KUALA LUMPUR, Nov 5 (Bernama) -- To create better demand, local takaful insurers should learn from pioneering countries such as Bangladesh, India and Indonesia, to kickstart pilot schemes in their own locality, Deputy Finance Minister Datuk Awang Adek Hussain on Thursday said.
He said in some countries, the access to insurance coverage could be as low as US$2 per month, which is not available here.
According to Awang Adek, by keeping the premium rates as low as possible, it would not only create better demand for takaful products, but also enable many businesses and families to have access to insurance protection.
"Many can benefit from this product.In the context of Islamic finance, the integration of micro-takaful schemes with Zakat, Waqf and other similar benevolent-activity institutions, are for the purpose of poverty alleviation," he said in his speech at the Takaful Rendezvous 2009 conference here.
He noted that for the takaful industry to emerge from the shadows of its conventional counterpart, there was still much to be done.
On the development of the industry, he said interest in the takaful sector remains intact despite the challenging environment, driven by strong demand for its services and keen interest shown by insurers in search of new avenues for revenue as well as market diversification.
Awang Adek said the values inherent in takaful schemes, which meet the demand for finance and socially responsible investments, had further enhanced the value proposition and market prospects for this sector.
He also highlighted that the takaful global industry, which has seen an annual growth rate of 25 per cent annually for the past few years, will continue to be strong over the next few years.
In line with the global growth, he said the local industry is expected to maintain its course, reinforced further by the liberalisation measures announced earlier this year, including the issuance of up to two new takaful family takaful licenses.
These new licenses, Awang Adek said, should be able to further instill innovation and competition and act as an impetus to further growth and expansion of the industry.
"We need to venture into new areas, including the non-traditional sectors. We need a vision, the will and the confidence to bring the industry forward.
"Supplemented with the culture for financial innovation and creativity, great strides can be achieved," he added.
Awang Adek also suggested that local players look into medical and health coverage as well as micro-finance services, particularly the micro-takaful, which is expected to offer tremendous opportunities for growth.
"In the case of medical and health coverage, demographics changes and escalating medical and healthcare costs, have led to the demand for financial security against morbidity risks," he said.
He explained that the life expectancy by year 2020 would increase to 79 for females and 75 for males and the number of active persons to retirees would fall by 40 per cent.
"This presents an enormous opportunity, as currently only approximately 15 per cent of Malaysias have medical health coverage," he added.
Meanwhile, the two-day conference, starting today, is organised by the Malaysian Takaful Association. Its participants are local and from the region with 20 speakers presenting papers.