FWD Group Holdings makes another investment in FWD Takaful

FWD Group Holdings (FWD) has completed an additional investment for a further 21% stake in FWD Takaful. This makes FWD the majority shareholder in FWD Takaful, with a 70% holding. The remaining 30% is held by the Employees Provident Fund. JAB Capital is no longer a shareholder after the transaction.

"We are delighted to increase our investment in FWD Takaful, after first entering the Malaysian market five years ago. Our commitment to changing the way people feel about takaful in Malaysia is all about building our presence in the local community over the long term," said Binayak Dutta, MD, FWD Group.

FWD Takaful's family takaful product portfolio to customers in Malaysia include term life, critical illness, cancer, hospital cash benefit and medical protection.

"With the continued commitment of FWD Group over the years to its development in Malaysia, we've created a full-service offering to provide both family takaful and life insurance solutions in a rapidly growing market with long-term potential," said Dutta.

Malaysia is the fourth-largest life insurance market by premium in Southeast Asia¹. Insurance penetration² is less than 5% alongside attractive macroeconomic fundamentals and favourable demographics.

FWD Group first entered the Malaysian market in 2019 as a provider of family takaful products with its acquisition of a 49% interest in FWD Takaful. Later that year, FWD Group established its regional technology and innovation hub in Kuala Lumpur, with a focus on delivering best-in-class technology and supporting innovation across the whole company.

In 2023, FWD Group created a full-service offering in Malaysia, featuring both family takaful and life insurance solutions with its establishment of FWD Insurance. This followed the completion of the company's investment, together with other investors, in the business formerly known as Gibraltar BSN, on 3 April 2023.

The Southeast Asia region is strategically important for FWD Group, with more than half of its value of new business³ contributed by its operations in the region. FWD Group is a top five insurer and top bancassurer within its Southeast Asia markets, on an annual premium equivalent⁴ basis.

1 NMG; Swiss Re

2 NMG

3 For the six months ended 30 June 2023

4 For the nine months ended 30 September 2023

FWD to enter Malaysian life insurance market through Gibraltar BSN Life investment

FWD Group Holdings will enter the Malaysian life insurance market following the signing of an agreement to invest in a majority stake in Gibraltar BSN Life. The transaction is expected to close in Q223.

FWD Group, and other investors, will together hold an effective 70% stake in Gibraltar BSN, which was sold by The Prudential Insurance Company of America, the wholly owned subsidiary of US-based Prudential Financial, Inc. Bank Simpanan Nasional (BSN) will continue to hold the remaining 30% stake in Gibraltar BSN. Post-completion, FWD Group will partner with BSN to further develop and grow Gibraltar BSN.

Huynh Thanh Phong, Group CEO and Executive Director of FWD Group, said, "We're creating a full-service offering in Malaysia and will be able to offer both family takaful and life insurance solutions in a rapidly growing market with huge long-term potential for growth. We're excited to bring our digitally-enabled products and services to more people in Malaysia. With these strategic developments, we also substantially complete our footprint across key Southeast Asia markets in the 10th anniversary year for FWD Group. Changing the way people feel about takaful and insurance remains the vision that guides our work."

Malaysia is the 4th largest life insurance market by premium in Southeast Asia*, with highly attractive macroeconomic fundamentals and favourable demographics. FWD Group entered the Malaysian market in March 2019 as a provider of family takaful products, including term life, critical illness, cancer, hospital cash benefit and medical protection.

Binayak Dutta, FWD Group MD, Emerging Markets and Group Chief Distribution Officer said, "Our partnership with BSN underscores our commitment to the Malaysian market and we look forward to playing our part in the growth and development of Malaysia's takaful and insurance sectors. Since establishment, our business in Malaysia has gone from strength to strength. We grew gross written contributions by 173% in our first full year of operation**, established our regional technology and innovation hub in Kuala Lumpur and partnered with a leading social enterprise in Malaysia to develop Fun(d) for Life, a financial literacy programme supporting over 4,200 individuals***."

Existing customers and distribution channels of Gibraltar BSN will not be affected by this investment and all existing policies will continue to be honoured. Customers can also continue to access the company's products and services using their preferred service channels. Additionally, existing customers and distribution channels of FWD Takaful will not be affected. FWD Group plans to rebrand the Gibraltar BSN business at a later date.

*NMG; Swiss Re.

**Malaysia gross written contributions (GWC) grew by approximately 173% from 2020 to 2021. This is in comparison to the industry gross written premiums (GWP) in Malaysia, which grew by approximately 9% over the same period, according to NMG.

***As of 30 September 2022.

Takaful market projected to exceed US$40 billion by 2023

The IMARC Group Takaful Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2018-2023 report in ResearchAndMarkets.com's offering valued the global takaful market at US$19 billion in 2017. 

Catalysed by factors such as an ethical investment policy, strong growth prospects and price competitiveness, takaful represents a strong business proposition and has a significant share of non-Muslim customers as well. The market is projected to exceed US$40 billion by 2023, at a CAGR of 13% from 2017 to 2023. 

