takaful distribution models a practical approachtief2014.org/pdf/report/materiali/muktisjah.pdf ·...
TRANSCRIPT
Takaful Distribution Models
A Practical Approach
Presented by Muktisjah Ramli, Director
Takaful Outsource Ltd. Turin Islamic Economic Forum / 17-18 November, 2014 / Torino, Italia
1. Introducing Takaful Outsource, LTD 2. History and Development of Takaful 3. Developing Takaful Products 4. Islamic Principles of valid sale 5. Takaful Distribution Models 6. Bancatakaful as Distribution model 7. Bancatakaful Products 8. Big Data and Social Media 9. European challenge for Takaful
Takaful Outsource, Limited (TO) is a consulting and outsourcing firm specializing in serving the global takaful industry, particularly insurance/takaful companies, reinsurance/retakaful providers, private institutions, training institutes, and government regulatory authorities.
History and development of takaful
Takaful : Mutual guarantee among the group members Ta’awun: The act of mutual help and assistance of the participants within the group Promotes brotherhood, mutual assistance, piety and a
sense of caring for the community. System of Takaful began 14 centuries ago on Arabian
peninsula and was “modernised” in Sudan (1979) and Malaysia (1983).
History and development of takaful
Hadiths of the Prophet S.A.W. “Tie the camel and then submit to the will of Allah” (Sunan Al Tarmizi, 1981) This hadith implied a need to mitigate risk “Verily, it is better for you to leave your offspring (heirs) wealthy, than to leave them poor asking help from others” (narrated by Amir bin Saad bin Abi Waqqas)
History and development of takaful
Participants
Operating Expense
Shareholders’ fund
Investments
Surplus
Underwriting profits Investment
profits
Takaful Fund (Participants’ Fund)
Retakaful
Contract Benefits
Reserves
Wakalah fee
Qard Hassan (if deficit)
Wakalah Model
Source: Swiss Re Sigma, Islamic Insurance (2008)
Developing Takaful Products
Market Research, Product Features
Claims, Underwriting,
Actuarial
IT systems, Customer Service
(Ops)
Investments, Asset
Management
Finance, Retakaful
Sales & Marketing, Distribution
Terms and Conditions,
Forms
Shariah, Legal & Compliance
Regulatory approval
Developing Takaful Products
Waiver of Contribution (100euro/month until
maturity)
Basic Life cover )(400.000euro
Family Income Benefit (2.000euro/month)
Permanent Disability (100.000euro)
Critical Illness (100.000euro) Temporary Total Disability
(1.000euro for 2weeks)
Investments (100euro/month)
Top up (2.000euro)
• Offer and Acceptance • (customer has the right to know every feature of the
product, before signing the contract)
• Price to be mentioned • (exclusion of riba to be mentioned, highlight prudent
/ethical investment principles in case of unit-linked products)
• Parties to be sane and legally competent • (parties must have attained puberty and avoid selling
products to persons, who are emotionally not stable)
Developing Takaful Products Adopt Islamic principles for valid sale (1):
• Valid contract • (agent to know each part and section of the contract, the
company obligations and also client obligations)
• Disclosure of material including any mishaps • (disclosure of charges/fees/commission, any exclusions)
• Not hurting the Community • (mis-selling can hurt the Community as a whole as takaful
products are being promoted to the public)
Developing Takaful Products Adopt Islamic principles for valid sale (2):
Product Mix Bonus
Persistency Bonus
Production Bonus
Basic Commission
Basic Salary
Takaful Sales’ Remuneration Challenge
• Agency • (tied sales agents or independent agents remunerated on
commission only or salary plus commission, fit for complex individual products)
• Bancatakaful • (Banks distributing takaful provider’s products through bank’s
branches or channels (ATM, online, mobile) using bank’s client base. Fit for simple, high volume products
• Brokers • (Independent distributor of multiple takaful providers’
products. Fit for distributing corporate / group takaful products)
• Social Media • (Website, FB, Twitter, Linkedin, Whatsapp, Mobile; Fit for
simple individual protection only products, upgrades)
Takaful Distribution Models
Bancatakaful as Distribution Model Initial
Considerations
Branch employees
generate quality referrals
Takaful agents concentrate on
selling
Bankers don’t understand
insurance/takaful
Bank staff simply identify
customers with potential needs
for takaful products
Integrated models (where the bancatakaful activity is closely tied to the banking business)
Advice-based models (where there is less integration and the distribution is based on using professional takaful advisers to sell to the clients of the bank)
“Open architecture” models (banks can tie-up with multiple takaful operators / takaful operators can offer products through many banks with multiple tie-ups
Model Definitions for Bancatakaful
Family (Life) Takaful Product Simplicity vs Bancatakaful Model Choice
Takaful Products – Bancatakaful?
Individual (Bancatakaful Distributable)
Group (Non-Bancatakaful Distributable)
Personal Accident
Rental
Tuition
Retirement Retirement
Marriage Pension
Education Employee Thrift
Family (Life)
Investment w/ Protection
General (Non-Life) - Bancatakaful Ready [Yes / No]?
Homeowners [e.g. Bahrain]
Fire & Allied Perils / (Homeowners) [e.g. Malaysia, Bahrain, Pakistan]
Travel "Safe" [e.g. Bahrain]
Motor Vehicle [eg, Malaysia, Qatar, Bahrain]
Term (Simplified Issue, "Bundled")
Credit Life (Personal Loans, Credit Shield, Mortgage Takaful)
Protection ONLY
N/A
Big Data is “high-volume, high-velocity, and/or high-variety information assets that require new forms of processing to enable enhanced decision making, insight discovery, and process optimization.”
Big Data comes from multiple sources: • online access • mobile devices • social media • scientific devices • e.g. Twitter Tweets, generated every day
Key Issue in Alternative Distribution – “Big Data”
Paradigm Shift: Potential customers and prospects are interacting over phone, social, mobile and in person. The mountain of data captured at each of these touch points can make it challenging to respond to prospects and customers in a streamlined fashion.
The European Challenge for Takaful
•Fragmented Market •Takaful mainly targeted to Muslims only •Small scale Ops •Limited products • Limited Distribution •Lack of understanding in need for insurance/takaful •Lack of Takaful Human Capital •Lack of financial resources from community to set up own takaful company
Pan European / National Approach
Grass root approach
The European Challenge for Takaful National Approach
• Existing insurance company set ups takaful window • Sell takaful products besides conventional products • Use existing distribution channel • Expand client base to ethical market and increases volume • Use own asset management / mutual funds or external fund provider
Grass Root Approach • Community set ups own takaful mutual (OWM in NL) • Community members as initial client / member base • Start with simple protection products •Set up another mutual once max members reached • Merge smaller mutuals into larger takaful co. •Expand into EU through passporting
Insurance co takes over existing takaful
co.
Takaful Co from Gulf / Asia takes stake in
European insurer
Set up new full-fledged Takaful Co.
Dawud Abdus-Saboor Director
[email protected] +1 (267) 481-0229 (USA)
Muktisjah Ramli Director
+31-627146571 (The Netherlands)
Follow us on:
