News Posts 20100418-20100424

Insurance News While emphasis will still be on Malaysia market due to constraints in resources, Takaful Ikhlas is exploring 3 overseas markets including Indonesia. The other 2 countries were not disclosed but they would be outside Asia and the Gulf region. Where could these be? Any guesses? http://bit.ly/a9eoz7

Takaful Ikhlas mulls overseas expansion

TAKAFUL Ikhlas Sdn Bhd, a subsidiary of Main Board-listed MNRB Holdings Bhd, is weighing options of expanding its business overseas and is looking at three countries including Indonesia as its foreign ...


April 23, 2010

Insurance News Takaful industry sees entrance of more non-bumiputra agents due to factors such as: (1) The introduction of Takaful Basic Examination to enhance knowledge of non-bumi agents on takaful (2) Takaful operators promoting "takaful for all" concept, targeting both muslim and non-muslim customers (3) New takaful players tapping on the non-bumi agents of their conventional business http://bit.ly/cOMWLA

Takaful players counting on non-bumiputra agents

PETALING JAYA: Takaful players of late, have been aggressively scouting for non-bumiputra agents to strengthen their grip in the lucrative Islamic insurance market.

April 23, 2010

Insurance News It is confirmed that Prudential is seeking to list in both HK and Singapore. The target date is 11 May. http://bit.ly/bdiQG6

UK's Prudential to list in Singapore

LONDON: Prudential plc, the UK insurer buying American International Group Inc's main Asian unit, applied for a secondary listing in Singapore as it seeks to expand its shareholder base in the region.The ...

April 23, 2010

Insurance News Takaful Ikhlas aims to increase its contributions from Sarawak operations from RM18 to RM25 mil. http://bit.ly/alKSrf

Takaful Ikhlas eyes RM25mil in premiums from S'wak ops

KUCHING: Takaful Ikhlas Sdn Bhd is eyeing premiums of RM25 million in its third year of operation in Sarawak, President and Chief Executive Officer, Datuk Syed Moheeb Syed Kamarulzaman said Friday.

April 23, 2010

Insurance News The 2009 Annual Insurance Statistics was released by BNM 2 days ago. You could find it here --> http://bit.ly/aaKVFe

BNM Statistics

The following series of Tables 1-5 contain abstracts from the quarterly returns submitted by insurers under section 85, 89 and 193 of the Insurance Act 1996. The figures are for calendar year ending 31 Dec 2009 and business within Malaysia.

April 23, 2010

Insurance News Now everyone has a chance to provide views and suggestions on TPBID. BNM has released details on the TPBID scheme and called for public feedback to be sent to BNM by 14/5/2010. http://bit.ly/9jfbRn

BNM Notices & Announcements

Following the Government's announcement in Budget 2010 on the need to provide adequate access to reasonably priced basic motor insurance coverage, Bank Negara Malaysia is currently working with the relevant ...

April 23, 2010

Insurance News The talk now is Prudential may be seeking a secondary listing on the Singapore Stock Exchange. The listing on HK Exchange apparently has also been approved. http://bit.ly/bWiM4O

Prudential gets HK listing OK, eyes Singapore-sources | Reuters

HONG KONG (Reuters) - British insurer Prudential Plc is considering a secondary listing on the Singapore Stock Exchange, as part of a wider plan to lure Asian investors to its massive $21 ...

April 23, 2010

Insurance News Prudential may be listed on HK Exchange as early as 1st week of May. The exchange officials apparently met with Pru on Wednesday. http://bit.ly/9I8OlS

UPDATE 1-Prudential gets early Hong Kong IPO hearing -source | Reuters

* Pru trying to list quickly ahead of rights offering * Listing, offering key to AIA takeover (Adds details, background) By Kennix Chim HONG KONG, April 21 (Reuters) - Britain's Prudential Plc

April 22, 2010

Insurance News Bar Council called BNM's proposed TPBID as "one of the most drastic and evil schemes". Among its objections include the RM2 mil cap, which it claimed could only cover 90% of the claims, short of 100% it wanted to see; and the set up of Newco which would burden the public due to major shareholding by government. Bar Council also called for a cross-industry working committee to review public feedback and to propose holistic solution with public interest in mind. http://bit.ly/apYtgE http://bit.ly/cmQZH0

Bar Council unhappy with insurance scheme proposal

THE legal fraternity has described Bank Negara Malaysia's proposed reform of the third-party motor insurance scheme as "evil" and against public interest. The Malaysian Bar Council is opposing vehemently ...

