Session 4: Innovating Family Takaful Products and Linking Better to Consumer Needs

Ass. Prof. Dr. Omaima El Tahir Babikir MohamedUniversiti Tun Abdul Razak (UNIRAZAK)

Email: omaima@Unirazak.edu.my

June 11th 2014

CONTENT• Introduction

• Objective of the presentation

• Takaful Concept

• List of Licensed Takaful Operators in Malaysia

• Family Takaful Products in the Malaysian Market

• What are consumers Looking For?

• Proposed Framework for Microtakaful

• Conclusion

Purpose of Presentation

The purpose of this presentation is to provideinformation about the possibility of having a widerrange of Microtakaful products.

TAKAFUL CONCEPT

Section 2 of the Takaful Act 1984 defines:

Takaful as a scheme basedon brotherhood, solidarityand mutual assistancewhich provides for mutualfinancial aid and assistanceto the participants in caseof need whereby theparticipants mutually agreeto contribute for thatpurpose.

Takaful business as businessof Takaful whose aims andoperations do not involveany element which is notapproved by the Shariah.

Takaful Objectives• The objective of Takaful is cooperation and mutual

help among the members of a defined group.

• The participants of the group agree to guaranteeeach other should any of them suffer a catastrophe,he/she would receive a certain sum of money tomeet the loss or damage.

• All members of the group pool together their effortsto support the needy.

List of Licensed Takaful Operators in Malaysia

No. Name

1 AIA AFG Takaful Bhd.

2 AIA PUBLIC Takaful Bhd

3 AmFamily Takaful Berhad

4 Etiqa Takaful Berhad

5 Great Eastern Takaful Berhad

6 HSBC Amanah Takaful (Malaysia) Sdn Bhd

7 Hong Leong MSIG Takaful Berhad

8 MAA Takaful Berhad

9 Prudential BSN Takaful Berhad

10 Sun Life Malaysia Takaful Berhad

11 Syarikat Takaful Malaysia Berhad

12 Takaful Ikhlas Sdn. Bhd.

Source: BNM website

Family Takaful Products

Etiqa Takaful Berhad

Health: Medic Save Rider, Ultra Medic

Rider, Hospital Cash Benefit.

• Savings: Harmoni, Karisma, Pristin and

Mabrur.

• Home: house owner.

• Car: Private Car Takaful.

• Travel: World Traveller Care.

• Education: INTELEK.

• Protection: Prisma, Prisma+ Personal

Accident, Femina Special and Elite

Takafulink.

Syarikat Takaful Malaysia Berhad

• Health: Takaful myHealthProtector. NEW

• Takaful myMortgage

• Investment Funds: myGrowthFund,myEquity Index Fund, myBlue Chips Fund, myDividendFund and myBalanced Fund

• Takaful myGenLife: Includes medical coverage, Personal Accident, Hospital Cash, Saver.

Family Takaful Products

MAA Takaful Berhad

• Takafulink.

• Takafulink Education.

• Takafulink Hajj.

• Takafulink Wanita.

• Takafulife Series.

• Takaful Term 80.

• SmartMedic 200.

• CancerCare.

• Takafulink Single Invest.

• Group Term Takaful.

• Mortgage Protection Plan.

• Group Decreasing Term Takaful.

Takaful Ikhlas Sdn. Bhd.

•Investment: IKHLAS Capital Investment-

Linked Takaful Plus, IKHLAS Premier Investment-Linked Takaful Plus.

•Medical: IKHLAS Wanita Takaful,

IKHLAS MEDIC ASSIST TAKAFUL.

•Education: IKHLAS EDUCATION TAKAFUL

•Saving: IKHLAS HAJJ SAVINGS and

IKHLAS SAVINGS TAKAFUL.

Family Takaful Products

Great Eastern Takaful Berhad

•Protection: i-GrEaT , i-GrEaTAbadi, i-GrEaT Amal.

• Medical: i-Medik Rider , i-Early Payout Critical Care Ride.

• Education: i-GrEaT Iqra‘.

• Security: i-Great Idaman.

• Basic at its best: i-Great Teras.

Sun Life Malaysia Takaful Berhad(CIMB Aviva Takaful Berhad)

• Ultimate Term Takaful Plan (coverage against life uncertainties)

• Group Term Takaful: Group Term Takaful provides benefit in the event of death and orginizationalcoverage.

• SunLink Istismar (Takaful protection and potential investment return).

Family Takaful Products

AmFamily Takaful Berhad

• AmTakaful Lifestyle.• AmTakaful Lifestyle Single.• AmTakaful Pendidikan.• Medical Cover Rider.• AmAuto Life-i.• AmLifestyle Invest-i.• AmLifestyle Invest-i Single.• Medical Cover Rider.• Mortgage Reducing Term Takaful

(MRTT).• Personal Financing Reducing Term

Takaful (PRFTT).• AmTakaful Investment-Linked

Funds.

