In the name of Allah, Most Gracious and Most Merciful
On behalf of Management Committee, I am honoured to present the Malaysian Takaful Association’s (MTA) Annual Report for 2022.
Despite the pandemic’s impact on the Takaful industry and other economic and financial sectors, we are pleased to share that the industry has persevered, and has continued to grow and contribute to the economic development of the nation. Evidence of this, among others, is the shift in people’s attitudes towards financial protection, especially Takaful. The industry has witnessed a marked increase among individuals and businesses recognising the importance of having in place adequate protection to safeguard their health and finances. MTA sees this as a positive response and welcome development towards our ongoing efforts to raise awareness of Takaful over the last few years, efforts which intensified during the peak of pandemic in 2020-2021 and continued into 2022. MTA is delighted to see our efforts bearing fruit and making a difference to the rates of financial literacy and awareness of financial protection amongst the Malaysian population. Alhamdulillah.
The Family Takaful industry saw a significant growth, with gross contributions amounting to RM 10.06 billion in 2022, a notable 18.3% increase from the RM 8.5 billion recorded in 2021. The number of new business certificates issued also rose to 1.31 million in 2022, marking a 15.6% increase from the 1.14 million certificates issued in the previous year. New business single contributions registered a hefty 25.4% increase to RM 7.87 billion in 2022 from RM 6.28 billion in 2021. Meanwhile, annual contributions of new business maintained above the threshold RM 2 billion mark registering RM 2.19 billion, a slight decrease of 1.9% from RM 2.23 billion recorded in 2021.
Looking at distribution channels of new businesses, the Agency channel continues to be the primary contributor for “annual contribution” Takaful plans, accounting for 72% of the market share. On the other hand, BancaTakaful was the leading contributor for “single contribution” plans with 49% of the market share. For business in-force, the industry saw a 12.5% increase in total gross contributions, from RM 7.42 billion in 2021 to RM 8.34 billion in 2022. Similarly, the number of certificates in-force increased from 6.07 million in 2021 to 6.63 million in 2022.
In relation to agency business, the pandemic has had a significant impact on the growth rate of new agent recruitment. In 2022, MTA has registered 39,027 new agents. The continued strong recruitment trend in both 2021 and 2022, which recorded higher numbers than those seen in the pre-pandemic (before 2019), serves as an important indicator of the industry’s continued strength as our economy transitions from the post-pandemic to the endemic phase.
I am pleased to announce that the Family Takaful industry achieved a Penetration Rate of 20.1% in 2022, compared to 18.6% in the previous year. This percentage is the number of certificates in-force against the total Malaysian population. As mentioned earlier, MTA believes that this increase (in Penetration Rate) is a direct result of the Takaful awareness and promotional initiatives targeted at diverse segments of society, launched by both the Association and other industry players over the past few years.
The desired outcome of these initiatives is to create awareness on the financial opportunities offered by the Takaful industry, be it in terms of protection or as a career option. Collaborating with the media was also a key strategy in disseminating these awareness messages and content be they online, print, or on broadcast channels. A big thank you to the media for supporting our efforts and create awareness among the Malaysian population.
In 2022, the General Takaful business recorded a even stronger performance compared to the last financial year, recording a 21.1% increase in Total Business Gross Contributions to RM 4.64 billion [2021: RM 3.83 billion]. All four segments showed strong growth double-digit growth. The Motor Takaful business registered a 20.7% increase from RM 2.54 billion in 2021; the Fire Takaful business recorded a significant increase of 23.5% to RM 0.84 billion from RM 0.68 billion in 2021. In terms of volume, the Motor Takaful business maintained its position as the biggest contributor to the General Takaful business at 66.2% in 2022 [2021: 66.4%], followed by Fire Takaful at 18.2%.
For 2022, the Takaful industry paid out a total of RM 7.02 billion in net claims, an increase of 25.9% from the RM 5.58 billion in 2021. Out of this, Family Takaful recorded total net claims payout of RM 5.53 billion, a spike in growth of 23.09% from the year RM 4.50 billion in 2021. Meanwhile, General Takaful recorded a total net claims payout amounting of RM 1.49 billion, an increase of 38% from the previous year of RM 1.08 billion. These numbers demonstrate the industry’s commitment to providing financial protection to its customers and the community as well as the industry’s emphasis on ensuring it contributes positively towards supporting the nation’s economy.
As Chairman of the MTA, I would like to offer my heartfelt thanks and congratulations to all of our members companies for their unwavering commitment and persistence in the face of the challenges encountered in the past year. We acknowledge that it is through your steadfast efforts and collaborative contributions that the Takaful industry has been able to maintain its strong 2022 performance.
