MALAYSIA: One of the
largest Takaful operators in Malaysia has forged an exclusive partnership
with RHB Islamic in the backdrop of a growing number of bancaTakaful
arrangements as Islamic insurers show no signs of abating their efforts to
widen their reach and increase their market share.
Syarikat Takaful Malaysia (STMB) has revealed that it has entered into a
10-year bancaTakaful agreement with RHB Islamic Bank under which the bank
will distribute the operator’s Family and General Takaful products for a
total service fee of RM110 million (US$25.84 million).
“The bancaTakaful service agreement is not expected to have any material
effect on earnings and earnings per share of STMB group for the financial
year ending the 31st December 2015 but is expected to contribute
positively to the future earnings of STMB group,” the insurer noted in a
bourse filing.
STMB’s strategic decision follows a slew of similar partnerships in recent
months by its peers including Great Eastern Takaful with both Al Rajhi
Malaysia and Bank Muamalat Malaysia, moves which build the momentum toward
doubling the country’s bancaTakaful penetration rate to 10% as targeted by
the central bank.
Despite commanding the world’s largest Family Takaful market share,
Malaysia intends to up the penetration rate of life insurance and Family
Takaful to 75% from 54% (2013) and Bank Negara Malaysia in a concept paper
highlighted the need to diversify distribution channels to meet that
target. Apart from making available pure protection products via direct channels
and incentivizing the growth of financial advisors, the regulator
emphasized the need to form alliances with Islamic banks to capitalize on
their extensive network.
Holding about three quarters share of total gross Takaful contributions in
ASEAN, Malaysia’s total net contribution of Family Takaful reached RM4.5
billion (US$1.06 billion) in 2014 according to EY.
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