News Digest 20100124-20100130

Insurance News Etiqa Takaful Bhd appoints Shahril Azuar Jimin as its new CEO. http://bit.ly/cxXiRn

Shahril Is New CEO Of Etiqa Takaful :: Bernama.com

Insurance News The government proposed in GTP for insurers to reduce insurance premiums for cars, motorcycles and houses installed with security features. But surely the motor tariff will have to go in the first place. Right? http://bit.ly/8XTcx5

Five initiatives shortlisted to check crime
The Home Ministry has shortlisted five initiatives to achieve the target of reducing the overall crime index by at least 5% by the end of this year, according to the GTP Roadmap.

Insurance News HSBC Amanah Takaful will launch 7 products this year, focusing on medical and retirement. http://bit.ly/cnBWIG Meanwhile, an insurance survey by HSBC shows that 49% of Malaysians plan to save more in the next 6 months. 58% of the survey respondents are likely to buy products that offer capital protection. http://bit.ly/9L05nT

HSBC Amanah Takaful to launch 7 products in 2010
HSBC Amanah Takaful (Malaysia) Sdn Bhd, the Islamic insurance arm of HSBC Bank Malaysia Bhd, plans to launch up to seven products this year. Chief executive officer Zainuddin Ishak said the company is now focused on traditional long-term plans such as retirement and medical health. ...

Insurance News Zurich Financial now says it wants to have controlling stake in its joint venture in Malaysia but would do it in such a way that all parties are comfortable. Zurich Financial currently holds 40% stake in the JV. http://bit.ly/cF3fXV

Zurich Financial eyes controlling stake in Malaysian venture
DAVOS: Swiss insurer Zurich Financial Services Ltd is exploring ways to take a controlling stake in its Malaysian joint venture and grow its business in Indonesia, its Asia-Pacific head said yesterday. ...

Insurance News Great Eastern denies that it is in talks to sell a stake in Malaysian unit. http://bit.ly/a9hgGR

Great Eastern not in talks to sell stake in Malaysian unit
GREAT Eastern Holdings Ltd (GEH) said it is not in talks to sell a stake in its Malaysian insurance arm, Great Eastern Life Assurance (Malaysia) Bhd (GELM). "We wish to state that we are currently not ...

Insurance News Allianz General is paying profit commission of RM6.26 mil to its qualifying agents (25% of its agency force) before Chinese New Year. http://bit.ly/81tH9B

Allianz pays commissions to agents early
Allianz General Insurance Co (M) Bhd (AGIC) kept its promise for the fourth consecutive year by making an early profit commission payment.In a statement today, AGIC's chief executive officer Ng Hang Ming ...

Insurance News Tokio Marine is targeting a lower growth rate of 10% in 2010 compared with the 20% it achieved in 2009. However, it still expects to outpace the industry's expected growth rate of 6-7%. Prefers non-motor lines of business e.g. fire, marine, cargo and PA. Not ruling out acquisition. http://bit.ly/81WhB0

Tokio Marine expects 10% premium growth this year
KUALA LUMPUR: Tokio Marine Insurans (Malaysia) Bhd (TMIM) expects a premium growth of between five to 10 per cent this year, its chief executive officer Dr Michael Heng Kiah Ngan, said Tuesday.

Insurance News Will Great Eastern divests it stake in Malaysia? How much is the divestment, if any? Is Khazanah the suitor or any other parties? Is divestment a pre-condition of being granted the takaful licence? Would IPO be an option if a direct shareholder cannot be found? This article may shed some light. http://bit.ly/8iwedl

Khazanah said among suitors for Great Eastern
A group of potential suitors, including state-owned investment agency Khazanah Nasional Bhd, is said to have lined up for a stake in Singapore's Great Eastern Life Assurance (Malaysia) Bhd to help realise the insurer's takaful ambition. ...

