Key trends in the takaful sector: takaful market update

Malaysia remains predominantly family Takaful, with family making
up over 75% of total Takaful contributions. Family contributions
consist of a few main product types:
Regular contribution unit linked plans – these plans consist of a
savings element but tend to have significant sales of protection riders
such as medical riders in various forms such as major medical and
surgical benefits as well as critical illness benefits on the life of the
participant, the spouse or parents and waiver of contribution under
critical illness of the payer. Also becoming popular now are early
critical illness riders where benefits are paid out at an earlier stage of
critical illnesses to allow better access to medical care when it is most
needed. These plans are the largest in terms of Annual Contribution
Equivalent (ACE, which is defined as 100% of regular contributions
and 10% of single contributions). Multinational insurers tend to be
relatively strong in this market segment.
Single contribution credit plans – these plans are tied to underlying
bank loans and have traditionally been the largest component of
new business. Growth continues to be steady and tied to the growth
in Islamic bank loans. Not surprisingly the Takaful operators with
Islamic banks as sister companies are particularly strong here, which
tend to be local operators. Significant business also comes from
government loans to civil servants as well as third party banks with
no Takaful sister companies.