April 22, 2010

Insurance News For completeness, here are some more links on TPBID: The Star: http://bit.ly/ct40cv Business Times: http://bit.ly/9ZQLjl

New company for third-party bodily injury and death insurance

KUALA LUMPUR: The Government and insurance industry players will jointly set up a new company (newco) to solely undertake the proposed third-party bodily injury and death insurance scheme (TPBID).

April 21, 2010

Insurance News Etiqa is recruiting agents by targeting visitors to Unit Trust Week 2010. The insurer currently has >18,000 agents, one of the largest in the country. http://bit.ly/9Dcmi6

Etiqa aims to recruit more agents

Malayan Banking Bhd’s insurance and takaful arm Etiqa, is offering visitors to the Unit Trust Week 2010 (MSAM 2010) in Kuching, a career as an agent for the company.Describing the job as more flexible ...

April 21, 2010

Insurance News After talking to so many other parties on the sale of Pacific Insurance without any positive results, PacificMas is finally talking to a closer cousin - Great Eastern. http://bit.ly/cw6Fk4 OCBC was given until 17/10/2010 to resolve holding 2 GI licences in OACM and Pacific Insurance. Earlier news on Pacific Insurance can be found here: http://www.actuaries.com.my/news/labels/Pacific%20Insurance.html

PacificMas gets BNM nod to start talks with Great Eastern over sale of insurer

KUALA LUMPUR: PACIFICMAS BHD has received Bank Negara Malaysia's (BNM) approval to start talks with Great Eastern Group to dispose of its unit The Pacific Insurance Bhd.

April 21, 2010

Insurance News The Australian Competition and Consumer Commission has blocked National Australia Bank from bidding for AXA Asia Pacific Holdings as the takeover would hurt competition for retail investors by reducing the number of retail investment platforms in the market. http://bit.ly/9r78UG Meanwhile regulators in South Korea and Vietnam are studying the competitive impact following the proposed merger of Prudential and AIA. http://nyti.ms/9HCjFw

Aussie regulator blocks NAB bid for AXA unit

SYDNEY:Australia's competition watchdog blocked National Australia Bank's US $13 billion (US$1 = RM3.22) bid for AXA Asia Pacific Holdings yesterday, putting the agreed deal in limbo and allowing rival bidder AMP to make a comeback. ...

April 20, 2010

Insurance News This is the news article published this morning in newspaper before BNM's announcement on TPBID. Someone involved in the TPBID discussion must have leaked it to the papers because whatever published in the article are similar/same as BNM's announcement. http://bit.ly/9duDAI

Move to limit liability in third party claims

The government is looking at limiting liability of motor insurers to third party claimants to RM2 million, with insurers and the government acting as co-owners of a new company (newco) that will underwrite third party injury risks. ...

April 20, 2010

Insurance News BNM unveiled the proposed plan for TPBID. Some key features: (1) A newco to be set up, jointly owned by government & the industry (2) Covers both TPBID and 3rd party property damage (3) Claims may be capped at RM2 mil per life/injured person, RM2 mil figure is not finalised yet (4) 2 scenarios are being evaluated: (a) payment based on fixed scale, limited legal recourse, premium may be same as current (b) payment based on injury/death, full access to courts, premium higher than current. http://bit.ly/9PGzUq

BNM to restructure motor insurance policy

BANK Negara Malaysia has proposed to restructure the country's motor insurance policy in line with the government's aim of ensuring access for motorists to the mandatory Third-Party Bodily Injury and Death ...

