The global family Takaful market is projected to grow over 160% within the next five years hitting the $5billion mark, according to an expert.
“Family Takaful is seen as a long-term and sustainable proposition with strong bottom-line expectations. At a global level, the growth in Family Takaful continues to outweigh the growth observed in both general Takaful and conventional life insurance,” David McLean, Chief Executive of the World Takaful Conference, said.
“Whilst the focus on distribution has been to replicate the successes of the conventional counterpart through direct sales channel or bancaTakaful, the key to success lies in the development of alternative distribution channels. There are some unique and niche Takaful features that do require a concerted effort and ‘outside the box’ thinking to increase penetration rather than cannibalise the existing conventional customer base. This calls for harmonized and coordinated efforts by both the Operators and the Agents,” he added.
“As the industry seeks to achieve a higher level of competitiveness, increased product complexity, business sophistication, service excellence and the global nature of competition are all demanding a greater depth and breadth of leadership, knowledge, competence and core skills from industry professionals – in particular, the agents – who are the core distribution channel for Family Takaful,” he added.
The 4th Annual World Takaful Conference: Family Takaful Summit Malaysia (WTC: FTS 2013) which began today in Concorde Hotel, Kuala Lumpur, Malaysia, witnessed a high profile opening with more than 500 Takaful operators and agents engaging in discussions on how to capitalise on the huge growth potential for the Family Takaful industry in Malaysia and discussed key strategies for positioning and supporting Family Takaful as the key growth engine for the Takaful industry in Malaysia. The event, held under the support of Etiqa Takaful Berhad, highlighted the importance of empowering agents to be the driving force of Family Takaful growth.
A key highlight of the 4th Annual World Takaful Conference: Family Takaful Summit (WTC: FTS 2013) was the special keynote address delivered by Ybhg. Tan Sri Dr. Mohd Irwan Siregar Abdullah, Treasury Secretary General of the Ministry of Finance – Malaysia. Discussing the role of Islamic finance in the growth of Malaysia, Dr. Mohd Irwan Siregar Abdullah said that “as a form of financial intermediation that is well anchored to serve the real economy, Islamic finance offers distinct potential to achieve the goals of inclusive growth and financial stability. The recent global financial crisis provides a distinct example of how excessive leverage and exponential growth in financial activities that are detached from the growth trajectory of the real economy can become a source of instability; and this indicates where the real potential for Islamic finance lies.”
“Malaysia’s Islamic finance industry has been in existence for over 30 years and that Malaysia’s long track record of building a successful domestic Islamic financial industry of over 30 years gives the country a solid foundation that adds to the richness, diversity and maturity of the financial system in Malaysia.”
“Recent reports indicate that the Malaysian Takaful industry is expected to grow by 20% per annum for the next two years as consumer acceptance grows and regulatory changes provide a stronger and more stable infrastructure for the Shari’ah-compliant insurance industry. With a comparatively small 13% penetration rate for Family Takaful versus the 55% penetration rate for conventional life insurance, there is tremendous potential for growth in the Family Takaful segment in Malaysia. To fully realize this enormous potential for Family Takaful, it is essential that the industry taps into a wider segment of the Malaysia market further emphasising elements such as protection but also savings and investment,” Ahmad Rizlan Azman, Chief Executive Officer, Etiqa Takaful Berhad, said.
“Having a great understanding of consumer needs, Takaful agents, who are the face and image of the Family Takaful industry, have a significant role to play in the further development of the Takaful industry and it is essential that there is an ongoing dialogue between the agents and operators.”
“By having the widest distribution network with 4,500 agents, 31 branches throughout Malaysia, a wide Bancassurance distribution network with more than 401 Maybank branches and third-party banks, Etiqa believes in and supports the role of a powerful agency force in ensuring an exciting future for Family Takaful. On that note, we are once again delighted to be hosting the World Takaful Conference: Family Takaful Summit this year,” he added.
“Family Takaful contributions enjoyed a compounded annual growth rate of 32% in the period from 2007 to 2011 with Malaysia dominating both at the regional and global level. The contributions from Malaysia make up around 56% of the total global Family Takaful contributions,” Sohail Jaffer, Deputy Chief Executive Officer of FWU Global Takaful Solutions, said.
“Most markets contain far more Takaful operators than these markets could sustain in the long run and therefore aggressive distribution strategies are required as the cost of acquiring new business is high.”
“Though Takaful providers can capitalise on technology and distribution alliances, Family Takaful products ultimately need to compete with conventional products by providing value that goes beyond religious appeal,” he added.