Friday October 15, 2010
Great Eastern takaful tie-up prepares to ‘hit the ground running’
KUALA LUMPUR: The new joint-venture (JV) takaful unit formed by Great Eastern Holdings Ltd and Koperasi Angkatan Tentera Malaysia Bhd (KAT) hopes to start operations by January, subject to receiving the operating licence from Bank Negara.
The takaful unit adopted a “build and sell concept” whereby the team and products were in place before the licence was awarded, said its chief executive officer Mohamad Salihuddin Ahmad.
Salihuddin was speaking after the signing ceremony between i Great Capital Holdings Sdn Bhd, a subsidiary of Great Eastern Holdings and KAT yesterday to cement the JV. i Great holds a 70% stake in the takaful company and KAT the balance.
If all goes as planned, the JV will be the first to commence operations among the four applicants awarded a family takaful licence by Bank Negara on Sept 1. The other JVs awarded are AMMB Holdings Bhd and UK’s Friends Provident Group plc; Public Bank Bhd, Public Islamic Bank Bhd and ING Management Holdings (M) Sdn Bhd; and American International Assurance Bhd and Alliance Bank Malaysia Bhd.
Salihuddin said the takaful entity would leverage on Great Eastern’s existing agency network of over 17,000 agents.
“Some 3,200 agents have passed the takaful exams and we are actively recruiting more bumiputra agents. This will help us hit the ground running,” he said.
For a start, the takaful entity will provide investment-linked policies and up to 15 riders, which include a medical plan.
“The products are pending Bank Negara approval. We are working towards meeting the regulator’s drive to have more medical and retirement plans in the takaful industry,” said Salihuddin.
Besides KAT’s 140,000 members, the takaful entity aims to serve the local Muslim population that remains largely untapped.
“The local takaful penetration stands at 7.9% compared with about 41% for conventional insurance. The opportunity to tap the takaful market is huge,” Salihuddin added.
Asked when the new takaful entity was expected to break even, Salihuddin said it would take some four years.
Great Eastern and i Great chairman Fang Ai Lian said the local collaboration would see the partners developing the local takaful market further and Malaysia was a stepping stone for the group to expand within the region.
“Malaysia will be the poster boy as it is our first takaful venture,” she said. Great Eastern may look at other markets with a strong Muslim population such as Indonesia and Brunei for its next takaful JV.