According to ResearchandMarkets.com, takaful refers to a shari'ah-compliant insurance system through which members mutually contribute a sum of money, so as to support each other in case of a loss, damage or theft. The objective of takaful is to cooperate, live harmoniously amongst the community and protect each other against uncertain mishaps, the company said. Takaful policyholders' regular monetary contributions are supervised and managed by a takaful management firm. The surplus amount is invested which helps to earn policyholders a higher profit.

The report says that takaful is rapidly gaining momentum, particularly in the Asia Pacific and the GCC region, owing to a large Muslim population. Muslims currently account for a fifth of the total global population and these levels are expected to further increase in the future.

Another major driver of the market is that, in contrast to Western countries, the majority of the world's Muslim population is young with 60% of this entire population being under 25 years of age. Catalysed by rising levels of affluence, this large young Muslim population has the potential to represent a customer base for a fairly long duration if it is captured early.

The penetration of conventional insurance is also relatively low in affluent Muslim regions like the GCC. As a result, takaful is perceived as a key instrument to raise insurance awareness and has huge opportunities in these countries.

Some of the leading players operating in the global takaful market include:

• Islamic Insurance Company 
• JamaPunji 
• AMAN 
• Salama 
• Standard Chartered 
• Takaful Brunei Darussalam Sdn Bhd 
• Allianz 
• Prudential BSN Takaful Berhad 
• Zurich Malaysia 
• Takaful Malaysia 
• Qatar Islamic Insurance Company 

Details:

Buy the report (April 2018)

National Bonds customers offered new SALAMA takaful packages

National Bonds Corporation, an investment company providing shari'ah-compliant financial products and services, has partnered with the Islamic Arab Insurance Company (SALAMA). The collaboration will provide National Bonds customers with access to tailormade takaful protection packages from SALAMA.

Mohammed Qasim Al-Ali, CEO, National Bonds Corporation, said: “This agreement ensures that our customers have access to unparallelled protection, exclusively designed for National Bonds savings products. At National Bonds, we are committed to maintaining our position as a trusted savings advisor and we always seek to enhance the services we offer to our customers. This partnership is an ideal addition to our existing product offering and, moving forward, we will remain focused on making saving simpler, more convenient, and more secure for residents across the UAE.”

The new SALAMA protection packages will be available exclusively to all National Bonds customers. Each package complements National Bonds’ savings plans and variously include life coverage, complimentary payment protection, as well as covers for personal accidents and critical illnesses. Based on customer feedback and demand, additional protection packages will be introduced.

Parvaiz Siddiq, COO, SALAMA said: “At SALAMA, we aim to cater to the diverse needs of our customers and provide them with leading, shari’ah-compliant protection solutions. We continue to innovate and evolve the solutions which we offer and these newly designed packages for National Bonds are a step in the right direction. Through these exclusive, personalised plans, we can ensure that customers are satisfied and their savings are protected. We look forward to the successes of this partnership and introducing new packages in the near future.”

SALAMA provides takaful solutions and is one of the oldest shari’ah-compliant insurance providers in the world.  

Details:

Customers can sign up for SALAMA packages through their National Bonds representative. Customers will then be provided with a direct contact at SALAMA to manage all of their protection needs, at the press of a button.

AM Best gives Qatar Islamic Insurance Company B++ financial strength rating

AM Best has affirmed the B++ (good) financial strength rating and bbb+ long-term issuer credit rating for Qatar Islamic Insurance Company (QIIC). The outlook of these ratings is stable.

The ratings reflect QIIC’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

QIIC adopts a hybrid takaful model, whereby the shareholders’ fund (SHF) charges the policyholders’ fund (PHF) a wakalah fee based on gross written contributions (GWC) and a mudarabah fee based on investment income. QIIC’s ability to accumulate surpluses within the PHF whilst regularly distributing surplus back to policyholders supports the sustainability of the takaful model.

QIIC has a track record of strong operating and technical profitability, highlighted by a five-year average (2013 - 2017) combined ratio of 79% that has remained very stable over recent years. While there has generally been a good balance of earnings between technical and investment income, a volatile investment environment in Qatar has meant investment returns have declined over the past four years. During 2017, the company reported net profit of QAR62 million, equivalent to a sound return on equity of 13%.

Although the company is concentrated on its domestic market of Qatar, the company maintains a niche market position as an established provider of shari’ah-compliant products and a strong reputation that is partially attributable to the company’s track record of distributing surpluses back to its policyholders. The company also benefits from being a member of the National Insurance Consortium, which provides QIIC access to sizable government infrastructure contracts. QIIC reported modest premium growth in 2017, as the company reported a 1% increase in GWC to QAR317 million, compared with 2016.

BIOS boosts Takaful Emarat's growth

Source: BIOS. Dominic Docherty, Founder and MD,
BIOS Middle East (left) and Mohammad AlHawari,
Executive Board Member, Takaful Emarat-Insurance (right).