Hong Leong MSIG Takaful Berhad

Individual• Hajj by Proxy.

• HLMT i-Save.

• HLMT i-Grad.

• HLMT i-Ihsan.

• HLMT i-Cash.

• HLMT i-Invest.

• Mortgage Reducing Term Takaful.

Family Takaful Products

AIA PUBLIC Takaful Bhd

•Protection and Investment: A-Mas.

• Protection: A-Medik.

• Savings: A-EXCEL.

• Employee Benefits: Group Term Takaful.

HSBC Amanah Takaful (Malaysia)

Sdn Bhd

• Takaful Education Plan.

• Takaful Retirement Plan.

• HSBC LifeSelect Regular.

• HSBC LifeSelect Single.

• Takaful Future Smart.

• HSBC LifeStlye Protector Plan.

• HSBC LifeStyle Protector Plus Plan.

• Takaful Reducing Term Cover (TRTC) for Home Financing.

Family Takaful ProductsPrudential BSN Takaful Berhad

Protection against life's uncertaintiesAGENCYPruBSN Link SeriesPruBSN CrisisCoverPruBSN UmmahPruBSN ProtectHealthEnrich

CORPORATEPruBSN Employee BenefitBANCATAKAFULGiro Takaful WarisanGiro Takaful AsasGiro Takaful SejahteraGiro Takaful HajjLifeLink-iFirstHorizon-iGiro Takaful TaisirHealthEnrichInvestLink-i

Protection for your children's futureAGENCYPruBSN SmartLinkBANCATAKAFULGiro Takaful ImpianPruBSN EducateSmartEdu-i

Protection for your possessionsPruBSN KasihPruBSN Gadai Janji & Takaful Rumahku

ARange of Family Takaful

Products

Savings Investment Medical Protection

Sample from Etiqa for Medical PlanAnnual Contribution Rates: There are Five options to choose from for Males & Females

Ikhlas Takaful Schedule of Annual Contribution for Medical Product

Takaful Statistical Data

Takaful Assets at March 2013

RM 22.85bil

Net Contribution 2013

RM 7.6bil

Penetration Rate 8% (2008) 13% (2012)

Source: BNM (15 November 2013Deputy Governor's Speech at the Insurance and Takaful Industry Annual Dinner 2013)

Takaful Customers

Takaful companies are serving the middle to high income group.

How about low-income earners?

They are being neglected, and consequently deprived of takaful benefits.

TAKAFUL PRODUCTS INNOVATION FOR LOW INCOME GROUP

What are consumers Looking For?

Is it affordable to participate in….

Ahmed & Family with income of

RM3000 Monthly Children Education is just

a dream

Microtakaful• Microtakaful is a mechanism to provide Shariah-based

protection for low-income groups and under-privilegedindividuals at an affordable cost.

• Microtakaful is a huge potential for the financial servicesector to capture the low-income earners.

• Microtakaful provides a promising perspective for thefuture development of emerging markets which cancontribute to a country’s economic growth.

Sample of Microtakaful papers presented in (2013)

Opportunities for Microtakaful International Seminar onAgriculture & Microinsurance Dhaka, Bangladesh February 2013

Micro-Takaful Conference in Pakistan November, 2013

New Product Development and Innovation in Takaful February 2013 Egypt

GTG/ICMIF/IFTI Joint Takaful Seminar:Completing the Takaful offering – Microtakaful Sudan February 2014

Microtakaful Challenges

Difficulties to provide microtakaful products to the low-income sector:

• Lack of awareness

• High transaction costs

• Uncertain profitability

• Efficient administration systems

• The need for qualified staff to manage the funds

• Re-takaful cost

• Cost of marketing, to reach and convince low income earners to participate in microtakaful scheme.

Proposal for Integrating MicroTakaful for Low Income Groups Via Takaful Operators

Source: Author’s compilation.

Microtakaful is the Solution• The net contribution mentioned above (RM 7.6bil) came from the

middle income to higher income groups.

• Imagine if we add the lower income group to the data in slide 16.

• In addition of inviting volunteers and organizations to contribute to such scheme might increase to double the amount stated above.

• The solution is to tailor products for the lower income in the market place to move forward.

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Q & A

DisclaimerNo individual who is a manager, partner, faculty member,shareholder, director, employee or consultant of UNIRAZAK assumesresponsibility, or has any liability in respect of this presentation.

والمآبوهللا أعلُم بالصواب وإليه المرجعAllah knows what is right and the final return

لسالم عليكم و رحمة هللا و بركاتهوا