April 20, 2010

Insurance News BNM has identified low investment yields as a near-term challenge to the industry and it is important for the industry to go back to basics to ensure sound underwriting. http://bit.ly/awvDfQ

Insurance market to gain momentum

The insurance market is expected to register improved results in 2010 on the back of economic recovery and increasing awareness on the role of insurance as a protection and financial planning tool.In stating ...

April 19, 2010

Insurance News In addition to HSBC, speculation is that other possible suitors for Jerneh are Generali and Samsung Fire and Marine. http://bit.ly/cTSrTU

Talks on sale of insurer spark interest in Jerneh

PETALING JAYA: Investors have been showing keen interest in Jerneh Asia Bhd since it announced in November that it was seeking Bank Negara approval to start talks with certain parties with the aim of hiving off its insurance arm Jerneh Insurance (M) Bhd.

April 19, 2010

Insurance News AXA Affin will focus on conventional business and building distribution channels for the time being and may move into takaful in 2 years' time. AXA Affin currently ranks 16 out of 16 in market share and expects to move up 2 or 3 notches by 2nd quarter this year, banking on AXA group's standardised blueprint. http://bit.ly/atoUMF

AXA Affin Life focused on building solid foundation

PETALING JAYA: AXA Affin Life Insurance Bhd, a relatively new entrant in the insurance market, may venture into the lucrative takaful business in the next two years.

April 19, 2010

Insurance News Prudential will not cut the purchase price of AIA even though there were some questions raised earlier by shareholders on the justifications of the offer price. http://bit.ly/9nY6s3

No pressure to cut AIA offer: Pru’s Asia CEO

HONG KONG: UK insurer Prudential Plc, which last month launched a US$35.5 billion takeover of AIG’s Asian life insurer unit, is not facing shareholder pressure to cut the purchase price, its Asia CEO said. ...

April 18, 2010

News Posts 20100411-20100417

Insurance News It would be interesting to see what solution/proposal BNM comes up with on TPBID Tuesday next week. So far the unofficial sources seem to think that the scheme will have a cap of RM2 mil, claims to be settled within 1 month and an increase in premium. For compilation of earlier posts on TPBID, visit: http://bit.ly/at9Ont

Bank Negara to address third party insurance issues

PETALING JAYA: Bank Negara is scheduled to address key issues involving third party bodily injury and death motor insurance on April 20.
April 17, 2010

Insurance News With the takeover of AIA, Prudential is targeting 1 million agents in Asia. Currently Prudential has 400,000 agents, AIA has 300,000, the combined entity would need another 300,000 agents. Barry Stowe, the chief executive of Prudential Asia, who joined Prudential from AIG in 2006, when asked about earlier speculation that he would lead the integration, said: "What the hell makes anyone think that I would run the integration? I’m the chief executive of Asia; integration is a completely different animal."

Dreaming of a million men from the Prudential - Times Online

Prudential plans to increase significantly its agency workforce to at least one million in Asia as part of a recruitment drive to follow its $35.5 billion acquisition of AIA.
April 15, 2010

Insurance News ISM released the GI industry report card which showed that the industry underperformed in 2009 compared with 2008. The industry is expected to grow 9-11% in 2010, consolidation is expected in the industry with 25 players remaining in conventional GI market. Combined ratio for motor business hit 112% in 2009. http://bit.ly/aMhjhM, http://bit.ly/al1ROM

Industry Performance in a Snapshot

April 15, 2010

Insurance News Prudential has assigned its CEO for UK and European operations to lead the Asia Prudential-AIA integration. This has sparked speculation that eventually the UK operations of Prudential will be sold off.

