Transcript Merger Kickoff-Nov 2005 - The Takaful Summit Series

International Takaful Summit 2007
Langham Hotel, London
1st & 2nd November 2007
The Bancassurance Route to
Takaful Distribution
by
Mohd Tarmidzi bin Ahmad Nordin
CEO, Takaful Nasional
<[email protected]>
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Key Messages
1
Malaysian Takaful Industry
2
Bancassurance What & Why?
3
Maybank Insurance & Takaful Sector
4
Maybank’s Banca Experience
End
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1
Market Structure
Reinsurance
9
Composite
9
General
27
Takaful
Operators
9
Retakaful
2
Life
7
The industry
Brokers
35
Loss
Adjusters
40
International Offshore Financial Centre (I.O.F.C.)
Reinsurance
24
Captive
4
General / Life /
Underwriting Managers
9
Information Source: MNRB - The Malaysian Insurance Directory
Brokers
14
Other*
1
* Recoveries Management (L) Ltd.
2
2
Malaysian Takaful Industry
RM million
Net Contribution
2000
1800
1600
1400
1200
1000
800
600
400
200
0
98
99
00
General
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02
03
04
05
06
Year
Family
Exchange Rate: US$1 = RM3.40
2001 2002 2003 2004 2005 2006
Market
Share (%) 4.8
5.6
5.4
5.1
5.4
6.1
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Growth of Bancatakaful in Malaysia
Year 2004
Year 2006
Agents
17.3%
Bancatakaful
6.5%
Agents
28.8%
Bancatakaful
29.6%
Brokers
14.6%
Direct Client
61.0%
Others
0.6%
Brokers
1.9%
Year 2005
Agents
23.5%
Others
0.7%
Bancatakaful
19.3%
Brokers
17.3%
Direct Client
37.6%
Others
2.3%
Direct Client
39.0%
Bancatakaful has emerged as a major distribution channel:
• 2004: 6.9%;
• 2005: 19.3%
•2006: 29.6%.
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What is bancassurance?
• In Malaysia, this includes any distribution or
marketing arrangement with banks that involves:
– Sale of takaful / insurance products:
• by the staff of the bank;
• using the bank’s distribution channels which includes its call
centres, internet, branches and marketing booths as well as third
parties providing such marketing support services to the bank;
• Using the bank’s customer database other than direct mailing
arrangements that are limited to the acquisition of a name list of
bank customers for the mailing of takaful / insurance brochures for
a limited period at a nominal fee.
– Joint marketing of takaful / insurance products with banks.
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Why Bancassurance?
For banks’ customers:
• Total financial solutions
• Differentiated customer experience;
• Value for money products
For Banks:
• Increased product range;
• Can earn fee income.
• Can achieve deeper and stronger customer relationships (better customer
retention);
• Opportunities to bundle and improve product offerings;
• Better customer lifecycle management;
For Takaful Companies / Insurers:
• Broader distribution and market coverage;
• Opportunity to save cost and improve distribution efficiency
• Become more competitive
• Can leverage on banks’ brand, infrastructure and organizational workforce.
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Maybank Insurance & Takaful Sector
Maybank
30%
70%
Fortis International
2001
Mayban Fortis
MNI
Takaful Nasional
Mayban General
Mayban Life
Mayban Takaful
1977
1993
2002
Conventional
Takaful
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7
Evolution of Maybank’s
Banca business
Mayban
2001
2002
2003
2004
2005
2006
2007
(RM million)
(RM million)
(RM million)
(RM million)
(RM million)
(RM million)
(RM million)
325.1
518.1
989.0
951.6
1,397.9
1,852.2
245.8
Life *
Mayban
32%
181.6
181.5
General
Mayban
0%
-
59%
160.3
-12%
16.3
-
Takaful
Total NPW
growth
91%
166.8
4%
41.1
152%
427.4
506.6
19%
figures as at 30th June each year
US$1 = RM3.40
694.7
37%
1,196.9
72%
-4%
276.4
66%
101.8
148%
1,329.8
11%
47%
298.1
8%
185.8
83%
1,881.8
42%
32%
287.2
-4%
163.9
-12%
2,303.3
22%
*excluding Annuities
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Maybank’s Banca Experience
Bancassurance = Bank Strategy
•
The bank must lead the implementation of bancassurance strategy not the
takaful company or the insurer.
