, has also announced their aspirations to be a hub as well," he said.
"Malaysia has a head start and does have the perfect infrastructure and talent to spur the growth of Islamic finance and insurance to become the premier Islamic finance hub in the region," he added.
AXA Affin does not currently have a takaful wing and, while Kua would not comment on the firm's plans on the matter, he said who would not want to have an Islamic insurance division here at this point in time.
"From an industry perspective, who wouldn't be keen on those two new licences? I'm sure everyone's eyeing that," he said.
While the company did not track the takaful sector numbers per se, he said that independent evaluation provided a lot of positives for firms looking to venture into the local takaful segment.
"Any interested player coming into this market, looking at the statistics, would have a lot of confidence that this is the market to get into as a new start-up," he added.

(This story appeared in The Malaysian Reserve on May 18, 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)

HSBC Malaysia rakes in RM100m from cargo insurance

HSBC Bank Malaysia Bhd recently offered marine cargo insurance to complement its onestop t rade solut ions for commercial customers from small and medium enterprises (SMEs) to multinational corporations.
Vivek Gupta, director, Trade and Supply Chain, HSBC Bank said the initial response from customers, especially the SMEs, has been excellent as it appealed to their need for convenience and value-for-money solutions.
"When we first introduced it last month, we secured business with over RM100 million coverage. I am confident we will see an ongoing momentum for this customised proposition," he said in a statement.
"The marine cargo insurance initiative reinforced HSBC's focus on meeting customer needs with a comprehensive suite of products and services. We are not only able to bring about cost efficiency to our customers in terms of competitive pricing and a single contact point, but also help advise and educate customers on this key risk mitigation," Gupta said.
He added that HSBC Malaysia's import customers will now have the convenience of insuring their single voyage shipments within the same day of submitting documents at any of the 19 Trade and Supply Chain centres within HSBC branches nationwide.
With this, customers can now enjoy both single shipment voyage cover as well as marine open cover policies at competitive rates. This initiative further strengthens HSBC Malaysia's reputation as a premium provider of a comprehensive suite of trade and supply chain solutions in the local market.
HSBC manages to maintain its leading market position in the trade and supply chain business in Malaysia. Marino cargo insurance is designed to provide protection on companies' cargo shipments between countries against uncertainties. It covers the companies' cargo against risks during shipment by sea, air or land.

(The Malaysian Reserve, May 18, 2009, p9)

MUNICH RE: World’s first microinsurance in the offing

By Alfean Hardy
Munich Re, a global leader in reinsurance, has teamed up with German government agency Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) and Indonesian insurance firm Asuransi Wahana Tata (AWT) to launch the world's first microinsurance flood product.
The GTZ is currently active in numerous microinsurance projects and is helping to implement about 50 technical assistance projects globally in the field of social protection.
Microinsurance is being seen as a growing market, given that only 3% of the world's low income earners currently have access to insurance products. In a joint statement issued recently, the three parties said floods and inundation were a recurring threat to the livelihood of the people of Jakarta, Indonesia, and that impacts brought about by such disasters, such as property damage, higher medical expenses and rising food prices, constituted a heavy burden to those affected.
"The idea behind the joint project is to offer affordable, easy understandable and non-bureaucratic insurance cover specially adapted to this segment of the population. Instead of a lengthy policy document, the insured will receive a simple protection card that costs 50,000 rupiahs (RM16.75) per card and guarantees a one-off payment of 250,000 rupiahs (RM8,383) if the waters rise to or above 950cm (Alert 1) at the Manggarai Water Gate in Jakarta," they added.
The Alert 1 Manggarai Protection Card will offer the low income households in Jakarta with the opportunity to insure themselves against the direct economic losses and social risks brought about by severe flooding. Under the scope of the venture, AWT is to act as primary insurer and will be involved in the marketing, distributing and selling of the product. Munich Re developed its features and would also act as the sole reinsurer of the product.
GTZ was involved in researching the needs of the target group and also conducted a microinsurance awareness campaign within the pilot region of Jakarta.
The fourth largest country in terms of population, the World Bank has estimated that about 49% of the Indonesian population live below the US$2 (RM7.02) purchasing power parity rate. The local population is expected to hit the 243 million mark in 2010.
Susanne Krippner of the GTZ-supported Promotion of Small Financial Institutions programme in Indonesia said, "In developing countries in particuar, low income households are often those least protected against the financial and social consequences of natural catastrophies and other risks."
"Innovative microinsurance solutions can significantly improve the economic and social protection of the population and, thereby, contribute to the fight against poverty," she added.
Munich Re Asia board member Dr Ludger Arnoldussen said, "Thanks to Munich Re's risk management expertise and risk assessment we can help devise insurance solutions to cover people in exposed regions for whom protect ion was previously unavailable. It means that natural catastrophies will not automatically bring more poverty."
AWT president commissioner Rudy Wanandi said the project was an excellent chance to provide simple and affordable insurance cover to the low-income market combined with fast claims payment.
"With the right partners, a defined product and through our wide network within the region, we are able to reach people and explain our innovative solutions. It will raise the insurance awareness of society and bring more economic stability and social security to people who live in exposed regions," he added.

