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Monday October 18, 2010

Hunt for talent in takaful

Local Islamic insurance industry scrambling for expertise after recent award of four new licences

PETALING JAYA: The local takaful industry needs more trained human capital and professional agents who understand the industry to increase the low penetration rates experienced in Malaysia, say industry players.

With the award of four new family takaful licences on September 1 by regulator Bank Negara Malaysia, the war for talent is bound to intensify as the new takaful players poach from existing takaful operators. The current takaful penetration rate in the country is 8%.

“A present challenge for takaful operators is the lack of skilled and knowledgeable human resource in technical areas such as product development, actuary and investment.

Datuk Hassan Kamil says a shortage of talented staff has led to staff pinching.

“These are very technical areas and require people with in depth knowledge of both the insurance and syariah-compliance takaful concept. A lack of such expertise prevents takaful operators from having a better understanding of the market and coming up with more innovative products to fit the needs of different target audiences,” said Etiqa Takaful Bhd chief executive officer Shahril Azuar Jimin.

Syarikat Takaful Malaysia Bhd group managing director Datuk Mohamed Hassan Mohd Kamil said that a shortage of talented staff in the industry had led to staff pinching, resulting in higher wages but no difference in productivity and efficiency.

Takaful Ikhlas Sdn Bhd president and chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said takaful operators need to have insurance knowledge as well as syariah understanding.

“They also need to have staff experienced in takaful statutory reporting and accounting. The new companies have the insurance knowledge but may lack in shariah understanding and operational experience. Staff-pinching would provide them immediate relief and would cause problems for old players who have invested much time and money training staff,” he said. However, he added that it might not be easy to pinch agents as there were rules governing agency registration and movements.

The new takaful licences were awarded to joint-ventures between AMMB Holdings Bhd and UK’s Friends Provident Group plc; Public Bank Bhd, Public Islamic Bank Bhd and ING Management Holdings (Malaysia) Sdn Bhd; The Great Eastern Life Assurance Co Ltd and Koperasi Angkatan Tentera Malaysia Bhd; American International Assurance Bhd and Alliance Bank Malaysia Bhd.

Shahril Azuar Jimin ... ‘These are very technical areas and require people with indepth knowledge.’

Prior to the recent award, there were eight existing takaful operators - CIMB Aviva Takaful Bhd, Etiqa Takaful, Hong Leong Tokio Marine Takaful Bhd, HSBC Amanah Takaful (M) Sdn Bhd, MAA Takaful Bhd, Prudential BSN Takaful Bhd, Syarikat Takaful Malaysia and Takaful Ikhlas.

Syed Moheeb said that the primary takaful market was the Muslim segment and the penetration was low due to affordability, lack of appreciation for wealth planning, lack of shariah compliant insurance products and awareness of such products. “Education is vital but takaful operators have not invested enough in educating the primary market due to lack of funding. These programmes need to be structured and sustained over a long period. Perhaps there could be government funding or incentive for this,” he said.

Shahril said public education on the importance of takaful adoption would help increase awareness and penetration of these products.

“The concept of takaful needs to be visible so that people will see it as a way of life, either through creative campaigns and promotions or through a larger agency and distribution force,” he said.

Mohamed Hassan said that new players could now help penetrate untapped markets since the conventional agents were not allowed to sell takaful products previously by their principal companies. “Now that these companies have been awarded takaful licences, the agents are able to tapped this new market aggressively,” he added.

Datuk Syed Moheeb Syed Kamarulzaman says takaful operators need to have insurance knowledge as well as syariah understanding.

However, the new players might not be able to deploy their existing know-how and products immediately despite the players being backed by large conventional insurers, said Syed Moheeb.

“Takaful is different and to transact takaful, the new companies require a learning curve - they need to understand the fundamentals of Islamic financial transaction and embed the principles in their products and operations,” he added.

The current takaful operators did agree that new blood in the industry will not only help with product innovation but also increase the sales distribution channels and market reach.

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