Takaful Emarat, UAE's premier provider of shari'ah-compliant life and health insurance, has enhanced its infrastructure with BIOS, a UAE-based system integrator and cloud computing specialist.

Dubai-based Takaful Emarat's tech refresh replaced much of its legacy IT infrastructure, allowing the company to remain competitive in a challenging marketplace. Key among Takaful Emarat's requirements was an in-country cloud infrastructure, which could leverage various technologies for a complex IT environment.  Takaful Emarat chose to work with BIOS' in-country cloud, CloudHPT.

Mohammad Alhawari, Takaful Emarat's MD and Executive Board Member commented: "This is a very exciting time for Takaful Emarat as we continue focus on growing our business in tandem with accelerating our digital and online capabilities as we access new customer markets.

"Our investment in technology is central to this objective and, will give us a competitive edge to strengthen our market position, as a leading UAE provider of innovative insurance products and services. From a customer perspective, our new IT infrastructure will also enable our business to provide optimal value through improved business efficiencies and enhanced customer service support. We will continue to invest in our business to drive growth and I look forward to reporting new initiatives in due course."

Dominic Docherty, Chairman, BIOS agreed, saying, "Even in traditional sectors such as insurance, customers expect modern technological capabilities. Strategic positioning through superior technology is critical for Takaful Emarat's continued success."

Takaful Emarat's new technology includes a complete infrastructure-as-a-service (IaaS) package, which features hosting for Takaful's core insurance application of Oracle and critical services such as the file server, the contact centre. BIOS will migrate Takaful Emarat's email Office 365 setup, with complete email security and archiving provided through Mimecast. These critical improvements will increase Takaful Emarat's operational efficiency with BIOS' powerful platform.

BIOS is also building a disaster recovery solution that replicates workloads at Takaful Emarat's offices on their old hardware. This provides further cost savings on infrastructure, while lowering risk and improving industry compliance.

As with any technological upgrade, information security was a major concern for Takaful Emarat. To protect their assets, BIOS leveraged CloudHPT, which offers the region's first security information and event management (SIEM)-protected cloud with 24x7 security operations centre (SOC) services. CloudHPT is also fully protected by 1TB of anti-distributed denial of service (DDoS) protection, which no other local cloud service vendor provides, BIOS said.

Built on Cisco's Application Centric Infrastructure (ACI), CloudHPT is the only Cisco-powered cloud in the Middle East. This secure platform is supported by BIOS' 24x7 network operations centre, which monitors all infrastructure around the clock.

Lalitha Prasad Rao, COO, Takaful Emarat said: "Our technology refresh is a critical investment for our business. It will improve daily operations and reduce IT spend by increasing efficiency through technological improvement, offering us a key market advantage over our in-region competition."

INCEIF opens up part two of takaful MOOC

INCEIF has made part two of its Takaful massive open online course (MOOC) available.

Part 2 is about shari'ah principles and the practices underlying takaful, enabling students to determine forbidden elements as well as shari'ah compliance in the insurance business.

The course  instructor is INCEIF subject matter expert on takaful and risk management Ezamshah Ismail, who is also the Dean of School of Professional Studies at INCEIF. He was formerly the CEO of Hong Leong Tokio Marine Takaful and several industry-related institutions including Malaysian Institute of Insurance and the Financial Mediation (formerly known as Insurance Mediation) Bureau.

He holds a Masters degree in actuarial science from Northeastern University in the US and an LLM in business Law from the lnternational Islamic University Malaysia.

Interested?

Join the MOOC. It is self-paced, and free

IIRA reaffirms ratings for The Islamic Insurance Company, Jordan

The Islamic International Rating Agency (IIRA) has reaffirmed the takaful financial strength (TFS) rating of The Islamic Insurance Company (TIIC) in Jordan at 'A' (Single A), with a stable outlook. The corporate and shari'ah governance framework at the institution remains sound, the IIRA said.

TIIC is the first and one of two takaful operators in Jordan, and is the 7th largest player commanding a share of 4.2% of gross premiums written in the insurance industry. IIRA observes that TIIC's growth trends, although affected by economic pressures, have remained favourable compared to the industry in recent years. The company has been successful through increasing the proportion of low-risk and highly profitable life takaful segment in their revenue mix.

IIRA also notes that TIIC draws an advantage from its association with Jordan Islamic Bank (JIB), which has a strong retail franchise in the country and is TIIC's major shareholder. The company sources a significant amount of profitable business from JIB.

According to the IIRA, diversification in earnings could help the company to buffer the volatility inherent in key lines of takaful businesses and boost overall returns.

Qatar Islamic Bank enables online purchases of Travel Takaful plan

Qatar Islamic Bank (QIB) has introduced online purchases for the Travel Takaful plan, underwritten by Damaan Islamic Insurance Company (Beema) and distributed by QIB.

With the new functionality, QIB’s customers can conveniently purchase the Travel Takaful plan through the Bank’s website  using their debit or credit card, at any time, from the comfort of their home or office.

