Growth in Southeast Asia's Islamic insurance sector has been weaker than expected with many consumers happy to settle for regular policies, the Asian head of Britain's No 2 insurer Aviva said yesterday.
"The huge growth that we expected a few years ago hasn't been seen," Aviva's Asia chief executive Simon Machell said. "It really depends on what the customer wants, so we're now able to provide products for them depending on what they want."
In Asia, Aviva sells Islamic insurance, or takaful, in Malaysia, where it has a joint venture with CIMB Group, and in Indonesia, which it entered in March 2010 after acquiring a 60 per cent stake in a local player.
Besides Aviva, other foreign insurance players with a significant presence in Asia, such as Prudential and AIA, also sell takaful products to Muslim customers.
Appreciating Asian currencies contributed about 10 percentage points to the 48pc jump in premium growth in Asia in 2010, Machell said, a phenomenon that may not be repeated this year. In local currency terms, premiums rose 39pc in 2010.
"There is still real underlying growth in the numbers after you take out the effects of the currency appreciation," Machell said.
Rival AIA, which announced its full year earnings last week, was also supported by appreciating Asian currencies in 2010, helping the AIG spin-off report a 54pc jump in net profit.
Aviva re-entered the general insurance market in Singapore last year, surprising some analysts when it began selling car insurance online in the city state. General insurance products typically command lower profit margins.
The company has no plans to expand this anywhere else, although it considered selling general insurance products in Hong Kong but decided against it because of the higher start-up costs.
"We've done well in Singapore with a 2.2pc market share of the car insurance market after nine months," he said. "We looked at Hong Kong, but that required a lot of capital for general insurance, so we decided against it."
The company announced its 2010 results last week, with its full-year operating profit rising 26pc on the year to 2.55 billion pounds ($4.2b), outperforming market expectations.