•
To deliver a differentiated customer experience unique strategies need to be
developed specifically for bancassurance, such as:
•
•
•
•
•
Distribution
Product
Branding
IT Systems
Key Success Factors:
1.
2.
3.
4.
5.
Greater integration.
Customer Centricity;
Maximise sales capacity;
Suitable end-to-end processes;
Best Value For Money Product & Service Packages;
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Distribution Strategy
1.
2.
3.
4.
Bank staff sell takaful / insurance products while the takaful
company / insurer provides sales support.
or
Takaful company / insurer place their staff or agents at the
bank premises to sell takaful / insurance products;
or
Bank provides leads for takaful company’s / insurer’s own
staff or agents to sell;
or
Combination of 1 and 2 or 3 where bank’s sales force sell
the simple products while takaful / insurance company’s own
staff or agents sell the more complicated products.
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Product Strategy
1. Bank sells existing on the shelf takaful / insurance products with
home or auto financing such as MRTA, fire, houseowners, motor, PA
or
2. In addition to existing products Bank also sells takaful / insurance
products exclusively designed for the bank channel
Some findings from own experience:
•
Bank’s sales force:
–
–
–
–
reluctant to promote insurance / takaful products if they are too expensive.
do not like to sell products they do not understand (too complicated, too many
features)
Prefer to sell simpler products with shorter sales process time with efficient back
office processing.
Need to identify with the products they sell.
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Branding Strategy
1. Ride on the bank’s brand / reputation
– some advantages:
•
•
•
Lower marketing investment;
Higher customer acceptance
Better identification by bank’s sales force
– However reputation of takaful company / insurer can be
affected if bank’s image is damaged and vice versa;
or
2. Maintain takaful / insurance company’s own
branding by keeping it separate from the bank.
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Before the
acquisition
of MNI / TN
we chose to
ride on
Maybank’s
brand /
reputation
but now we
are
reviewing
this.
underwritten by
Mayban Takaful
Berhad
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IT System Strategy
1. Integrated IT system with the bank allowing policies to be
issued by the bank upfront: Other advantages of integrated
system:
–
–
–
–
–
Better customer experience;
One view of the customer
Data mining and cross-selling capabilities
Better underwriting controls
integrated with payment systems
or
2. Systems are not integrated thus policies have to be manually
processed.
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KSF1:
Greater Integration = Greater Success
Bancassurance = Bank Strategy
• Top management of the bank must give strong
commitment to takaful / insurance as one of the
core revenue generators
• Bank must lead cohesive marketing strategy
between bank and takaful company / insurer
• Takaful / Insurance activities are fully integrated
into banking operations;
Integrated
Model
Intermediate
Model
Distribution
Agreement
Model
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KSF2: Customer Centricity
Simple for Customer
•Solution to a clear need
•Easy to Understand
•Avoids ambiguities
Integrated
Maximize cross over
opportunities
between bank and
takaful / insurance
products
Flexible
•Adopts coverage to range of
situations
•Tailors payment to different
possible solutions
Bancassurance
Products
Simple for Bank
•Increase potential for
cross selling
•Integrates into system
Competitively Priced
•Matches competitiveness
offerings
•Reflects value of customer
relationship
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KSF3: Maximise Sales Capacity
Keep It Simple & Standardised (KISS)
• Products
– easy to explain, easy to understand (so that everybody can
sell)
– tailored to specific needs, not ‘one size fits all”
– low advice content, high value content.
• Processes
– minimise administrative complexity
– minimise exceptions / special features
– clear & simple sales processes
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KSF4: Suitable end-to-end Processes
• Some typical features of successful bancassurance
processes:
–
–
–
–
Straight through processing
Policy issuance upfront;
Industrialised sales process / simple underwriting;
Automation of premium payment / auto-debit, standing
instructions;
– Claims / benefit payments using auto credit;
– Optimise Customer Profile Management;
• To deliver top quality service (at low cost) need to invest in
technology and re-engineer processes both in the front and
back offices.
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KSF5:
Best Value For Money Product & Service Packages
• Win - Win - Win situation
• There must be an alignment between the value proposition
to all involved parties:
– Customers;
– Banks (as distributor)
– Takaful Company / Insurers (as manufacturer)
• The product must also be among the best value for money
offered in the market for the clients arising from:
– Lower management expenses;
– Lower distribution expenses
• To share advantages with the customers
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Wassalam
Peace to All
from
Mohd Tarmidzi bin Ahmad Nordin
Takaful Nasional
<[email protected]>
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