Prudential's U.K. CEO to Lead Asia Integration - WSJ.com

Insurer Prudential said that Rob Devey, CEO of its U.K. and European operations, will lead the integration of Prudential Corp. Asia and AIA Group.
April 14, 2010

Insurance News Saudi Arabia has the highest takaful market share in the whole world in 2008 with US$2.9 bil contributions, Malaysia was 2nd with US$0.9 bil. The total world takaful contributions is expected to hit US$8.8 bil this year. Generating profit is seen as challenging for the industry.

Global takaful contributions to reach US$8.8b

KUALA LUMPUR: The global takaful industry is on track to surpass US$8.8 billion (RM28.42 billion) in contributions this year, said Ernst & Young (EY).
April 13, 2010

Insurance News MSIG now provides professional liability insurance of up to RM500k to Traditional Chinese Medicine practitioners. Annual premium starts from RM388; entry ages: 21 to 70; renewable up to age 80. Cross-border cover can be taken by paying additional premium.

MSIG Insurance cover for traditional Chinese medicine practitioners

KUALA LUMPUR: MSIG Insurance (Malaysia) Bhd has in collaboration with the Federation of Chinese Physicians and Acupuncturists Association of Malaysia (FCPAAM), introduced a professional liability insurance scheme for Traditional Chinese Medicine (TCM) practitioners.
April 13, 2010

Insurance News Using server to process data is said to be no longer effective. Comes grid computing which claims to be able to reduce time required for actuarial calculations by 97%.

Jaring launches OneGrid

JARING Communications Sdn Bhd has launched OneGrid, believed to be the country's first grid computing centre, or high performance computing (HPC) centre, to help programmers and researchers speed up their work and save costs. ...
April 12, 2010

Insurance News HSBC may be the buyer of Jerneh Insurance, according to an article in Singapore newspaper. The company is valued at RM700 mil according to the same source.

Buyer found for Jerneh Insurance?

PETALING JAYA: Shares in Jerneh Asia Bhd jumped yesterday on fresh speculation that it may have found a buyer for its 80% stake in Jerneh Insurance Bhd.
April 12, 2010

Third Party Bodily Injury and Death (TPBID)

Due to the popularity of the TPBID topic, we compile below all our previous posts on TPBID:

Insurance News It would be interesting to see what solution/proposal BNM comes up with on TPBID Tuesday next week. So far the unofficial sources seem to think that the scheme will have a cap of RM2 mil, claims to be settled within 1 month and an increase in premium. For compilation of earlier posts on TPBID, visit: http://bit.ly/at9Ont

Bank Negara to address third party insurance issues

PETALING JAYA: Bank Negara is scheduled to address key issues involving third party bodily injury and death motor insurance on April 20.
April 17, 2010

Insurance News The proposed TPBID compensates for injuries but does not cover other vagaries such as loss of current and future income.

CAP hails Najibs statement on insurance

KLANG: The Consumers Asso­ciation of Penang (CAP) has welcomed the Prime Minister’s statement that he will tell Bank Negara to consult all interested parties with regard to the proposed new basic motor insurance coverage for third-party injuries and death.

April 7, 2010

Insurance News FOMCA proposes that a fund be setup and managed by government to resolve the TPBID issue. Those who are injured in car accident can seek compensation from the fund. This approach is used in Australian and NZ. The fund can operate in a similar fashion as SOCSO and is to be funded by the public.

消聯：參考外國減少爭議‧應設基金供車禍索賠 | 星洲日報

（雪蘭莪‧八打靈再也）大馬消費人聯合會（FOMCA）總秘書莫哈末沙阿尼建議當局設立一個由政府管理的基金，讓任何在車禍受傷的人士索取賠償金，減少涉 及三號車險的投保人、保險業者及第3方的爭議。

April 6, 2010

Insurance News PM instructed BNM to consult consumer groups before finalising TPBID scheme. The scheme apparently has a cap of RM100,000 compensation. PM also took note of the loss suffered by the industry in motor insurance. http://bit.ly/aBs7Be

Consult groups on third party insurance, Bank Negara told

BANK Negara Malaysia (BNM) must take into consideration the plight of the people when proposing new basic motor insurance coverage for third-party bodily injury and death, just like enacting any other policy. ...

