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International Takaful Summit 2007 Langham Hotel, London 1 st & 2 nd November 2007 The Bancassurance Route to Taka PowerPoint Presentation
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International Takaful Summit 2007 Langham Hotel, London 1 st & 2 nd November 2007 The Bancassurance Route to Takaful Distribution. by Mohd Tarmidzi bin Ahmad Nordin CEO, Takaful Nasional <tarmidzi@maybantakaful.com.my>. 2. Bancassurance What & Why?. 3. 1.

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slide1

International Takaful Summit 2007 Langham Hotel, London1st & 2nd November 2007The Bancassurance Route to Takaful Distribution

by

Mohd Tarmidzi bin Ahmad Nordin

CEO, Takaful Nasional

<tarmidzi@maybantakaful.com.my>

slide2

2

Bancassurance What & Why?

3

1

Maybank Insurance & Takaful Sector

Malaysian Takaful Industry

4

Maybank’s Banca Experience

Key Messages

End

market structure
Market Structure

Reinsurance

9

Composite

9

General

27

Retakaful 2

Takaful

Operators

9

Life

7

The industry

Loss

Adjusters

40

Brokers

35

International Offshore Financial Centre (I.O.F.C.)

Reinsurance

24

Other*

1

General / Life /

Underwriting Managers

9

Brokers

14

Captive

4

Information Source: MNRB - The Malaysian Insurance Directory * Recoveries Management (L) Ltd.

malaysian takaful industry
Malaysian Takaful Industry

Exchange Rate: US$1 = RM3.40

growth of bancatakaful in malaysia
Growth of Bancatakaful in Malaysia
  • Bancatakaful has emerged as a major distribution channel:
  • 2004: 6.9%;
  • 2005: 19.3%
  • 2006: 29.6%.
what is bancassurance
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.
why bancassurance
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.
maybank insurance takaful sector

Fortis International

Maybank

30%

70%

2001

MNI

Takaful Nasional

Mayban General

Mayban Life

Mayban Takaful

1977

1993

2002

Conventional

Takaful

Maybank Insurance & Takaful Sector

Mayban Fortis

maybank s banca experience
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:
      • Greater integration.
      • Customer Centricity;
      • Maximise sales capacity;
      • Suitable end-to-end processes;
      • Best Value For Money Product & Service Packages;
distribution strategy
Distribution Strategy
  • 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.
product strategy
Product Strategy
  • Bank sells existing on the shelf takaful / insurance products with home or auto financing such as MRTA, fire, houseowners, motor, PA

or

  • 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.
branding strategy
Branding Strategy
  • 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

  • Maintain takaful / insurance company’s own branding by keeping it separate from the bank.
slide14

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

it system strategy
IT System Strategy
  • 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

  • Systems are not integrated thus policies have to be manually processed.
ksf1 greater integration greater success

Integrated

Model

Intermediate

Model

Distribution

Agreement

Model

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;
ksf2 customer centricity
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

Bancassurance

Products

  • Simple for Bank
  • Increase potential for cross selling
  • Integrates into system
  • Flexible
  • Adopts coverage to range of situations
  • Tailors payment to different possible solutions
  • Competitively Priced
  • Matches competitiveness offerings
  • Reflects value of customer
  • relationship
ksf3 maximise sales capacity
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
ksf4 suitable end to end processes
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.
ksf5 best value for money product service packages
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
slide21

Wassalam

Peace to All

from

Mohd Tarmidzi bin Ahmad Nordin

Takaful Nasional

<tarmidzi@maybantakaful.com.my>