The multi-trip Travel Takaful plan provides travel benefits such as compensation in case of lost/delayed baggage, delay in departures, or in the event of lost passports, National IDs and driving licences.A key benefit is the coverage of medical expenses incurred abroad, including hospital and surgical costs, dental emergencies, as well as other emergencies and needs that can occur when travelling.

“The shari'ah-compliant Travel Takaful plans are developed and constantly improved as part of our continued commitment to ensure that our customers’ needs are recognised and supported at all times considering that they are traveling frequently throughout the year,” said D. Anand, GM, QIB’s Personal Banking Group. “With the new instant online purchase functionality, customers don’t need to visit a branch to take out a policy, but can do so from their home or office. This simplified approach reflects our dedication to providing the highest quality service and convenience to our customers.”

Etiqa chooses Informatica for customer relationship management

Etiqa's deployment of Informatica's customer-centric master data management (MDM) system has reinforced the company's commitment to its total customer relationship strategy and ongoing efforts to create new market opportunities.

A multichannel provider of life and general insurance services and takaful products, Etiqa is a subsidiary of the Maybank Group. The MDM system provides Etiqa with better control of its data, enabling the company to build a consolidated customer profile as it pursues new avenues of growth in a more open and competitive Malaysian insurance market.

With the MDM solution, Etiqa has shifted from a product-centric view to focusing on a customer's holistic relationship with Etiqa across all its businesses. This approach gives Etiqa a 360-degree view of customer relationships with the company, as well as their interests, preferences, and activities. The system also enables Etiqa to integrate information from new channels such as social media. Information on lifestyle and other interests enhances Etiqa's customer information base and helps identify new marketing opportunities. 

Having access to accurate and enriched customer information allows Etiqa to personalise its products and price them more competitively and quickly based on an individual customer's profile and history.

"We have one platform for accessing, integrating, cleansing, and governing our customer data. This customer-centric view across general and life insurance lines of business plays a powerful role in helping Etiqa attract and retain insurance customers and grow revenues," said Kamaludin Ahmad, Chief Executive Officer (CEO), Maybank Ageas Holdings (MAH).

"This is a game changer," said James Lee, Head of Channel Applications & Enterprise Architecture, Etiqa. "Besides delivering a powerful platform for MDM, we also have the flexibility to conduct data integration, profiling, migration and other processes - all within the same platform."

Informatica's technology leadership position in the Gartner Magic Quadrant, ease of use, and straightforward deployment were some reasons why Etiqa chose Informatica MDM. Said Sivadas Ramadas, Managing Director, Informatica ASEAN: "Data powers business. With Informatica Customer MDM, Etiqa can enjoy a customer-centric view of their business to better attract, retain and grow profitable and sustainable policyholder relationships. This is Insurance Customer 360 at work."

Etiqa worked closely with Informatica Partner Emerio, a wholly owned subsidiary of NTT Communications company, on the architecture, development, management and integration of the systems onto the MDM platform.

"Emerio understands that information management is of special concern for companies in the financial sector industry. Because of Etiqa's position as a trusted insurer, solid data quality management and good governance were priorities right from the very start of our partnership," said Michael Warren, Managing Director, Emerio. "This MDM solution is ideal for insurance sector companies as it is built with ACORD-compliant* capabilities.

"Quick access to good information is important, but ultimately our customer has to be fully satisfied that such data is not only trustworthy, but remains secure at all times."

*ACORD is the Association for Cooperative Operations Research and Development, a global nonprofit association working to improve data quality and information exchange for the insurance industry.

Malaysia's takaful industry is doing much better than the Middle East takaful market

A.M. Best, the insurance rating and information source, has created an A.M.BestTV episode on Malaysia's takaful industry. In the episode, which can be viewed online, A.M. Best Senior Financial Analyst Salman Siddiqui explains how regulation has helped to boost growth in Malaysia's takaful industry. 

This issue is fully explored in a Best Special Report, The Dynamics of Takaful Markets Of the Middle East and Malaysia: Similar Models, Different Approaches, Contrasting Fortunes.

“When I exclude the Saudi corporative insurance market, I'd say that the Malaysian takaful industry has been more successful in getting a strong foothold in this local insurance market,” said Siddiqui. “Looking at takaful penetration, which is a ratio of takaful contributions as a percentage of total gross written premiums in that market, the ratio for Malaysia is much higher, at about 15%, compared with an average of 8% for the entire Middle East. It is evidence of the strong level of traction that takaful has had in the Malaysian market. Malaysia’s success is all the more impressive when you consider that only 60% of Malaysia’s population is Muslim, compared with an average of 92% in the Middle East.”

Siddiqui said regulation has had a large role in Malaysia’s strong takaful traction. “Regulation is one of the key factors here. Regulations are a very important factor in the development of any industry, as it allows market participants, investors, consumers and insurers, to actively partake in the development of that industry.”

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday.