April 5, 2010

Insurance News The TPBID plan will be finalised by middle of this year and a special company may be formed to oversee the plan. http://bit.ly/ca8uVy

Parliament: Decision on motor insurance coverage by middle of 2010

KUALA LUMPUR: The decision to introduce a new basic motor insurance coverage will be finalised by the middle of the year, Second Finance Minister Datuk Ahmad Husni Hanadzlah said.

March 31, 2010

Insurance News While TPBID's plan features are still being finalised, there is a widespread fear that the claims amount would be capped and civil suit would be the only recourse to get additional compensation. http://bit.ly/buBBHN

New insurance plan a bane for motorists

KLANG: Motorists injured in road accidents may find themselves in limbo due to lack ofcompensation when the new basic third party motor insurance coverage scheme for bodily injury and death is introduced on July 1.

March 30, 2010

Insurance News The TPBID saga continues ... Bar Council has gone to politicians to apply pressure on BNM. http://bit.ly/cIfMVK

Bar Council submits memo opposing insurance scheme

KUALA LUMPUR: The Bar Council Malaysia submitted a memorandum to the Barisan Nasional Backbenchers Club yesterday in Parliament to oppose Bank Negaras newly proposed third party motor insurance coverage scheme for bodily injury and death.

March 23, 2010

Insurance News Consultation on TPBID will commence next month and the scheme is targeted to kick in by end of Q3. BNM's corporate comm has issued statement in response to the views expressed by the Bar Council in particular on the cap placed on the compensation (see our earlier post on March 14). http://bit.ly/di2LHk

Development of new Third Party Bodily Injury and Death Scheme

RESPONDING to recent public interest and media coverage on the above, we would like to provide the following updates. In developing the new Third Party Bodily Injury and Death (TPBID) Scheme, Bank Negara ...

March 22, 2010

Insurance News The Bar Council thinks that basic and affordable motor insurance scheme as proposed by BNM would be detrimental to motor accident victims, as well as their families and dependants. BNM is urged to consult various stakeholders. On March 5, BNM announced that it needed more time to finalise the scheme as it wanted to consult various parties. http://bit.ly/cfKHMg

Be more transparent, Bank Negara urged

KUALA LUMPUR: Bank Negara and the Government should be more transparent about a proposed scheme on basic motor insurance coverage for third-party bodily injury and death, said the Bar Council.

March 14, 2010

Insurance News The basic and affordable motor insurance scheme as announced in Budget 2010 would need more time before becoming a reality. Consultation with various stakeholders by BNM is required. No indication of timeline was given by BNM. http://bit.ly/aj38dj

BNM Press Statements

The Government, during the Budget 2010 Announcement, had announced the need to provide a basic motor insurance coverage for third party bodily injury and death (TPBID), at a reasonable premium that is commensurate with the level of protection provided...

March 5, 2010

Insurance News Government has no plans to scrap 3rd party motor insurance. http://bit.ly/4VNeiG

Parliament: No plans to scrap third-party insurance coverage

KUALA LUMPUR: The Government has no plans to scrap third-party insurance and insurance coverage for old cars valued at RM10,000 and below, Finance Minister Datuk Seri Najib Tun Razak said.

November 24, 2009

News Digest 20100321-20100327

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News Digest 20100309-20100320

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News Digest 20100223-20100301

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News Digest 20100203-20100223

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News Digest 20091116-20100106

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No change in voluntary cessions

Malaysian Reinsurance Berhad has received confirmation from BNM that the Voluntary Cessions (VC) levels in 2010 would remain the same as 2009. Specifically:

1. VC on Motor, PA, H&S: 4% quota share, no cession limit
2. VC on other classes: 5% quota share, no cession limit
3. Auto-Facultative and Auto-Treaty: 15% VC. Retrocessions: 20% VC