Insurance News Takaful Malaysia won the Global Diamond Award while its Group MD Hassan Kamil won the "Smart Entrepreneur" Award. http://bit.ly/6YbYwS

Takaful Malaysia, group MD win major awards

Insurance News While many may think that China and India markets are hot, Prudential is scaling back its growth ambitions in both countries. Instead investment would be pushed into fast-growing economies in southeast Asia, including Malaysia, Vietnam and Indonesia. The reason for such decision seems to be the slow relaxation of restrictions on foreign ownership of financial firms in China and India. http://bit.ly/7CJkyf

Prudential to Scale Back on India, China - NYTimes.com
LONDON (Reuters) - Britain's biggest insurer Prudential has begun a shake-up of its Asian business that will see it scale back its ambitions for growth in India and China, The Sunday Times said.

Insurance News LIAM, ACE Synergy and Prudential spoke on 2010 outlook and challenges. http://bit.ly/8H8IxQ

Malaysian insurers in for better times
PETALING JAYA: Despite facing some hurdles, the local insurance industry has a promising outlook with new life business weighted premium forecast to grow 12.5% to RM3.6bil this year.

Budget 2010: Responses

LIAM:

• Micro insurance: insurance not only for high-income earners; will work with authorities to launch the scheme
• RM1,000 tax relief on annuity: by 2020, 10% of population age >60 years; investment income earned in annuity fund should be tax free.
• Insurance penetration rate will improve, currently 41%

Source: LIAM

PIAM:

• Restructuring of motor insurance cover for 3rd party liabilities is necessary
• Lead to ultimate deregulation and liberalisation of motor and fire tariff

Source: Business Times

EPF:

• 1Malaysia Retirement Scheme will benefit 2 mil self-employed and non-wage earners
• Only 18% of 5.72 mil active members have enough savings to finance their retirements
• 40% of active members chose to contribute at 8% instead of 11%

Source: Bernama

Insurance outlook

Summary of views of various industry players on insurance outlook in 2H 2009:

Great Eastern

• The worst is over, export industry picking up, companies started recruiting
• 2H to be better than 1H
• Expect double-digit growth for whole year
• Distribution channel and products are key growth drivers

LPI Capital

• Export and construction sectors will provide growth
• Marine and fire insurance will benefit
• Need to be prudent in underwriting and have strong claims management in view of rising motor insurance claims (bodily injury and motor theft)

Manulife

• Regardless of economic cycles, insurance performs well
• Stimulus plans are positive
• External factors may affect growth pace
• Equity markets have not stabilised

Source: The Star

New third-party tariff

Third-party motor insurance premium rates are under reviewed. A new tariff may apply and the new tariff will be based on supply and demand, and market forces.

The existing tariff has been around for more than 30 years.

Source: The Star

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

Perwakim's views on motor insurance rebates

Perwakim, an association of general insurance agents in Malaysia, will meet BNM and PIAM to discuss motor insurance rebates.

Perwakim's views on rebates:

• Detrimental to both agents and customers
• Only benefit insurance companies (no reasons were given on why this is so)
• Will result in retrenchment of staff of smaller agencies

In Malaysia, there are 50,000 insurance agents of which 40% are full time.

Source: The Star

More responses on motor insurance rebate

The recent decision to grant 5-10% rebate to policyholders buying motor insurance direct has resulted in different responses from different parties:

Deputy Finance Minister:

• Poicyholders will continue to use agents if their services are excellent
• This practice is in line with the rest of the world
• The aim is to increase the public's access to insurance
• Also to bring the industry up to speed with various technological advancements
• Remisiers have set the precedent, now you can buy shares direct

Proton Dealers Association Malaysia (Peda):

• It will destroy the automotive eco-system, particularly the dealers network
• Automotive dealers will lose > 20% of their income
• Motor insurance premiums are > RM1 mil per year per dealer agency
• Peda will call for a boycott
• It will contribute to a higher unemployment

EON Bank:

• No impact on its insurance business if Peda calls for a boycott

Source: The Star, Business Times 1 & 2

Mandatory rebates for motor insurance

From July 1, motor insurance can be purchased directly from insurance companies and the commission normally paid to the agents will be mandatorily rebated to policyholders who are the actual owners of the vehicles.

The rebates are:

• 5% in 1st year
• 10% in renewal years

The responses by various parties on the above:

• Agent: livelihood of agents would be affected
• BNM: promote the promulgation of alternative channels
• Federation of Malaysian Consumers Association: agents will have less cross-selling opportunities

Source: The Star

Automotive Intelligence Report

ISM has issued an "Automotive Intelligence" report with statistics on vehicles by make, model and capacity, as well as buyers gender and age and geographical location.

