Wednesday April 6, 2011
What is needed to take takaful industry to next level?
KUALA LUMPUR: A critical factor that will determine the success in taking the takaful industry to the next level of development is the existence of players with the right quality and calibre.
Besides that, Bank Negara deputy governor Datuk Mohd Razif Abd Kadir said players readiness in terms of capacity and capability to formulate and execute successful strategies in response to new market opportunities were also paramount.
“Responsiveness to consumer needs is a crucial test that defines success. The takaful industry in Malaysia has never been about syariah conformity being its only value proposition.
“With consumers becoming increasingly discerning and the market being more competitive, factors such as innovative product design, price competitiveness, transparency and service quality have been important determinants in winning and securing customer loyalty,” he said at the launch of ING Public Takaful Ehsan yesterday.
He added that the ability of takaful operators to deliver such value propositions would continue to be among the key factors to successfully position takaful in Malaysia to appeal to both Muslim and non-Muslims.
In terms of the industry outlook, Mohd Razif said there were three dimensions from which strong opportunities for growth could be harnessed in the takaful industry.
“First, is the opportunity to penetrate the remaining underserved areas in family takaful. One such area is medical and health, which constitutes only 9% of new family takaful business last year.
“The second dimension of growth opportunities for the takaful industry is to be seized from the transformation of Malaysia as a high-income economy.
“Third, and integral to the nation's high-income agenda, relates to the opportunities to be harnessed under the initiative to consolidate Malaysia's position as an international Islamic financial centre,” he said.
Mohd Razif said the entry of ING Public Takaful Ehsan would further add to the dynamism and vigour of the takaful industry.
“With this strategic alliance between two financial groups of such calibre, Bank Negara looks forward to strong management stewardship, innovative product offerings, wide distribution channels, operational and service excellence as well as breakthrough business strategies,” he said.
ING Public Takaful is formed as an alliance of ING Management Holdings (M) Sdn Bhd, Public Bank Bhd and Public Islamic Bank Bhd. It is the third licensee to launch operations of the four family takaful licences awarded recently.
A total of 11 takaful players are now in operations.
The takaful industry recorded a compound average growth rate of 27% in terms of net contributions between 2005 to 2010, with family takaful which dominates more than 80% of the total takaful market in 2010 driving the growth at 28% for the same period.