‘TAKAFUL SECTOR SET TO MISS 2020 TARGET’

Take-up has remained at 15 to 16pc after 10 years, say industry observers

MALAYSIA’S takaful sector’s outlook will remain “stable” this year but it is set to substantially miss out on its blueprint’s growth target, said industry observers.

They said the penetration rate for the takaful sector was around 15 to 16 per cent now, compared with the 25 per cent target under Bank Negara Malaysia’s Financial Sector Blueprint 2011-2020.

“The target was to hit 25 per cent, fuelled by high take-up among the Muslim population. But it didn’t pick up. Over the past 10 years, the take-up has hovered at 15 to 16 per cent,” said an observer.

Still, they said the potential remained vast, adding that the sector should continue its upward trend.

Takaful protection was valued at RM324.2 billion last year.

According to Malaysian Takaful Association (MTA), the protection value rose 14.5 per cent last year from 2017.

MTA is due to hold a briefing on the takaful sector’s performance today.

Amid an evolving operating landscape, RAM Rating Services Bhd has kept a “stable” outlook on the sector this year, driven by its resilient growth.

It said with the progressive impact of tariff liberalisation and moderating economic growth, general takaful contributions were expected to expand at a slower pace of six to seven per cent this year.

It said family takaful’s new business growth was expected to decelerate to seven to nine per cent, given the weaker consumer sentiment and rising cost of living. “Despite near-term moderation, the long-term growth prospects for the industry remain anchored by Malaysia’s supportive demographics, low penetration rates and awareness initiatives targeted at the Muslim-majority mass market,” it said.

RAM Ratings said general takaful contributions rose eight per cent to RM2.8 billion last year. Overall, takaful only accounted for 17 per cent of insurance and takaful sectors’ total premiums and contributions.