Tune Ins eyes tie-up with Islamic insurer

Razman: 'We have not identified any relevant parties to tie up with but we are hoping to have a tie-up with one.'

KUALA LUMPUR: Generally known as a provider of online air travel insurance, Tune Ins Holdings Bhd (TIH) is looking to venture into the Islamic insurance space through a tie-up with a local party.

It also plans to offer more general insurance products online to capture a bigger market.

Chairman Razman Hafidz Abu Zarim said that there was demand for takaful insurance products from its customers but the insurer was unable to offer such products at the moment.

To get a piece of the Islamic insurance market, Razman said Tune Ins was looking at establishing a strategic partnership with a local Islamic insurer to offer takaful products.

“At the moment we have not identified any relevant parties to tie up with but we are hoping to have a tie-up with one. We are receiving inquiries from customers asking us when we plan to offer takaful products,” he said in an interview with StarBiz.

Tune Ins is a listed insurance arm of the Tune group of companies that controls AirAsia Bhd and AirAsia X Bhd. One of its businesses include enabling air travellers to buy insurance online.

Its share of other general insurance products is small compared with the more established players such as AmInsurance and Pacific and Orient Bhd. The latter two have already captured the major share of the market in the motor insurance segment.

However, there is room for growth in the takaful insurance business, which is still seeing double-digit growth due to its small base.

Based on Bank Negara statistics, the preliminary premium income for general takaful insurance as of end-2013 was RM1.4bil. In 2009, it was only RM722.4mil.

Razman said the company was actively looking to sell other general insurance products online, apart from air travel insurance, in the domestic market.

“We will soon pilot test the market for some general insurance products online and will assess the market before going full swing,” he said.

Over the past few years, Bank Negara has been advocating insurers to allow an avenue for customers to purchase general insurance online, but many of the existing players are slow to respond to the call because of pressures from the existing agency force.

On its regional plans, Razman said Tune Ins had not given up on entering Indonesia and was in discussions with new potential partners after its failed attempt to buy over PT Batavia Mitratama Insurance (BMI) last year. That plan was terminated due to unresolved issues with the Indonesian regulators.

However, analysts are confident Tune Ins’ fresh attempts could be more successful because the Indonesian authorities are now more receptive to insurance companies opening branches.

RHB Research, in a recent report, stated that it was optimistic of Tune Ins striking a deal in Indonesia this time around as it believed the regulatory conditions were now more investor-friendly to foreigners.

On the possible shareholding should the talks with the Indonesian insurer is successful, Razman said TIH was eyeing a majority stake in the proposed venture.

Apart from Indonesia, TIH is also in Thailand where the Office of Insurance Commission Thailand recently approved its (TIH’s) proposal to hold up to 49% of Osotspa Insurance pcl, a general insurance company.

Razman said TIH’s strategy in Indonesia and Thailand would be similar to Malaysia’s where the company would bank on online general insurance products to grow its presence.

He said there was good potential in Indonesia and Thailand due to their market sizes.

“Indonesia has a population of 230 million and Thailand about 80 million. They are viable markets for us to have a presence in,” he noted.

RHB and KAF Seagroatt & Campbell Securities have a “buy” call on TIH, with a target price of RM2.40 and RM2.31 respectively.

According to Razman, TIH also plans to tie up with more airlines and travel providers after its recent successful collaboration with Cebu Pacific of the Philippines and Dubai’s Cozmo Travel. These collaborations, he added, would further help boost the company’s travel insurance business and open up more avenues for its general insurance business.

TIH reported a net profit of RM21.6mil for the fourth quarter to December 2013, up from RM18.1mil a year earlier. For the whole of 2013 its net profit increased to RM68.6mil from RM41.4mil in 2012.

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