The family takaful certificate in force is forecast to reach 14.3m in comparison to 13.8m for life insurance
by SHAZNI ONG/ pic by MUHD AMIN NAHARUL
THE Islamic finance industry as a whole is poised to benefit from the rapid growth of family takaful into a dominant position, said Malaysian Reinsurance Bhd (Malaysian Re) president and CEO Zainudin Ishak.
Through its collaboration with the Singapore branch of Pacific Life Re Ltd, the company aims to attain a sustainable long-term growth through the capability to write both family and general retakaful businesses.
“Family takaful certificate in force is forecast to reach 14.3 million in comparison to 13.8 million for life insurance, which translates to a family takaful penetration rate of 37.1% compared to 35.8% for life insurance penetration, according to statistics from Insurance Services Malaysia Bhd.
“Based on the present rate of higher annual growth, our internal forecast indicates that family takaful will exceed life insurance in the number of certificates in force by 2030,” he said at the signing of a memorandum of understanding (MoU) with Pacific Life Re in Kuala Lumpur (KL) recently.
The MoU signifies the first strategic partnership between the two companies, which will enable Malaysian Re to provide sustainable family retakaful solutions to family takaful operators through its retakaful division, Malaysian Re Retakaful Division (MRRD).
The collaboration is expected to expand Malaysian Re’s access to international research and data through the usage of the underwriting technology powered by Pacific Life Re’s fully owned subsidiary, UnderwriteMe.
It will also allow the company to offer competitive and innovative products and services to its clients in the future.
The partnership is also expected to benefit both Malaysian Re and Pacific Life Re in terms of business growth as a result of the encouraging upsurge in the takaful segment.
“We commenced our venture into the retakaful business in 2016 by providing general retakaful solutions to our customers.
“The formalisation of this strategic partnership marks a milestone for us as we expand our business into family retakaful. We’re positive that this expansion will be a growth catalyst for Malaysian Re,” Zainudin said.
The move will solidify Malaysian Re’s strategy to sustain its domestic market leadership, while diversifying its income and exposure, he said.
MRRD also has access to Malaysian Re’s best underwriting practices and market reach. It operates on a leveraged model, which encompasses among others, experienced talents and the company’s brand and overseas presence.
“This collaboration with Pacific Life Re signifies that we are on the right path to being a strong family retakaful provider,” Zainudin said.
Meanwhile, Pacific Life Re will provide support for MRRD’s family takaful business through its technical pricing, underwriting, product development, experienced analysis and global insights.
Pacific Life Re Asia and Australia MD Andrew Gill said the life reinsurer is looking forward to supporting family takaful solutions in Malaysia as it continues to expand its footprint in Asia.
“By leveraging on Pacific Life Re’s advantages such as data insights and leading technology through UnderwriteMe, we are confident that Malaysian Re will further enhance its market-leading offering to its family takaful operators clients,” he said.
Both Malaysian Re and Pacific Life Re are recognised by major rating agencies.
Malaysian Re, the largest national reinsurer in South-East Asia by assets, has a financial strength rating of A by Fitch Ratings Inc and A- by AM Best, while Pacific Life Re, a global life reinsurer, is rated AA- (stable) by Standard & Poor’s Financial Services LLC.