Growth of Malaysia's insurance, takaful sectors seen stable

KUALA LUMPUR: The growth of the insurance and takaful sectors for 2014 will remain stable amid domestic demand, said industry experts.

Takaful Malaysia group managing director Datuk Mohamed Hassan Kamil said strong growth prospects and improved risk management would lead to increased demand for insurance and takaful amongst the public at large.

He said the industry is anticipated to remain encouraging for both conventional and takaful operators through the introduction of new or enhanced and innovative products by insurance takaful companies.

“There is plenty of room for organic growth, given the fact that Malaysia still has low insurance penetration in both the conventional and takaful sectors.       

“In addition, we project a muted earnings growth outlook in certain areas of the local insurance and takaful industry arena that is likely to be impacted by investment de-risking and financial market volatility,” he told Bernama.

Regarding market players, he said the local insurance and takaful players are expected to utilise multiple distribution options available and develop alternative channels whilst strengthening their agency force to establish a solid foothold in the industry.

He said this will be supported by the implementation of strategic marketing and operating systems on top of competitive and cutting-edge products and services offered by respective industry players.

Hassan Kamil said despite the positive outlook, the industry will face diverse changes that were expected from the enforcement of the Risk-Based Capital (RBC)framework in 2014.       

“The RBC implementation might change the landscape of the takaful industry and the expected contribution growth is deemed to accelerate modestly, with fairly robust growth amongst takaful operators outpacing the conventional players,” he said.

Apart from that, both industries have been experiencing an influx of mergers and acquisitions (M&As) resulting in more foreign insurers tapping into the Malaysian insurance market, he said.

Amongst M&As this year were Khazanah Nasional Bhd’s partnership with Canadian-based Sun Life Financial Inc to acquire 98% of CIMB Aviva Assurance Bhd for RM1.8bil, and American International Assurance Bhd’s acquisition of ING’s insurance and takaful business in June 2013.

The industry has seen new players from Canada and the US coming into the Malaysian market, taking over the smaller local players.

“We have witnessed the emergence of financial solid players in the local insurance industry arena as a result of the M&A exercises.       

“The insurance and takaful industry in Malaysia remains encouraging for both life and general insurance and takaful despite moderating economic growth following the slowdown in major advanced countries,” Hassan Kamil said.

The persistent talent shortage, of professionals well versed in both principles, would be one of the main areas that need to be looked at critically in order to remain competitive in the industry, he said.

In addition, he said the rapid development of insurance and takaful industry has made it all the more difficult to recruit the right human capital needed for the various job functions. — Bernama

Source: www.thestar.com.my

ASEAN Countries have big potential for Islamic Finance: Zubair Mughal

(Manila - Philippines) There are multiple opportunities in Association of Southeast Asian Nations (ASEAN) countries to promote Islamic Finance, through which Halal Industry can be flourished rapidly in the region. These views were expressed by Muhammad Zubair Mughal, Chief Executive Officer, AlHuda Centre of Islamic Banking and Economics (CIBE) during his speech at “First National Halal Forum” in Manila which was organized by Department of Science and Technology, Government of Philippines at a local hotel (Shangri-La Makati) on 29th- 30th October, 2013, in order to grow Halal Industry and Economy on both regional and international level.

During his address to the Forum, he stated that Islamic Finance and Halal Industry are complement to each other. Micro and Small Medium Enterprises (MSME’s) can be energized by utilizing Islamic Finance concept in the region which will be cause to reduce in poverty and ultimate socio-economic prosperity in the ASEAN member Countries. He, presenting an analysis on ASEAN countries (Malaysia, Indonesia, Brunei Darussalam, Loa PDR, Myanmar, Singapore, Thailand and Vietnam), stated that the approximate total population of ASEAN countries is 600 million including the Muslim Population more than 40% (240 million) which is a potential indicator for Islamic Finance growth whereas in Malaysia, Indonesia and Brunei Darussalam already have significant contributions in Islamic Banking, Takaful, Sukuk and Islamic Funds, while Philippines and Thailand are being considered as future potential markets for Islamic Banking and Finance in ASEAN countries.

He explained that Islamic Banking and Finance is the system not a religion which can be utilized by Muslim and Non-Muslims to get absolute benefits from the best services of Islamic Banking and Finance as its best example is the South Africa where Muslim population is less than 2% of the whole population but it has more than 5 Islamic Banks, 13 Islamic Funds and 2 Takaful companies working actively, which are equally famous among Muslims even non-Muslims communities because of their best practices and services. He said that Philippines is an important country of the region with having 100 million populations, approximately, containing Muslim population by more than 7% which bears it out that there are momentous chances for the promotion of Islamic Finance and, apparently, government of Philippines found active in this concern and it will, definitely, energize Islamic Banking and Takaful in result. He also stated that government of Philippines can generate financial resources for national level mega projects by utilizing the concept of Sukuk (Islamic Bonds).

National Halal Forum continued for two days at Manila where experts from different countries of the world participated including Pakistan, Turkey, Malaysia, Indonesia and Thailand #