I would also like to shout out a thank you to all the stakeholders who have contributed to the success of the Takaful industry in Malaysia – this includes the regulators, the agents, and most importantly, the customers who have chosen to place their trust in our industry.
The pandemic had accelerated the adoption of digital technologies by the consumers, and as a result of the Takaful industry’s forward-looking focus and investments in digitalisation, the communication challenges during the pandemic provided the much-needed opportunity and push for the Takaful industry to raise its game and continue to adapt and improve, ensuring effective deliver its services and customer experience during the difficult times. The industry’s continuous investments in digitalisation, especially in online channels for product search, purchase, and claims processing, have provided greater convenience and accessibility to customers.
Moving forward, the Takaful industry is committed to leveraging these digital technologies to further enhance our services and deliver innovative and relevant solutions that cater to the evolving needs and stages of the lives of our customers in the years to come. We remain focused on providing reliable, comprehensive protection, and affordable products to individuals and businesses.
2022 was a busy year for MTA. The year saw MTA launching two key industry initiatives – as we continued to drive the industry with various strategic initiatives aimed at promoting the Takaful industry’s development and growth, and setting the industry towards the pathway of New Takaful Landscape.
Operating in line with the Maqasid al-Shariah in every aspect of its conduct, in June 2022, MTA launched a transformative and progressive MTA Reform Plan 2022-2023 (or ISLAH-23), which seeks to strengthen its capacity to facilitate and position the Takaful industry and Islamic Finance towards achieving greater heights. ISLAH-23 is a strategic journey which involves the pursuit of MTA’s fundamental purpose, within the context of its core values, in ways that effectively and optimally meet and reconcile the current needs of the target market and of key stakeholders. ISLAH-23 aims to deliver MTA’s commitment to the industry and nation by building and strengthening the Association’s foundations, which focuses on the following key strategic objectives:
• stablishing Visibility for MTA;
• dopting Best Governance practices;
• chieving Operational Efficiency; and
• ttaining Organizational Sustainability.
ISLAH23 supports, and is complemented by the industry’s Value-Based Intermediation for Takaful (VBIT) Framework and Roadmap launched in by MTA in June 2021 and October 2022 respectively, as well as aligned with the national Financial Sector Blueprint (FSB) 2022-2026 launched by Bank Negara Malaysia in January 2022.
The Takaful industry continues to play a vital role in supporting a sustainable economic recovery for the country. MTA and the industry players came together in support of efforts to advance value-based finance, with our own VBIT to bring greater impact to the economy, community, and environment and to help maintain Malaysia’s position as a global leader in Islamic finance.
The industry’s VBIT efforts are aligned with the development priorities for Islamic finance as outlined in Bank Negara Malaysia’s FSB 2022-2026 which was launched in January 2022. MTA proactively and successfully launched and started the implementation programme for both the VBIT Roadmap and FSB initiatives in 2022, a journey that covers their development, project management and visibility elements.The programmes conducted under the VBIT-FSB umbrella in 2022 has opened up many opportunities for the Association to continue pushing the industry to the next level.
Keeping at pace with the global and national drivers of economic growth, MTA’s strategy includes climate change, environment and sustainability considerations. In ensuring its universal application, VBIT is also benchmarked against, and is in alignment with, globally accepted sustainability concepts including the United Nations Sustainable Development Goals (UNSDGs) and the UNEP Finance Initiative Principles for Sustainable Insurance (PSI).
Being at the core of the Takaful industry, it is crucial for the industry to be able to quantitatively link the VBIT initiatives with the overarching principles of Maqasid al-Shariah. Recognising this as a key element within the VBIT framework, MTA together with ISRA Research Management Center of INCEIF University kicked off a collaboration to develop a Maqasid al-Shariah-based VBIT Scorecard. The first of its kind in the world, this scorecard is intended to allow the Takaful industry to accurately measure their business and non-business performance based on well-defined KPIs, clear targets and timelines within the ambit of the objectives of Shariah. It will also facilitate Maqasid al-Shariah considerations in our work, and enhance decision-making, strategic planning, advanced reporting and greater transparency.
The RM50 Perlindungan Tenang Voucher (PTV) initiative was introduced by the Malaysian Government in its 2021 budget as a means to increase social protection for Malaysians from the lower income group. Seeing the positive impact of the PTV, the initiative was extended by the government in its Budget 2022 for another year (in 2022) with an increase in the voucher amount to RM75 for purchase of individual protection plans as well as comprehensive insurance policies for motorcycles below 150cc. MTA actively supported the PTV initiative through a comprehensive communication campaign, which included launching of videos, joint press releases between MTA and industry associations, and public engagements. MTA member companies also rallied their support by offering 12 Perlindungan Tenang products offering Takaful protection, where the lower income group could access a sum cover of RM10,000 for as low as RM 2.09 per month. More products are constantly being developed to cater to the different needs of the Malaysian public. As a result of this public-private collaboration towards greater good, as of 31 December 2022, over 845,894 vouchers have been redeemed by Bantuan Prihatin Rakyat (BPR) recipients amounting to over RM50 million sum covered.
