Takaful players must invest in technology, people and distribution channels as strategies to enhance their ability to tap the cross-border takaful business, Bank Negara Malaysia’s (BNM) assistant governor Bakarudin Ishak said yesterday.
He said strong global gross takaful contribution growth trends, averaging about 31 per cent, had been forecasted to hit US$12 billion (US$1=RM3.11) by year-end from US$7 billion in 2009.
“This signifies positive growth potential in years to come, particularly to the present very low rate of takaful market penetration,” he said in his keynote address at the Takaful Rendezvous 2011 here yesterday.
Bakarudin said takaful and retakaful markets’ potentials were recognised by major conventional players as evident by the setting up of takaful or retakaful companies within a number of large conventional groups from the US, UK and Germany.
He said takaful operators, who numbered more than 150, were set to increase, thus reinforcing the competitive element in the takaful business. Being the world’s largest takaful market, Malaysia has a strong presence in the takaful market globally, with total assets worth US$3.2 billion that dominated 26 per cent of the total global takaful assets in 2009.
The domestic takaful industry’s healthy growth and strong performance, with a compound average 27 per cent growth in terms of net contribution between 2005 and 2010 illustrated the increase in takaful coverage as the preferred option.
Moving forward, Bakarudin said the takaful industry had to seek the best solutions to propel its growth at a faster pace.
He said efficiency strength could be achieved through investments in systems and technology.
“A more advanced back-end system and up-to-date structured information retention and data mining system will allow operators to conduct more comprehensive analysis to understand its target market better,” he said.
Given the current culture of consumers who leveraged on information technology in their daily lives, takaful operators might also further develop the systems to facilitate this.
Bakarudin said investments in people would secure continuous success of the takaful industry and like other financial services providers, takaful operators have to invest in efficient and cost-effective distribution channels.