For years 2011 and 2012:

1. 4% revised to 2.5%
2. 5% remains
3. 15% and 20% remain

Source: Bursa

Main points of Governor's Keynote Address

Main points related to the insurance industry in the Governor's Keynote Address at the 21st Federation of Afro-Asian Insurance and Reinsurance Conference:

• The insurance industry has remained resilient throughout the current financial crisis
• Maintaining strong capital buffers and sound risk management is imperative to ensure the continued resilience of the insurance industry especially the domestic and external conditions are expected to remain volatile
• Insurance and pensions will have a greater role especially with the ageing population
• Prospects for higher insurance penetration rate: in 2008, Asia (5.95% of GDP), Africa (3.57%) compared with America (7.29%) and Europe (7.46%)
• The demand for investment-linked and wealth management products are strong with changing priorities of the young workforce in the middle income group
• Insurers need to strategise to increase the accessibility of insurance products e.g. through bancassurance and internet
• Public-private partnership between Government and the insurance industry are needed to cope with catastrophe losses
• High growth in Takaful: between 2004 and 2007, the average annual growth rate of the global takaful industry is estimated at 25%, compared to 10.3% for conventional insurance
• More integrated approach to the prudential regulation of the insurance industry together with the other segments of the financial sector, such as the one practised in Malaysia, enables the regulator to form a more complete assessment of the risks to financial stability while ensuring consistency in the treatment of risks across the different industries

Source: BNM

Articles on insurance/takaful over the weekend

Some of the articles appearing in StarBizWeek Special on 8 August that may be worth reading:

Keeping abreast with changes: Various insurance chieftains touch on issues like financial planning, bancassurance, professionalism, sustainability of business and future challenges and growth drivers.

Innovation key to growth for takaful: Leaders of takaful industry talk on sustainability of takaful industry, liberalisation, bancatakaful, human capital and retakaful.

Linking markets with Islamic finance: Towards the end of the article, BNM governor mentions that the insurance industry has a long way to go and develop products for retirement, pension schemes, annuities and medical coverage. Professionalism and capitalisation need to be increased. There should be more mergers in the domestic sector and the need for setting up enabling infrastructure.

Source: The Star

LIfe after FSMP

What is next after Financial Sector Master Plan (FSMP)? Here are some clues:

• A new blueprint for significant expansion of the financial system
• More emphasis on the development of a vibrant regional financial market that can support the expansion in trade and investment activities within the region

Source: The Star

Perwakim picketed outside BNM

Perwakim, an association of general insurance agents, picketed outside BNM in protest of the introduction of premium rebates. The premium rebates come into force on 1 July 2009.

A memorandum was handed to Prime Minister's office, the Ministry of Finance and the Ministry of Human Resources.

Source: Business Times

BNM moves to principle-based regulatory regime

BNM is moving towards principle-based regulatory regime, away from the rule-based regime in the past.

In early 2009, RBC was introduced. In July, "Guidelines on Introduction of New Products" will be implemented to ensure that consumers are clearly and fully informed of the nature and risks associated with the products.

Towards end of 2009, the Bank will consult with the industry on risk management standards.

Source: The Star, Business Times

BNM firm on premium rebates

BNM is pushing through premium rebates on general insurance policies bought directly from insurance companies, despite a strong protest from insurance agents.

Apparently, the rebates do not apply only to motor insurance policies as previously announced but to other general insurance policies as well. The rebates for non-motor policies vary by type of insurance and are between 5% and 25%.

Insurance agents are encouraged to transform themselves to financial advisors. BNM also said that there were no plans to introduce premium rebates for life policies.

Some statistics:

• 40,000 general insurance agents in Malaysia
• RM4.4 bil premium in general insurance (2008)
• Motor insurance is the largest class with 50% share
• 15% of motor insurance business was direct business

Source: Business Times 1 & 2, The Star, BNM

BNM assumes control of Tahan

BNM has assumed control of Tahan Insurance Malaysia Bhd as the latter failed to comply with capital requirements and non-fulfilment of the capital restoration plans. PwC has been appointed to assume control of the insurer and the aim is to turn around the insurer within a year.

