Malaysia: Rural market key to takaful growth
Source: Asia Insurance Review | Jun 2016
Malaysia’s Islamic insurance industry is set to double its growth rate this year as takaful operators focus on selling cheaper policies in rural areas, according to the nation’s takaful body.
The number of policies will rise by 10% to 5.05 million in 2016, compared with 4.3% growth in 2015 and a 1% estimated expansion of non-Islamic business, Mr Ahmad Rizlan Azman, Chairman of the Malaysian Takaful Association, said in an interview with Bloomberg in Kuala Lumpur. Insurers entering the micro-takaful market and the liberalisation of commission structures are the biggest drivers, he said.
Around a quarter of Malaysia’s 31 million people live outside the cities and government efforts, to boost the country’s insurance penetration rate to 75% by 2020 from 55%, are supporting demand.
“Growth prospects still remain positive just by the virtue of the fact that the takaful base is smaller relative to the overall insurance industry,” said Mr Ahmad Rizlan, who is also CEO of Etiqa Takaful, Malaysia’s biggest Islamic insurer.
Adding that the industry needs to improve distribution channels if it is to meet its goal of increasing the number of takaful policies to 8.5 million by 2020, he also said a new set of rules on commissions and allowing sales without advisory requirements will make achieving the target easier.