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New study discusses why takaful in Malaysia is growing faster than in the Middle East

A perception persists in the takaful market that Malaysia has been relatively successful in forming a vibrant takaful industry, while despite the Middle East having large Muslim populations, the takaful operators have struggled to establish a foothold in a market that has the potential to reach US$20 billion by 2017.

A.M. Best discusses the market differences in The Dynamics of Takaful Markets of the Middle East and Malaysia: Similar Models, Different Approaches, Contrasting Fortunes. 

“Over the last three years, Malaysian operators have generated superior margins on their family takaful portfolio compared with Middle Eastern operators. On the other hand, Middle East companies have spent considerable time and money to develop family takaful products that have not translated into significant revenue to absorb these costs,” the company notes.

The report identifies one of the key drivers of the success of takaful in Malaysia is the balance of earnings between the shareholders’ and policyholders’ funds, demonstrated by the stronger returns experienced in their family and general takaful portfolios. Salman Siddiqui, Senior Financial Analyst at A.M. Best and co-author of the report, said: "Over the last three years, Malaysian operators have generated superior margins on their family takaful portfolio compared with Middle Eastern operators. On the other hand, Middle East companies have spent considerable time and money to develop family takaful products that have not translated into significant revenue to absorb these costs."

In addition to enjoying higher family takaful margins, Malaysian companies also outperform the Middle East operators in their general takaful portfolios. Mahesh Mistry, A.M. Best Director, analytics, and co-author, added: "Overall, Middle East takaful companies produce combined ratios above 100%, whilst lower loss ratios in Malaysia help operators produce marginal yet profitable sub-100% combined ratios. This emphasises the value-added proposition that many Malaysian operators can provide clients, with the focus toward bottom-line profitability over top-line growth, allowing technical surpluses to be distributed to policyholders."

A.M. Best's report further notes that the lack of differentiation and the associated pricing pressure, along with poor distribution networks, will be the key challenges for Middle East takaful companies going forward. For the industry to tackle these challenges, the operators will need to adopt suitable strategies and appropriate structures to ensure that the takaful model employed is balanced, and that it serves the requirements of shari'ah-compliant insurance, to the benefit of all stakeholders.

Interested?

Download the report

World Takaful Conference begins April 11

Source: Middle East Global Advisors.

The conveners of the 11th annual World Takaful Conference (WTC) - Middle East Global Advisors - will be revealing new insights on the outlook for the global takaful industry as part of its commitment to serving the shari'ah-compliant insurance markets. The 23-year financial intelligence platform, in partnership with Netherlands-based consultancy Takaful Outsource, will launch the Finance Forward World Takaful Outlook Report 2016 on April 11 at the WTC.

Blake Goud, Chief Research Officer of Middle East Global Advisors, said, "For over a decade, the World Takaful Conference (WTC) has connected the industry with insights about the state of and future for takaful. The Finance Forward Takaful Outlook Report 2016 will complement the insights that come out of the conference and provide takaful leaders with the key insights they need in order to make strategic decisions to capitalise on emerging opportunities."

According to the report, the Islamic insurance industry faces an uphill climb against severe competitive pressures with an added headwind coming from macroeconomic challenges. However, the forecast is brighter with takaful growing faster than the broader insurance market. Further, the report also identifies several areas where changes could accelerate growth.

Momna Saeed, Senior Research Analyst at Middle East Global Advisors added: "The takaful industry has exhibited impressive double digit annual growth over the last decade; however, it remains underdeveloped as compared to the overall thriving Islamic finance industry.

"The uniqueness of the report is that it combines current insights from takaful leaders - gathered from an extensive global survey of practitioners' - with robust analysis of the impact of the global economy on the regional takaful markets, as well as comparative analysis of various markets."

The report covers a wide variety of issues including pricing regulations and their impacts across various regions, the evolving role of actuaries, as well as key issues relating to human capital.

WTC 2016 is a two-day gathering of the global takaful industry taking place on 11 and 12 April at the Dusit Thani in Dubai, UAE. According to the convenors, the takaful industry is still at a nascent stage in its development although its growth has been rapid over the past seven years, with total assets doubling in the last five years. 

Takaful Emarat launches new website

Takaful Emarat, the DFM-listed, shari'ah-compliant life and health insurer, has launched a new website with better access to information and real-time access to a fund’s performance and financial reporting tools. 

The refreshed website, along with recently announced distribution agreements with RAK Bank and Emirates Islamic Bank, appeals to the UAE population’s increasing inclination to transact using digital technology, and aims to give customers self-service access outside office hours.

Takaful Emarat has seen an increase in the number of customers visiting their website over the last year and sees this investment in technology, which is funded through the proceeds of its recent rights issue, as the next step in its innovation strategy and growth trajectory.

The website refresh will be delivered in two phases. The first phase focuses on offering customers easy access to product information and a new, modernised feel while the second phase, which is due to come online in the second half of 2016, will allow Takaful Emarat customers to play an active role in managing their own policies online by adding or deactivating policy features as required and filing claims from a desktop or from the smartphone-enabled website. In this second phase of the website revamp, Takaful Emarat will also be able to offer potential customers instant life or health insurance quotes 24x7.