Tahan had a shortfall of RM29.22 mil in capital as at end of 2006, failing to meet the absolute minimum capital of RM50 mil. It is understood that Tahan's CAR is 100%, below RBC minimum CAR of 130%.

Related stories: Resignation of Tahan's CEO, Various M&A proposals on Tahan

Source: The Star, Business Times 1 & 2, BNM

Lot of enquiries on liberalisation

BNM received a lot of enquiries on all areas related to the recently announced financial liberalisation, including issuance of new licences.

Source: Business Times

Liberalisation of financial sector

The details of the liberalisation of the financial sector announced by PM and BNM (those relevant to insurance and takaful):

• Up to 2 new family takaful licences to be granted in 2009 (all existing takaful licences are composite, the new ones seem to be restricted to family takaful business only)
• Limit on foreign shareholding in insurance and takaful companies increased to 70%
• Case-by-case consideration for limit beyond 70% if players can facilitate consolidation and rationalisation of the insurance industry
• Restriction on establishment of branches imposed on locally-incorporated foreign insurers and takaful operators uplifted
• Restriction on bancassurance tie-up imposed on locally-incorporated foreign insurers and takaful operators uplifted
• Greater flexibility to employ specialist expatriates
• Offshore insurance companies licensed under Lofsa can have physical onshore presence from 2011 after meeting predetermined criteria

Industry statistics:

• Financial sector contribution to GDP: 9.2% (2000), 11% (2008)
• 2006-08: Finance and insurance sector grew 8.8%, GDP growth 6%
• 2004-08: Islamic banking and takaful sector grew 20%
• >140,000 workers employed in banking institutions and insurance companies

Source: BNM's Press Statement, PM's Press Statement, Issuance of Family Takaful Licences

BNM's Annual Report 2009

Some of the salient points from BNM's Annual Report 2009 related to insurance and takaful industry:

• The finance and insurance sub-sector recorded a growth of 7.7% against 11.1% in 2007 to account for 11% of GDP at end 2008
• Solvency position of the insurance and takaful industry was sustained during 2008
• Total income for life insurance sector fell to RM26.779 bil in 2008 from RM28.440 bil in 2007, while its outgo increased to RM19.238 bil from RM14.617 bil
• General insurance sector's operating profit fell to RM588.9 mil in 2008 from RM1.339 bil in 2007
• Family takaful income rose to RM2.834 bil from RM2.376 bil, while outgo rose from RM1.294 bil to RM1.441 bil
• The general takaful operating profit rose to RM171.6 mil from RM24.5 mil
• Insurance and takaful sectors will be affected by lower demand and higher competition
• Motor insurance and takaful to be affected by expected decline in vehicle sales
• Potential higher surrender rates
• Potential lower sum assured (smaller policies)
• Potential higher incidences of theft and fraud

Source: The Star 1, 2 & 3, Bernama

Bakarudin now AG of BNM

Encik Bakarudin bin Ishak was appointed as Assistant Governor of BNM effective 5/3/2009. Bakarudin held the post of Director of the Islamic Banking and Takaful Department prior to his appointment as AG of BNM.

Source: BNM

BNM Met with Insurance and Takaful Leaders

BNM held a dialogue with leaders of the insurance and takaful industries today to discuss the developments in the economy and wide ranging issues facing the industries.

Among others, the insurers are ready for the implementation of RBC come 1 Jan 2009. The insurers and takaful operators will be more vigilant against fraudulent claims and potential fraud. BNM has also make available liquidity facility to insurance companies and takaful operators.

