In recent times, Malaysia’s insurance industry has enjoyed steady expansion, growing at an average of 6.6 percent over the last four years. This expansion is projected to continue, with growth in the industry expected to be further driven by the country’s Economic Transformation Programme. As part of Malaysia’s National Transformation Programme, the Economic Transformation Programme aims to help Malaysia obtain ‘developed nation’ status by 2020.
Within the insurance industry, growth has also been led by the life insurance segment, which accounted for 65.9 percent of the industry’s gross written premiums. The non-life segment followed this with 29.6 percent, while the personal accident and health insurance segment achieved 4.5 percent.
World Finance spoke with Kamaludin Ahmad, CEO of Maybank Ageas Holding Berhad – a firm comprising Etiqa Insurance Berhad and Etiqa Takaful Berhad, one of Malaysia’s leading insurers – to find out more about the industry’s development.
The insurance industry is witnessing a breed of digital players encroaching into traditional business
What role has Etiqa played in shaping the insurance industry in Malaysia?
At Etiqa, we differentiate ourselves by humanising insurance and Takaful, prioritising people over policies. ‘The Etiqa way’ has been introduced to change the way our employees behave: we place people over policies and we keep our customers’ best interests at heart. Because we understand every individual’s needs are different, our products are designed to cater for him or her.
We also have the company philosophy of providing an ‘EPIC customer experience’. EPIC here is an acronym for four characteristics that describe our interaction with customers: empathy, professionalism, integrity and courage. An example of this is the utilisation of a proactive claims mechanism, deploying multiple channels to track Etiqa’s policyholders who may have been entitled to payment claims. We have a team who constantly monitor the mass media and social media, and once we identify a policyholder, we will reach out to them or their families.
In times of national crises, we reach out to ensure there is a quick way to expedite claims, in order to ease the burden on customers. This includes minimal documentation, appointment of additional adjusters and dedicated personnel to process claims. We ensure our customers enjoy hassle-free claims, with just one phone call needed for personal accidents and home incidents.
One of our key strategies to ensure the success and effectiveness of the distribution of insurance and Takaful products has been to understand emerging markets. Alongside this, we have focused on the internet as an emerging alternative distribution channel with significant potential for growth. We have made substantial inroads due to the younger generation’s expectation to fulfil their needs online. Indeed, Etiqa is one of the pioneers for direct sales through the internet.
What are main challenges facing the insurance market in Malaysia?
At present there is strong competition from established conventional players in terms of the branding and efficiency of distribution channels. Takaful competitors in particular are growing faster. Malaysia is also facing limited amounts of economic uncertainty, compounded by the fall in crude oil prices. Stemming from this global economic uncertainty is increased profit volatility.
The present low interest rate environment, coupled with the sluggish economic growth, has dampened investment returns – a key source of income for insurers. As a result, life insurers may move away from products with a pure investment and towards protection products. At the same time, in a frail economy with rising costs, consumers may not have deep pockets to spend on insurance. Therefore, insurance is going to be way down the list of what to purchase.
How important are new forms of technology to the insurance sector?
Today, everyone is talking about digitalisation. The insurance industry is witnessing a breed of digital players encroaching into traditional business. Our customers are also changing the way they interact with us, as they are more digitally savvy than ever before; they are becoming increasingly more sophisticated with their online requirements, hence increasing the complexity of their relationships and the specificity of their demands. Customers now have more access to information, experts and lower cost channels. This increases the pressure on insurance companies to deliver good value.
When it comes to our own utilisation of technology, Etiqa has been an early adopter of a customer-centric Master Data Management (MDM) solution, which aims to sharpen its competitive edge in Malaysia’s newly liberalised insurance market. The system provides Etiqa with better control of its data, enabling it to build a consolidated customer profile as it pursues new avenues of growth in a more open and competitive Malaysian insurance market.
We have one platform for accessing, integrating, cleansing and governing our customer data. This customer-centric view across general and life insurance lines of business plays a powerful role in helping Etiqa attract and retain insurance customers and grow revenues. We have enhanced our data analytics capabilities to draw greater insights into the needs and preferences of our customers. Armed with such valuable insights, our distribution channels are able to offer the right products to the customer at the most appropriate time, and to consistently deliver quality service.
How does Etiqa integrate new information channels and why are they important?
New information channels have allowed us to connect with customers on social media and through e-marketing and cross-selling. Social media’s growth has also allowed us to provide a consistent customer experience across channels where the choice of engagement lies with the customer. New information channels have also allowed us to digitalise the whole process of buying insurance from start to finish, making it an end-to-end paperless process.
Providing the public with education concerning insurance has also become easier with social media. We have been able to educate the general public particularly through online videos. For instance, Etiqa has launched Etiqapedia, a series of short, educational videos on basic insurance knowledge can be viewed on YouTube.
What edge does Etiqa have over other insurance firms?
The major benefit of Etiqa is that we have experience with all markets related to our industry. This means we are in the life insurance and general insurance, as well as in Takaful; we also service the retail market up to the corporate market. We underwrite small general insurance, such as travel insurance, in addition to insuring big businesses, such as the airlines, oil and gas businesses, and marine, aviation and transport risks.
As a true multichannel distributor, Etiqa has a strong agency force
On the life side, we are strong players in the individual market. We also have a leading position in employee benefits and medical coverage. In the Malaysian market, Etiqa is the only local company with such a wide business mix. This gives us stable growth, as well as stable profitability. Looking ahead, Etiqa will leverage on Maybank Group’s strength and build a wider distribution footprint for its products and services, as well as looking at alternative distribution channels.
As a true multichannel distributor, Etiqa has a strong agency force, comprising over 24,000 agents, 30 branches, sales offices and customer service centres located throughout Malaysia. We also have a wide bancassurance and bancatakaful distribution network, with more than 400 Maybank branches and agreements with professional third-party banks. Etiqa is also one of the pioneers for direct sales through the internet with online Motor Takaful and Maybank2U. Cooperatives, brokers, institutions and online banking services provide added accessibility and convenience to our customers.
How does Etiqa approach corporate social responsibility?
We aim to deliver long-term value for the community and ensure our sustainability efforts work in tandem with our economic activities. We are fully committed to giving back to the community through our corporate social responsibility/Corporate Zakat Responsibility (CZR) programmes.
In 2015, we built 46 permanent houses for Kelantan flood victims who lost their homes in the devastating floods that hit the state in December 2014. The construction project was the largest CZR project ever to be undertaken and fully financed by any Malaysian corporation for flood victims. A total of MYR 2.4m ($591,000) was allocated for the construction of 31 houses in Kampung Lebir, Gua Musang and 15 houses in Pahi, Kuala Krai. The construction of the 46 houses in Gua Musang and Kuala Krai was financed by Etiqa Takaful Berhad’s CZR fund and its customers’ ‘tabung amal jariah’ [charity fund], which was derived from the distribution of surplus contribution.
We have also contributed a total of MYR 808,000 ($119,000) of CZR and amal jariah funds to improve the quality of life and economic wellbeing of villagers living in Pekan and Kuantan. Out of these funds, MYR 340,000 ($83,800) was allocated to the construction of two bridges in Pekan and MYR 350,000 ($86,250) to build a dormitory for Rumah Anak Yatim Nur Iman in Kuantan. We also allocated MYR 100,000 ($24,650) to provide fishing nets for a fishing village in Tanjung Lumpur and various equipment to help small business owners obtain the resources they need to start their businesses. The remaining MYR 18,000 ($4,435) was used to provide basic food packs for 200 needy families.