Takaful still lacking, huge gap compared to conventional

KUALA LUMPUR: The huge gap in the penetration rate between Takaful insurance, which stands at around 15.5 per cent, and conventional life insurance at 55 to 60 per cent of the Malaysian population, indicates that the former segment is dramatically underserved.

Zurich Takaful Malaysia Bhd chief executive officer Mukesh Dhawan said the gap showed that the market for Takaful, which generally constitutes the Bumiputera and Muslim segment, was underserved and untapped and therein lies tremendous opportunities to grow the market.

Currently, Zurich holds about 5.5 per cent market share in Malaysia via its six to seven popular plans, he told Bernama.

To improve the Takaful penetration rate, he said the industry must raise awareness among the people on the importance of protecting and safeguarding the future and to plan their financial needs for retirement and rainy days against various uncertainties.

“People also need to be made aware of Takaful’s many advantages. One of the most attractive features is that the Takaful plan offers 50 per cent sharing of underwriting profits based on Shariah guideline of mutual cooperation and donation.

“This fact is not properly disseminated and once this is being made aware of, all Malaysians, not only the Muslims, should look at Takaful in a different light,”

People also need to be made aware of Takaful’s many advantages. One of the most attractive features is that the Takaful plan offers 50 per cent sharing of underwriting profits based on Shariah guideline of mutual cooperation and donation. Mukesh Dhawan

he said.

Dhawan noted Zurich is looking to create greater awareness for a better and faster growth not only via media but also through wider distribution network of agency force and a multichannel approach.

“With the current situation, in which unemployment is on the rise, where travel and hotel industries are unfortunately (adversely) impacted by the Covid-19 pandemic, we are now looking at the people from this industry, who have been well trained to join our agency force.

“They would be trained under a programme called Zurich My Second Income, to make Takaful and insurance selling an alternative career path to earn additional income,” he said.

On financial planning, Dhawan believes this is important in preparing for a more secure future to provide for the best part of lives after retirement, and to work toward financial immunity for better control over unexpected situations that may arise.

Hit by the unprecedented Covid-19 pandemic and its impact on the economy, he said the government and Bank Negara Malaysia (BNM) had taken measures to cushion the impact, among them, by lowering the interest rate which is now at a record low of 1.75 per cent.

This also means traditional savings and fixed deposits are generating subdued returns, he said.

Amidst this scenario, Zurich saw the need to help Malaysians build their asset value for financial resiliency and wealth, and sustain their quality of life through investment-linked plans (ILPs) that would help customers fulfil their retirement aspirations, he said.

As at Oct 1 this year as per BNM framework, the industry players, which were selling lower allocation, were asked to relaunch it with a higher allocation.

In response to that, he said Zurich Takaful had come out with ProInvest, designed to give customers higher allocation in the initial years by building up the asset value better than before. —