Takaful Emarat’s Chief Executive Officer Wael Al-Sharif said: “The digitisation of life and health insurance has great benefits for our existing customers who can manage their insurance needs at their own convenience and take a more proactive role in planning for their future. Increasing accessibility to information about suitable investments, savings and health and life plans through technology also helps the previously uninsured and lower-income consumers to take control of their finances and wider life plans. For our investors, the updated website provides essential information about the company’s performance and strategy, increasing our transparency to enable a more informed investment decision.”

From a corporate perspective, investors have a more transparent insight in to the company’s financial performance, with a comprehensive library of financial reports and related information. The expansion of accessibility to insurance through technology supports the growth of the global takaful insurance market, which is expected to reach US$20 billion, up from current estimates of US$14 billion, according to research by EY. Demographics in the MENA region support insurance growth particularly in personal lines, which currently make up 16% of the market, compared with 56% globally, according to the Qatar Finance Centre.

National Bonds survey shows 17% of UAE nationals have takaful insurance

National Bonds, the shari'ah-compliant savings and investments company in the UAE, has announced the latest results of its ongoing financial health check survey*.

Source: National Bonds.

Findings indicate that 36% of UAE nationals save for a major purchase, while 34% save to buy a house and 24% save for retirement. However, only 7% save for their children’s education. As for other nationalities, 37% save to buy a house and 35% for retirement while 18% save for a major purchase and only 10% save for education. 

 
In additional findings, 56% of UAE nationals said they make monthly payments towards personal loans, 32% are settling credit card debts, while 12% are paying off mortgages. As for other nationalities in the UAE, the survey found 50% of the respondents are paying off personal loans, while 38% make credit card payments, and 13% are settling mortgages.

The results also indicate that 20% of UAE nationals among the respondents usually save monthly, as opposed to only 11% of single UAE nationals. Additionally, 52% of UAE-based women from all other nationalities do not have an emergency fund, against 6% of female UAE nationals who do. Further, 17% of UAE nationals said they have takaful insurance, compared to 14% of respondents from all other nationalities said they do.

Mohammed Qasim Al Ali, CEO, National Bonds Corporation, said: “Five months since our last financial health check, we are observing a major shift in our savers’ financial behaviour. We are happy to note that saving for retirement and homes is gaining precedence among customers of all nationalities. However, debts due to personal loans and credit cards remain the biggest challenge. We at National Bonds are well aware that bad habits die hard. This is why we offer a comprehensive financial planning strategy that helps customers achieve a balance between their needs and wants, their budgets and liabilities.”

Highlighting the low numbers of savers with takaful insurance across all nationalities including UAE nationals, Al Ali explained: “The significance of takaful does not only lie in being a means of protection against an uncertain future incurred through job and income loss. It serves as an expression of social and Islamic culture - reflecting its inherent values such as cooperation, solidarity and partnership even while ensuring a safe and sustainable future for all segments of society without discrimination.”

Takaful can also be a key to resolving the problems relating to Emiratisation policies in the private sector, where the advantages are less compared to the public sector. Thus, takaful is an effective alternative that provides financial security to the employee and his family. Takaful insurance is also expected to be one of the main drivers for financing development and ensuring stability of the financial sector.

The CEO of National Bonds also highlighted the debts paid by the majority of savers against personal loans and credit cards and said: “Despite the increased awareness today about the importance of savings and the burden of debt, the credit card culture continues to weigh heavily on many people, draining their income and severely impacting their financial security and the future of their children. The issue of debt is more related to habit than need if we consider the high income levels of individuals and consumption trends in society. This habit is reinforced by excessive consumption associated with earlier economic phases, but the same habits may not be appropriate for the upcoming economic phase if recession and its related challenges continue to adversely impact the global economy.”

National Bonds has created a number of innovative tools to encourage regular saving among bondholders. Of these, the new myPlan Rewards Program launched in August 2015 with the aim of encouraging customers to commit to a monthly savings plan is gaining popularity among bondholders that are mindful of the challenges they might face in the future.

National Bonds advises that financial plans should cover more than just investments, including retirement, taxes, insurance takaful, cash flow and debt management.

*Designed by financial advisors at National Bonds, the financial health check was launched in February 2014 as an online tool to help customers assess their financial status and take corrective action towards achieving a more resilient financial future. To date, the survey has received responses from more than 1,000 customers across cultures and nationalities. Respondents fall within the 26 to 40 age group.

Malaysia's Shariah Advisory Council refines rulings on Islamic finance at 165th meeting

The Shariah Advisory Council (SAC) of the Central Bank of Malaysia recently discussed on the issue of application of tabarru` (تبرع voluntary gifts) contracts in takaful, transfer of ownership of hibah (هبة) assets, breaches of condition in wakalah bi al-istithmar contracts (وكالة لابالاستثمار agency contracts for investment) and wa`d (وعد promise) which is attached to action, time or situation.

