By Zufazlin Baharuddin
KUALA LUMPUR: Public awareness and knowledge on the importance of having takaful protection were on the rise this year, amid challenging economic conditions.
According to Malaysian Takaful Association (MTA) chief executive officer Mohd Radzuan Mohamed, the introduction of the Perlindungan Tenang Voucher (PTV) programme since 2021 has boosted consumer awareness in takaful protection despite the fact that the programme has been discontinued.
“Although the PTV initiative has been discontinued since December 2022, we can see its impact this year, whereby the programme has increased public awareness and sentiment towards having protection,” he told Bernama.
The PTV programme, a national initiative by the government in collaboration with insurance and takaful providers, was launched on Sept 30, 2021, with a RM75 voucher to help them purchase the plan. The programme was made available from September 2021 to December 2022.
Mohd Radzuan said the penetration for Perlindungan Tenang, a takaful protection plan for the lower-income group, is outstanding with 116,852 certificates issued from January to June 2023 compared to less than 18,000 total certificates issued in 2021 before the PTV programme was introduced.
He added that the Takaful4All campaign introduced by MTA this year also helped to boost the penetration rate in Malaysia as 18 takaful and retakaful operators participated in the campaign, aimed at enhancing awareness on the concept and benefits of takaful and to promote financial literacy via roadshows, contests and engagement across multiple platforms.
Empower insurance industry
The Life Insurance Association of Malaysia (LIAM) has engaged four main agendas this year to empower the insurance industry in the country and enhance insurance awareness and financial protection among Malaysians.
LIAM president Raymond Lew reportedly said the four thrusts are the Financial Sector Blueprint 2022-2026, elevating financial education agenda through partnership with the Financial Education Network (FEN), enhancing social protection of B40 community, and narrowing the protection gap in the country.
“As LIAM has become an official partner of FEN beginning 2023, this will provide greater opportunity for us to undertake various awareness campaigns and financial literacy initiatives as well as foster financial consumer protection among the public in Malaysia,” he said.
The current insurance and takaful penetration rate in the country stands at about 54 per cent compared with 100 per cent in developed countries.
Overall performance of general and family takaful
The general takaful business recorded a 20.16 per cent rise in total business gross contributions to RM2.68 billion in the second quarter of 2023 (2Q 2023) from RM2.23 billion in 2Q 2022.
The family takaful industry recorded a slight downturn of 3.94 per cent in new business contributions to RM5.23 billion in 2Q 2023 from RM5.44 billion in the same period last year.
Mohd Radzuan said discontinuing the PTV initiative has influenced the performance of family takaful contributions this year, however he remains optimistic that the takaful industry’s overall strength and innovation potential may help to overcome this setback in the long term.
Among the top general takaful products are motor, fire and personal accident while for family takaful, they are endowment as well as medical and health products.
General insurance shows growth
The general insurance industry recorded a 7.3 per cent increase in gross direct premiums to RM10.5 billion for the first half (1H) of 2023 compared with the corresponding period previously.
The General Insurance Association of Malaysia (PIAM) said that despite the positive trajectory, underwriting profit experienced a drop of 37.8 per cent, totalling RM500 million, largely due to a contraction in profitability for the motor and fire lines of business.
In terms of premium, motor retained its position as the largest line of business at 44 per cent share to reach RM4.6 billion in 1H 2023.
Meanwhile, the fire line of business recorded an eight per cent increase in premium in 1H 2023 amounting to RM2.11 billion compared with 1H 2022, partly due to the rise in residential and commercial construction activities, coupled with an increasing demand for flood coverage.
On claims, PIAM said the general insurance industry saw claims payout of close to RM23 million in 1H 2023, up 23 per cent from the whole of 2022.
Outlook
Moving forward, Mohd Radzuan said MTA remains optimistic that the takaful industry will continue to grow next year despite the global economic challenges, geopolitical tensions and rising inflation concerns.
“Inflation from a protection perspective means that more individuals should increase their protection or coverage against unexpected incidents.
“And it is happening now when people are thinking on the perspective whereby they should have a protection although facing inflation as well as economic challenges, and this is expected to bring to light a potential increase in the visibility of takaful products,” he said.
Hence, he said MTA will collaborate with the industry to explore more products and diversify these offerings to include microtakaful, online options, critical illness coverage, and other protection in the future.
Meanwhile LIAM said it remains committed and focused on pursuing its financial inclusion agenda and the national aspiration to increase the penetration rate and narrow the protection gap in the country.
Lew said LIAM strives to adapt to the changing preferences and lifestyles of the youth, making insurance more accessible, relevant, and engaging for them. – BERNAMA