Some of the statistics extracted from the report are:

• 49% of new car registrations in 2007 & 2008 was from male buyers, 41% female. (presumably the other 10% was registered in the name of companies)
• 19% of the buyers were in age group of 26-30, 15% in 21-25
• 23% with engine capacity 1,000-1,300 cc, 15% with 1,000 cc or less

Source: Business Times, The Star

Motor insurance claims worsen

The combined loss ratio for motor insurance business in 2008 worsened to 115.5% compared with 114.1% in 2007 and 104.4% in 2006.

Gross direct motor insurance premiums rose by 10.1% to RM4.89 bil.

Claims ratios for 3rd party bodily injury claims reached 340% in Q1 2008 compared with 262% in 2007.

Source: Business Times

Negative profit growth for MSIG

MSIG Insurance has suffered a pre-tax profit growth of -21.4% in FY 12/2009.

Reason quoted: significant drop in investment and other income.

Information on MSIG:

• 3rd largest general insurer by premium income.
• RM120.9 mil pre-tax profit (2009) vs RM153.9 mil (2008).
• Will launch new personal & lifestyle insurance products.
• Gross premium grew 9% to RM774.2 mil (mainly from motor and miscellaneous).

Source: Business Times

Motor tariff to be increased with discount for direct cases?

Are motor insurance premiums finally going up? The motor insurance tariff has remained unchanged since 1978, despite higher motor claims, surging vehicle thefts and the rising cost of automotive repairs. Some insurance companies are shying away from writing motor insurance, while others have allegedly forced consumers to buy other general insurance products together with motor insurance.

It was reported that BNM was considering approving a hike in motor insurance premiums with the condition of those buying direct getting a discount of 5% in 1st year and 10% in renewal years. This is in view of the saving of commissions which will not be paid for direct cases.

Source: The Star

Kurnia to reduce reliance on motor insurance

Kurnia targets to reduce its reliance on motor insurance business. Motor insurance business currently contributes 84% of it gross premium income, the target is to reduce it to 50%.

Yesterday, Kurnia also re-launched its enhanced Kurnia Auto Assist (roadside breakdown repair, 30 minutes arrival at scene) and Kurnia Express (immediate settlement of claims of comprehensive motor policyholders up to RM3,000).

Source: Business Times

Pay-as-you-drive Motor Insurance

If you use your car very infrequently, I think you would like the idea of pay-as-you-drive motor insurance policy.

In UK, you can have your motor insurance premium based on distance covered and the time of day or night you use your vehicle. This is achieved through a monitoring device called Coverbox which monitors your driving habits.

Actuaries would love this as well because it will provide very detailed data for them to improve on their pricing models.

Source: Insurance Daily

December Born Drivers Higher Risks

A study in UK has concluded that the month in which people are born can have impact on their performance as drivers.

People who were born in December have the highest likelihood to submit a motor insurance claims.

While there is no plan as yet to charge motor insurance premium by the day and month one was born in, there is no guarantee that this will not be done in future.

Source: Insurance Daily

Inflation will Affect Motor Insurance Business

The recent fuel price hike and the high inflationary environment is expected to have negative impact on the motor insurance business. The demand for vehicles, especially the large capacity vehicles, will likely to be depressed. The motor insurance premium growth is expected to be affected as a result.

The gross written motor insurance premiums reached RM4.67 bil in 2007, a growth of 1.4% over 2006.

Kurnia expects that inflation will also put pressure on management expense. The slowdown in vehicle sales however may be temporary as cars are still a neccessity for Malaysians.

Source: Business Times

Captor for Takaful Ikhlas

Takaful Ikhlas has teamed up with Captor Retail Sdn Bhd to offer its contributors a vehicle security system at RM1,998.  The contributors will also get a free PA takaful of RM50,000 sum covered.

Takaful Ikhlas has 140,000 comprehensive motor takaful contributors.

http://www.bernama.com.my/bernama/v3/news_business.php?id=321018