The SAC has decided the following at its 165th meeting dated 26 January 2016:

Application of tabarru` in takaful

• The underlying concept/principle for takaful scheme is tabarru` and ta`awun (تعاون mutual assistance) among the takaful participants.
• Tabarru` in takaful is applied through contributions from the participants to the tabarru` fund which is managed by (and entrusted to) the takaful operator in the interest of takaful participants, based on the agreed terms and conditions.
• The financial obligations (الذمة المالية zimmah maliyah) of a tabarru` fund are independent of the financial obligations of the takaful operator and the individual takaful participant. 

Transfer of ownership of hibah assets to the hibah recipient

The SAC has decided that in hibah contracts the ownership of the hibah asset is generally transferred effectively once the hibah recipient takes the possession (قبض qabd) of the hibah asset physically or constructively. This forms the basis for transfer of ownership of hibah asset. Without qabd, the donor may still revoke the hibah. 

However, in conditional hibah, the ownership of the hibah asset is effectively transferred to the hibah recipient upon the occurrence of agreed conditions. This forms the basis for transfer of ownership of hibah asset in conditional hibah. As such, in conditional hibah, it is not possible for the donor to revoke the hibah upon the occurrence of the agreed hibah conditions even though the hibah recipient has yet to take possession of the hibah asset physically or constructively. Notwithstanding this, hibah which is attached to the condition of the demise of the donor shall only be applicable in the context of takaful. This is to provide certainty to the beneficiary in relation to his ownership of the takaful benefit upon the demise of the donor/participants even though he has not yet taken possession (qabd) of the hibah asset, in this case, the takaful benefit.

Breach of conditions in wakalah bi al-istithmar contracts

The SAC has decided that in the event of breach of condition by wakil (وكيل agent) under the wakalah bi al-istithmar contract, in line with its ruling in the previous 150th SAC meeting, the wakil shall guarantee:

• Investment capital; and
• Actual profit generated up to the date of breach of condition. 

In addition to the above, the SAC has decided that the investor (الموكل muwakkil) is eligible to claim actual cost incurred due to the breach of condition by the wakil.

In the event of breach of condition that results in higher-than-expected profit, the excess profit shall be treated based on the agreed terms and conditions in relation to performance fee. If the terms and conditions are not stipulated or not agreed, the excess profit is subject to the discretion of the muwakkil. 

This ruling is based on the principle that wakil performs his duty on the basis of trust (أمانة amanah) and he is not allowed to guarantee the investment capital and profit except in the event of misconduct, negligence and breach of condition by the wakil. This is in line with the opinion by several fuqaha (فقهاء experts in Islamic law) that allow sharing of profit in mudarabah in the event of breach of condition by the mudarib (مضارب manager). In addition, the permissibility to claim actual cost incurred due to the breach of condition by wakil is a form of penalty for the breach and also intended to emphasise on the aspect of amanah and discipline on the wakil.

Wa`d attached to action, time or situation

The SAC has decided that wa`d is binding (ملزم mulzim) on the promisor if the wa`d is attached to any of the following:

• A particular action which is done by a party including the promisee in the future;
• A particular time or date; or
• A particular situation which will occur in future. 

This ruling is based on the view of fuqaha that wa`d which is attached to conditions is binding. The types of conditions, which are attached to the contract as outlined by fuqaha that include a particular action, date/time and situation may be applied in the context of conditions attached to wa`d.

This ruling may clarify the types and categories of conditions attached to wa`d that lead to the bindingness of wa`d, especially in the financial instruments that involve promise to enter into contract that is attached to a particular date/time in the future.

Interested?

Read the hibah concept paper from BNM dated January 2016 (PDF)

Takaful Emarat announces website revamp

Takaful Emarat, the DFM-listed, shari'ah-compliant life and health insurer, has announced a revamp to its website to offer more capabilities for customers. Takaful Emarat has seen an increase in visits to its website over the last year and sees this investment in technology, which is funded through the proceeds of its recent rights issue, as the next step in its innovation strategy and growth trajectory.

The expansion of accessibility to insurance through technology supports the growth of the global takaful insurance market, which is expected to reach US$20 billion, up from current estimates of US$14 billion, according to research by EY. Demographics in the MENA region support insurance growth particularly in personal lines, which currently make up 16% of the market, compared with 56% globally, according to the Qatar Finance Centre.

The website refresh will be delivered in two phases. The first phase focuses on offering customers easy access to product information and a modernised feel while the second phase, which is due to come online in the second half of 2016, will encourage customers to have a digital dialogue with Takaful Emarat by requesting insurance quotes and filing claims online. From a corporate perspective, investors have a more transparent insight into the company’s financial performance, with a comprehensive library of financial reports, up-to-date stock prices, governance structure, details about the management, company strategy and business model underpinning its performance as a one of the fastest growing companies in the UAE’s takaful insurance sector.