The Malaysian Reserve, May 13, 2009, p32

HLA group MD tipped to helm Prudential, says Star

Hong Leong Assurance Bhd (HLA) group managing director (MD) and chief executive officer (CEO) Charlie E. Oropeza is tipped to become Prudential Assurance Malaysia Bhd’s (PAMB) new CEO, reports The Star (May 14, 2009).
The newspaper, without quuting sources, said it had learnt that his last day at Hong Leong Assurance will be at the end of this month.
It added that he will head Prudential Assurance next month pending approval from Bank Negara.
The report said, according to sources, HLA’s chief operating officer (life division) Loh Guat Lan would for the time being oversee the operations of the company.
HLA has not at the moment identified any suitable candidate to replace Oropeza.
There had been talk of late that since Bill Lisle, the former CEO of PAMB, jumped ship to join Aviva Asia as its regional director, PAMB had two candidates in mind – Oropeza and AIA Bhd CEO Khor Hock Seng.
Oropeza was picked to helm PAMB due to his expertise and vast experience in regional markets, one source said. Prior to joining HLA, he was the chief executive of Prudential Life Assurance Indonesia and the CEO of Prudential Vietnam Assurance.
He started his career with Allstate Insurance Co, United States in 1981.
A graduate of La Salle University and University of New Haven in the United States, Oropeza has more than 25 years of experience in international life and general insurance, mutual funds and consumer finance.
He assumed the position of group MD and CEO of HLA on July 10, 2007.
In view of liberalisation and growing competition in the financial services industry, many insurers are roping in experienced CEOs and other senior executives.
PAMB posted new business annual premium equivalent (NBAPE) (with life insurance sales and takaful contributions combined) of RM659mil for the financial year ended Dec 31, 2008, a 9% increase from 2007.
NBAPE consists of regular premium sales plus one-tenth of single premium insurance sales.

MAA Takaful gets syariah expert to stay ahead of competition

By DALJIT DHESI
MAA Takaful Bhd aims to edge ahead of others in the Islamic insurance market through initiatives such as being the first local takaful player to have a syariah expert on its board.
Chief executive officer Salim Majid Zain says having an expert syariah adviser on board will help the company make informed strategic decisions and help it face growing competition in the industry.
“We are serious in ensuring that all aspects of our operations are syariah-compliant and certainly will have an edge over other players with the presence of our syariah adviser to provide us with relevant expert advice on syariah principles.
Salim Majid Zain “Having an expert on the board will also enhance our expertise in Islamic finance, corporate governance as well as give more confidence to our target market customers,’’ Salim says in an interview.
As one of the latest entrants into the takaful market, the company has aggressive plans to grow its market share, he says, adding that the company is recruiting talented agents.
At present the company has about 15,000 agents, of which 30% are active.
The company has also introduced customer-centric financial planning and sales-automation software in an effort to enhance service.
Investment-linked funds is also one of the areas of focus for the group.
To this end, Salim says MAA Takaful will also be hiring a top fund manager to assist in the development and management of these funds.
Investment-linked funds will continue to be the main contributor to family takaful business, he adds.
The company’s market share in investment-linked takaful business last year for regular new business was 13% and about 10% for single contribution (premium).
It is targeting a 35% growth in regular investment-linked new business by the end of the year.
There are eight players in the takaful market currently and the granting of up to two new family takaful licences this year under the Government’s liberalisation of the financial sector is expected to further heat up competition.
Asked on how it would compete with other new players coming on board, Salim says: “The new players will certainly increase competition and this would also pave the way for greater acceptance of takaful as an alternative to insurance and traditional invesment products.
“MAA Takaful inherits the MAA brandname which has been long established in Malaysia. It is known and well represented in the multi-ethnic population which provide the cutting edge in growing our business and retaining our customers.”
MAA Takaful is a 75:25 joint venture between MAA Holdings Bhd and Bahrain’s Solidarity Company BSC.
(The Star, Saturday May 9, 2009)