Source: BNM

BNM Gives Assurance on Financial System

BNM has released a press statement assuring that the Malaysian Financial System can weather the current global financial turmoil. Among the points relevant to insurance industry:

• Ample liquidity in the financial system
• Insurance industry is operating with adequate capital and liquidity buffers
• Negligible exposure to both sub-prime related securities and to the affected financial institutions of other countries
• More than 90% of total assets in ringgit denominated assets
• All foreign financial institutions are locally incorporated
• The insurance industry recorded high solvency surplus of RM16.5 bil as at end-August 2008

Source: BNM

Revised Capital Framework Key Priority

BNM said that the implementation of the revised capital frameworks for the banking and insurance industries would remain as its key priority this year.

Earlier there was some confusion that Basel II deadline for the banking industry would be extended, it has since been clarified that the deadline remains at 2010.

Source: The Edge Daily

Takaful Annual Statistics 2007

The takaful industry saw a 3-fold increase in the agency force from 15,194 in 2006 to 43,843 in 2007. However, net contributions income only improved by 49%.

It is believed that the increase in the number of agents was caused by the new licensees such as Prudential BSN, HLTMT and MAA. Although the new licenses were granted in 2006, most of the new licensees only started business in 2007. Another new licensee HSBC Amanah Takaful does not have agency force but distributes mainly through HSBC bank.

It is interesting to note that the number of employees for the takaful industry only increased by 200-300 from year 2005, despite the entry of the 4 new players. This is because the new players mainly adopt shared resources model (sharing with their traditional insurance business) and this helped to improve efficiency as the management expense ratio for general takaful has decreased from 34.3% to 29.7%.

The per capita contributions on family and general takaful were still low at RM73.2 and RM20.8 respectively compared with the traditional counterparts of RM695 and RM369.

Is the Malaysia Takaful market growing too slowly? Our earlier article has highlighted the threat that MIFC may not achive its targets as GCC has already claimed to be the largest takaful market in the world.

By class of business, we saw investment-linked and motor takaful increase in share in new business in 2007. This may be a result of the new licensees' strategies. It is worth noting that the claims ratio for general takaful has deteriorated from 59.2% to 71.5%, mainly due to the poor performance of motor business.

Source: BNM

2007 Annual Statistics for Insurance & Takaful

BNM recently released annual statistics for insurance and takaful industries for 2007. This is the 2nd year BNM publishes only the statistics as opposed to full annual reports as per year 2005 and earlier.

We make the following initial observations on the insurance industry (more may be posted in future as we have time to digest the statistics):

• Number of Financial Adviser licensees is still low at 7, an increase of 5 over the year. Number of financial advisers is 43 (6 in 2006), meanwhile the number of life agents increased by 3,247 to 78,587.
• There was a decrease in 1 direct general insurer and an increase of 1 general reinsurer.
• Premium as a % of Gross National Income dropped from 4.5% to 4.3%, total insurance fund assets (life & general) also dropped from 5.0% to 4.9% of total assets of the financial system.
• In absolute terms, the per capita insurance premium expenditure on life and general insurance increased from RM644 to RM695 and from RM362 to RM369 respectively
• The claims ratio for general insurance industry worsened from 60.6% to 65.7%. The main deterioration occured in Contractors' all risk & engineering and Motor Act.

Source: BNM

BNM Publishes Guidelines on Web

The wait is finally over. You can now download selected guidelines and circulars issued by BNM on its website.

This is definitely good news to the practitioners as they do not need to worry anymore on whether they are referring to the outdated documents.

It is hoped that in the near future, BNM will upload its complete set of guidelines and circulars on the web.

http://www.bnm.gov.my/index.php?ch=18&pg=55&ac=584

Kenneth Wong Leaving BNM

Kenneth Wong, the Senior Actuary of Bank Negara Malaysia (BNM), today announced that he was leaving BNM, after 3 and 1/2 years with them. His last day with BNM is apparently 31 March 2008.

There is no news on where he is heading to.

A replacement apparently is being identified and will be announced soon. Meanwhile, Kenneth announced that business was as usual in BNM as they have a strong and capable actuarial team in the Bank.