Over the years, MTA has been an active player in the nation’s financial education goals. We have traditionally leveraged expertise and resources from among member companies, and working in collaboration with right-minded partners to coordinate, cooperate, and collectively drive efforts to promote the effective delivery of financial education and awareness initiatives to Malaysians in a sustainable manner, physically and online. MTA has collaborated with relevant local councils, industry associations, institutions, consumer groups, and other key stakeholders to deliver, monitor, and measure financial education initiatives under the National Strategy for Financial Literacy 2019-2023. Such collaborations fall under VBIT’s Underpinning Thrust 5 Capacity Building, where two of the seven desired outcomes of VBIT are related to financial literacy.
Among the financial literacy programmes conducted include MTA’s self-produced Takaful Hi-5 (THi5) webinar series which is gaining popularity among Takaful agent community, and nationwide roadshows, namely “Takaful in Campus” and “Takaful Masuk Kampung” both of which are strongly supported by the industry players. The key objective of these programmes and events is to reach out to the BM40 and student segments of the Malaysian population respectively, with the aim to increase their awareness of Takaful, the need for protection as well as disseminating information on the various takaful products available, including microtakaful plans.
I am pleased to share that the success of these programmes received acknowledgement of Bank Negara Malaysia (BNM), and MTA recently became an official partner of the Financial Education Network (FEN). This will allow us to increase our efforts and collaborations, thus creating more benefits and impact on the nation’s goal to increase the nation’s financial literacy. We strongly believe that increasing access to financial management resources and tools, inculcating positive financial behaviour, boosting long-term financial and retirement planning and building as well as safeguarding wealth will bring positive impact to the nation in the medium to long term. I would like to note that MTA’s participation in these national initiatives automatically brings to the FEN the valuable pool of resources, expertise and outreach of the Malaysian Takaful industry players who form the backbone of our membership base.
MTA launched Fund4Cause on 25 April 2022 as a mechanism to allow member companies to contribute to causes championed by the MTA. The funds contributed are distributed across four specific funds, namely the VBIT Development Fund, the Social Takaful Fund, the Industry Capacity Building Fund and the Takaful Branding Fund. These four specific areas have been identified as having the potential to drive the industry towards higher levels of performance.
Over the past year, Fund4Cause has provided MTA with the additional financial capability and flexibility to implement various strategic initiatives for the benefit of the Takaful industry. The initiatives conducted under the Fund4Cause are reflected in this report. The industry’s commitment as a group led the MTA member companies to first identify and the embrace the areas which will serve to push the industry to its next level of performance. The MTA member companies have demonstrated their support during the initial seed funding for Fund4Cause.
A key aim of Takaful for All is to increase the penetration rate among the low-income target market through the development of products that are able to meet the needs, and fit the realities, of different market segments. With the B40 showing low penetration rates, a study on Emerging Markets for the B40 segment was carried out in 2022 with the objective to provide the industry with information and findings about the segment that would facilitate individual takaful operators in their efforts to design microtakaful products that are simple, relevant, accessible yet affordable.
While understanding the customer needs is a critical for the industry to grow and prosper, the future growth of the industry needs to be supported by the strong performance of the agency force. In this regard, MTA acknowledged a trend of underperformance among agents and commissioned an industry-wide study in 2022 with the aim to identify and provide feedback and insights on the why Takaful agents fail to meet the Balance Scorecard (BSC) target. The study on potential achievers objective was to recognise or determine the reasons for the underachievement of Takaful agents, and thus allow constructive recommendations on methods that can be employed to effectively tap their potential and increase the performance of agents.
I wish to express my sincere gratitude to the MTA Management Committee, and the leaders and representatives of member companies for the continuous support and dedication shown in ensuring the successful delivery of MTA’s initiatives throughout 2022.
On behalf of MTA, I also wish to thank Bank Negara Malaysia, Ministry of Finance, Agensi Kaunseling dan Pengurusan Kredit (AKPK), Financial Industry Collective Outreach (FINCO), the Employees Provident Fund (EPF), the Ministry of Health, the Inland Revenue Board, Perbadanan Insurans Deposit Malaysia (PIDM) and other Government agencies for cooperation and support extended to us in 2022.
Last but not least, my appreciation to MTA Secretariat for their hard work and commitment – for believing in the important role and work of MTA and for successfully carrying out the Association’s activities and operations in 2022.
Elmie Aman Najas