KUALA LUMPUR: The Malaysian Takaful Association (MTA) targets to double the takaful penetration in Malaysia to 40% from 20% in four years under the Hijrah 2027 Strategic Plan on the back of the untapped market potential where 46% Malaysians are still unprotected.
MTA CEO Mohd Radzuan Mohamed said there is a substantial market potential in Malaysia as 46% of people are still lacking protection, which represents opportunity for the takaful industry.
“And one of the areas we need to focus on is ensuring protection for those who are unserved and underserved. This includes not only the B40, (but also) what we like to call it the BM40, because we also have the bottom 20% of the M40 that are impacted. These include gig workers, young parents, who are also being economically impacted,“ he told reporters after unveiling the Takaful Financial Sector Blueprint (FSB) interim report yesterday.
He said the strategy to reach that 40% target involves implementing blended takaful which aims for sustainability by incorporating philanthropic approaches such as zakat, wakaf or rolling back takaful benefits for the benefit of others in case of death.
“Blended takaful as compared to Perlindungan Tenang ... Pelindungan Tenang looks into something that is available, accessible and affordable. Blended takaful is looking into how to make it sustainable by having philanthropist approach,” he said.
Mohd Radzuan mentioned that MTA is collaborating with the UN Development Programme (UNDP) to address the protection gap for small or medium-sized enterprises (SME).
“We will be working with them to develop a risk management tool for SME. So hopefully that will also pick up because SME is also one area where there is a lot of protection gap. Especially the micro SME, for example the small stalls,” he said.
Additionally, MTA is partnering with the banking sector to integrate financial and protection services.
“We are working together with the banking side ... where the banking side, they have the ITEC card. We are also coming up with iTenang for the financial side of it as well as the protection side of it can work together. We have done two programmes already with them in Terengganu and also in Kedah. So hopefully we will be able to do that again,” he added.
MTA has released the interim report on the FSB Programme 2023 which builds upon the industry’s commitment to Value-based Intermediation for Takaful (VBIT).
The interim report delves into the achievements of takaful operators, examining key project milestones and intended outcomes against the backdrop of the VBIT and its maturity continuum.
MTA chairman Elmie Aman Najas said “The Takaful FSB Programme 2023 has the potential to improve the industry and make it more competitive and resilient. We are confident that the programme will continue to make progress and achieve its goals. Despite challenges and increasing competition from the traditional financial system, with strong collaboration across the takaful industry and the enthusiastic participation of stakeholders, the Takaful FSB Programme is well-positioned to sustain its momentum and drive further advancements in the years to come. This programme serves as a valuable tool for the takaful industry to address longstanding challenges and enhance industry overall growth and development.”
The Takaful FSB Programme is in the implementation phase, and the working groups are making substantial progress in all strategic thrusts through the eleven working groups that oversee various aspects of financial inclusion, economic resilience, digitalisation, sustainability and climate resilience, and Islamic finance leadership.
The full report will be available in the first quarter of 2025.