Life insurance premiums in Asia-Pacific to touch $1.09t

Ehsan Zaheed, Executive Director of Amana Takaful Group, left, with Bert Paterson, President Director & Country Manager of PT Sun Life Financial Indonesia (R) at the Power Debate Session
Ehsan Zaheed, Executive Director of Amana Takaful Group, left, with Bert Paterson, President Director & Country Manager of PT Sun Life Financial Indonesia (R) at the Power Debate Session
Life insurance premiums in the Asia-Pacific region are expected to increase 23% by 2017 to US$ 1,090 billion as compared to US$ 843 billion in 2010, according to an expert.

“Looking at the Takaful landscape in the Asia-Pacific region, Indonesia and Brunei are becoming increasingly important Takaful markets and together with Malaysia, they accounted for US$2.5b in gross Takaful contributions in 2011,” Brandon Bruce Sta Maria, Partner, Assurance – Insurance Leader, Ernst & Young Malaysia, said.
“Providing a strategic review of the international Takaful landscape and its implications for operators in Asia, he said.
“Asia will continue to grow at a faster pace compared to other regions of the world and these growth differentials will contribute to more than one-third of global insurance premiums by 2020. Life insurance premiums in the Asia-Pacific region are expected to increase 23% by 2017 to US$ 1,090 billion as compared to US$ 843 billion in 2010.”
He was speaking during the Power Debate at the 2nd Annual World Takaful Conference: Asia Leaders Summit (WTC: ALS 2013) in which 150 senior industry leaders participated in high-level discussions.

The 2nd Annual Takaful Conference: Asia Leaders Summit (WTC: ALS 2013), which opened on Tuesday at the Concorde Hotel, Kuala Lumpur, Malaysia, saw more than 150 senior executive industry leaders in the regional Takaful industry engage in critical discussions on strategies for competing for growth and profitability in an increasingly competitive Asian Takaful market. The event, which builds on the successful 8 years history of the World Takaful Conference, Global Summit, held annually in Dubai, outlined the big picture industry changing scenarios and discussed the critical issues facing the regional Takaful industry.

“The Takaful industry is currently concentrated in limited markets, segments and business lines. However, there is unrealised potential that can be achieved.” He said that “the share of Islamic finance in the GCC and Malaysia is 25% and 22% whereas the Takaful market share is 15% and 10% respectively. Therefore, Takaful has at least 10% of the known Shari’ah inclined market that they have not yet tapped. Developing and Emerging Asia offer significant growth opportunities with insurance and Takaful penetration rates between 0.60% to3.4percent,” Brandon, added.

“Globally, the Takaful industry has been growing rapidly, appealing to both Muslims and non-Muslims; and entering new niche markets. The industry is expected to grow by 15-20% annually, with Takaful contributions expected to reach US$ 20 billion by 2017,” David McLean, Chief Executive of the World Takaful Conference, said.

“The strong economic growth in the South East Asia region and the resultant growth in per capita income denote a significant potential for the regional Takaful industry. The middle class in the Asia region is currently around 34% of the population and this is expected to grow to 62% by 2030. But what needs to be noted is that various Takaful markets in the region are at different stages of development. The Takaful industry in Malaysia is now moving towards a maturing stage and therefore the focus should now be on how to convert the potential into real growth and then sustain the momentum. This calls for reviewing strategies on all fronts, from product development and innovation, marketing strategies, risk management and investment opportunities. However the case is different for emerging markets such as Indonesia and Brunei; and new entrants such as Thailand and the Philippines, where the focus still remains on building consumer awareness and scale,” McLean, said.

“Whilst there has been a slowdown in economic growth and lower interest rates, top line opportunities for insurers continue to be significant in Asia-Pacific.” “For insurers operating in developing markets, a burgeoning middle class represents a major source of premium and profit potential, via wealth management and personal lines insurance. Insurers operating in mature markets can grow by enhancing product and service offerings to meet financial planning needs of consumers,” he added.

A key highlight of WTC: ALS 2013 was the keynote power debate session. The Power Debate which was moderated by Ahmad Hammami Muhyidin, Senior Manager – Assurance, Ernst & Young – Malaysia and featuring Ehsan Zaheed, Executive Director of Amana Takaful Group and Bert Paterson, President Director & Country Manager of PT Sun Life Financial Indonesia analysed key strategies that Takaful players in Asia must adopt to achieve scale, profitability and global connectivity.

Speaking at the Power Debate session, Ehsan Zaheed, Executive Director of Amana Takaful Group said that “with the Takaful industry globally growing at a rapid pace and playing an important role in the international financial system, the potential for future growth is tremendous with markets like India, Australia and Africa virtually being untapped. Even in the existing markets the potential for growth is very exciting. To realize this growth opportunities the Takaful industry needs out of the box/lateral thinking approach so as to create value for the consumer.”

WTC: ALS 2013 also featured the exclusive onsite launch of the first edition of the Pension Takaful Report. The Report, developed by Milliman, analysed key issues around longevity risk and other delicate financial concepts and explored how the Takaful industry can play its role in introducing Sharia-compliant pension products. The Report indicated that the global Muslim population currently constitutes almost 24% of the world’s population and many of the Muslim majority countries are emerging markets with a young and affluent population which has resulted in higher disposable income and demand for more Shari’ah -compliant financial products. According to the Report, as the population demographics mature, the issue of longevity will start to impact the Muslim world and by 2030 many Muslim countries will see a drop in the old age support ratio. The Report indicated that if not well planned, this will create financial and social problems similar to what we are witnessing in countries like Italy and Japan. This precarious situation demands that Muslims should consider carefully how they will finance themselves after their retirement and calls for the development of Takaful products that focus on retirement solutions.

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