Existing takaful operators will have to “up their game” and gear up for stiffer competition as the granting of four new licences by Bank Negara on Wednesday will see more players fighting for a share of the profit slice.
Takaful Ikhlas Sdn Bhd president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said the company would need to find a niche to stay ahead of the competition.
“We were surprised that four new players were granted licenses rather than two. With more players coming in competition will increase and so will customer expectation,” he said when contacted by StarBiz yesterday
Datuk Syed Moheeb … ‘We were surprised that four new players were granted licenses.’
“The introduction of more (new) players into the industry will increase the takaful penetration rate and take away the businesses of the existing players and we must find our niche,” Syed Moheeb said.
He however added that the local takaful market was huge and offered great growth potential even with new players coming on board.
According to Syed Moheeb, the penetration rate for takaful in Malaysia was around 10%, compared with conventional insurance at 40%.
On Wednesday, four joint-venture (JV) companies were issued new family takaful licences by the central bank following the approval from the Finance Ministry.
Those getting the licences are the joint ventures between American International Assurance Bhd (70%) and Alliance Bank Malaysia Bhd (30%); AMMB Holdings Bhd (70%) and Friends Provident Group plc, UK (30%); ING Management Holdings (M) Sdn Bhd (60%), Public Bank Bhd (20%) and Public Islamic Bank Bhd (20%); and the joint venture between The Great Eastern Life Assurance Company Ltd (70%) and Koperasi Angkatan Tentera Malaysia Bhd (30%).
The four new licences, issued under the Takaful Act 1984, were given based on the applicants’ financial soundness and resilience, track record, expertise, business plan and contribution towards local financial sector development.
Previously, there were eight existing takaful operators in Malaysia, namely CIMB Aviva Takaful Bhd, Etiqa Takaful Bhd, Hong Leong Tokio Marine Takaful Bhd, HSBC Amanah Takaful (M) Sdn Bhd, MAA Takaful Bhd, Prudential BSN Takaful Bhd, Syarikat Takaful Malaysia Bhd and Takaful Ikhlas Sdn Bhd.
Syarikat Takaful Malaysia Bhd group managing director Datuk Hassan Kamil also concurred that competition within the local takaful industry would be much stiffer.
“It is only natural that with more competitors coming in everyone has to buck up.”
Hassan said the JV companies comprised well established foreign partners with “good infrastructure.”
“Many of the local takaful players had to start from scratch and build their infrastructure from scratch. Some of the local operators are still building themselves up.
“The four players coming in are allied with established partners that are ready to go,” he said.
Syed Moheeb however noted that the inclusion of foreign partners as new takaful licensees was a boon to the local insurance industry.
“The new (foreign) operators have the international network to promote Malaysian takaful products in other countries,” he said.
source : biz the star