The platform offers real-time access to a fund’s performance and financial reporting tools. In the second half of the year, Takaful Emarat customers will be able to play an active role in managing their own policies online by adding or deactivating policy features as required and filing claims from a desktop or from the smartphone-enabled website. In this second phase of the website revamp, Takaful Emarat will also be able to offer potential customers instant life or health insurance quotes 24x7.

The refreshed website, along with recently announced distribution agreements with RAK Bank and Emirates Islamic Bank, extends the company’s access to new customers by digitising processes that have traditionally been limited to office opening hours or the availability of financial consultants. It also appeals to the UAE population’s increasing inclination to transact using digital technology.

Takaful Emarat’s Chief Executive Officer Wael Al- Sharif said: “The digitisation of life and health insurance has great benefits for our existing customers who can manage their insurance needs at their own convenience and take a more proactive role in planning for their future. Increasing accessibility to information about suitable investments, savings and health and life plans through technology also helps the previously uninsured and lower-income consumers to take control of their finances and wider life plans. For our investors, the updated website provides essential information about the company’s performance and strategy, increasing our transparency to enable a more informed investment decision.”

Medgulf Takaful allies with Copart Bahrain to reach wider audience

Medgulf Takaful, an insurance company in Bahrain, has signed an agreement with Copart Bahrain to streamline salvage sales processing.

Copart is a global online auto auction company, specialising in salvage disposal for insurance and takaful companies by using its VB3 auction technology, which brings together potential buyers from across the globe, therefore exposing a seller's assets to a wider audience and improving transparency and competition for the vehicles.

Nader Saeed Al Mandeel, CEO of Medgulf Takaful commented, "Using Copart's vast experience, technology and operations knowledge, we aim to improve the process and achieve higher returns and improvements to our motor portfolio."

Carlos Sabugueiro, CEO of Copart in the Middle East and Africa added, "It is an honour to be adding Medgulf Takaful to our panel of vehicle suppliers here in Bahrain. Our auctions every Sunday are growing in strength and scale. This helps all our suppliers of vehicles as the buyer network continues to increase daily, with regular bidders being seen from all over the GCC."

Ezamshah Ismail receives award from Malaysian Takaful Association

Source: INCEIF. INCEIF School of
Professional Studies Dean Ezamshah Ismailreceiving the Tokoh Ilmuwan Takaful 2015 award
from Dato’ Muhammad Ibrahim, Bank Negara
Malaysia Deputy Governor. Looking on is MTA
Chairman Ahmad Rizlan Azman.

INCEIF School of Professional Studies Dean Ezamshah Ismail was awarded the Tokoh Ilmuwan Takaful 2015 (Takaful Scholar 2015) by the Malaysian Takaful Association in recognition of his contribution to the growth and development of the Malaysian takaful industry.

Ezamshah first got interested in the insurance industry when he was part of the pioneer batch of students enrolled for the Diploma in Actuarial Science at University Technology Mara in 1974, when little was known about the subject. He went on to complete his degree in Mathematics at Penn State University and subsequently, Masters in Actuarial Science at Northeastern University in the US. He was later employed by one of US’s largest actuarial consulting firms in New York City before returning to Kuala Lumpur to be the Country Head where he engineered a merger with another international practice to form one of Malaysia’s successful actuarial consultancy firms.

Ezamshah was also previously President of the Life Insurance Association Malaysia and the first President of the Malaysian Financial Planning Council (MFPC). He was instrumental in developing the Shariah Registered Financial Planning qualification in MFPC.

Ezamshah will soon be publishing his latest research on application of the trust concept for takaful. His published works include Takaful: Realities and Challenges, Takaful Broking and Operational and Actuarial Aspects of Takaful.

Takaful Ikhlas expedites takaful claims for flood damage

Takaful IKHLAS has simplified its takaful claim service for claims caused by floods in the light of recent flooding in Malaysia.

The service is open to all takaful Fire and House Owner/ Household plan holders offered by Takaful IKHLAS. The customers only need to contact the nearest Takaful IKHLAS Regional Office, after which the appointed official adjuster will visit the property affected by the calamity, then set the claims process in motion. An SMS notification is sent to the customer after the claim is approved.

Interested?

Contact Takaful IKHLAS at +603 2723 9696
Mondays to Thursdays 8:30am to 5.30pm, or on Fridays from 8:30am to 5pm.

Customers can also contact the appointed adjusters or Takaful Ikhlas' Regional Offices.

Appointed adjusters include: 

East Coast Malaysia Region - Kelantan, Terengganu & Pahang: 

• Malaysian Broadwide Adjusters, hotline: +603 4266 5071
• Mestari Adjusters, hotline: +603 7989 0310 or +603 7989 0311

Southern and Eastern Malaysia Region - Johor, Malacca, Negeri Sembilan, Sabah, Sarawak & Labuan:

• Crawford & Company Adjusters, hotline: +601 9332 9332

Central and Northern Malaysia Region - Kuala Lumpur, Selangor, Perak, Penang, Kedah & Perlis:

• Associated Adjusters, hotline: +601 3430 4612 (Mr Prebesh) / +601 2361 2453 (Mr Vishnu)