KUALA LUMPUR: Malaysia’s takaful sector may have a stable outlook this year but it is set to substantially miss its blueprint target by 2020, industry observers said.
They said there was still low percentage of the Malaysian population having takaful at 15-16 per cent despite the Muslim population of 60 per cent. This was way off the 25 per cent penetration rate targeted under Bank Negara Malaysia’s Financial Sector Blueprint 2011-2020.
“By 2020, the penetration rate for the takaful sector is targeted to hit 25 per cent of the population, to be fuelled by high take up by the Muslim population. But it didn’t pick up. Over the past 10 years, the take up rate hovered at 15-16 per cent,” an observer said.
Still, observers said the takaful potential was vast.
He noted that the sector continued its upward trend, with new takaful protection valued at RM324.2 billion last year. This amounted to RM 4.91 billion in new business contribution for all certificates combined during the year.
According to Malaysian Takaful Association (MTA), the protection value increased 14.5 per cent from 2017 with a double digits growth of 13.1 per cent of the family takaful new business contribution over the corresponding figure of RM 4.35 billion in 2017.
MTA is due to hold a briefing on the takaful sector’s performance tomorrow (Tuesday).
Meanwhile, RAM Rating Services Bhd kept a stable outlook on the sector this year, on the back of resilient growth amid an evolving operating landscape.
RAM said with the progressive impact of tariff liberalisation and moderating economic growth, general takaful contributions were expected to expand at a slower 6.0-7.0 per cent pace.
It said family takaful’s new business growth was expected to decelerate to 7.0-9.0 per cent given weaker consumer sentiment and rising cost of living.
“Despite near-term moderation, the long-term growth prospects for the industry remain anchored by Malaysia’s supportive demographics, low penetration rates and awareness initiatives targeted at the Muslim-majority mass market,” it said.
RAM Ratings said general takaful contributions increased eight per cent to RM2.8 billion in 2018. Overall, takaful only represented a small 17 per cent of Malaysia’s insurance and takaful sectors’ total premiums and contributions.