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Takaful Sector Pays RM8.74Bil In 2023

KUALA LUMPUR: Domestic takaful operators paid RM8.74 billion in 2023, while family takaful paid RM6.79 billion in benefits.

The Malaysian Takaful Association chairman Elmie Aman Najas said the importance and benefits of takaful are gaining greater traction, as evidenced by the consistent in-force certificates following a strong year in new certificates in the previous year.

In a statement, the Malaysian Takaful Association (MTA) said the general takaful disbursed RM1.95 billion for 2023.

This payout uptick of 24.40 per cent demonstrates the takaful industry’s responsiveness to emerging needs and dedication to promptly assisting certificate holders.

This payout comes from the family takaful gross contribution of business in force, which grew 7.55 per cent to RM8.97 billion, compared to RM8.34 billion in 2022.

The number of certificates in force in 2023 was stable at 6.60 million, shy of the 6.63 million recorded in 2022.

Throughout the year, the family takaful business added 1.13 million new certificates with a corresponding gross contribution of RM9.59 billion but could not reach the high 1.31 million new certificates and RM10.06 billion gross contribution registered in 2022.

Although this figure was slightly lower than the previous year, MTA underscores the sustained interest and trust in takaful protection among the rakyat.

MTA chairman Elmie Aman Najas said the importance and benefits of takaful are gaining greater traction, as evidenced by the consistent in-force certificates following a strong year in new certificates in the previous year.

“This signifies that participants continue to fulfil their contribution obligations, indicating a sustained awareness of financial planning and retention among participants. The industry-wide awareness initiatives are translating to tangible outcomes, with takaful products continuing to be a preferred option,” he said.

Performance-wise, Elmie Aman said the three-year numbers indicate a normalisation in the industry in 2023 after a year of strong post-pandemic growth in 2022.

“The family takaful penetration rate in 2023 held relatively steady at 19.58 per cent, even as the population grew by 678,500 people, outpacing that of 2022 and was a record 10-year high growth,” he said.

In 2022, the penetration rate was 20.06 per cent, and population growth was 401,600 persons.

The general takaful business continued its upward trajectory in 2023, with a 17.44 per cent increase in gross written contributions to RM5.45 billion from RM4.64 billion.

The gross direct contribution also increased 17.40 per cent to RM5.44 billion from RM4.64 billion a year prior.

These contributions are primarily attributable to the robust performance of motor takaful, which expanded 18.70 per cent to RM3.64 billion, and remained a key driver of general takaful.

This performance aligns with an all-time high of 799,731 new motor vehicles sold in the year due to promotional campaigns and new model launches.

Increased awareness and appreciation for takaful products and ease of participation via digitalised solutions have resulted in motor takaful accounting for 66.94 per cent of the general takaful business.

MTA said general takaful operators are agile and have adapted to the uptake in electric vehicles (EVs) by introducing innovative motor takaful for EVs.

The tailor-made products help the operators gain ground and support the overall National Energy Transition Roadmap, which aims to have 20 per cent of all vehicle sales be xEVs by 2030 and 50 per cent by 2040.

Other lines of business also recorded strong growth as post-pandemic recovery continued, particularly those linked to logistics, as trade picked up pace.

Aviation performance grew 146.04 per cent, recording RM13.81 million gross direct contribution for 2023, while cargo rose by 79.09 per cent to RM30.85 million.

Marine hull improved by 45.89 per cent to RM15.07 million.

The construction sector’s recovery in 2023 helped contractor’s all risks and engineering achieve a 44.00 per cent or RM71.32 million improvement, bringing its total to RM233.42 million for the year.

In terms of channels, agency and bancatakaful remained the key contact points, with new businesses’ total contribution standing at 34.03 per cent and 29.99 per cent, respectively.

MTA expects the takaful industry to maintain a steady momentum in 2024, reflecting Malaysia’s overall economic expansion forecast.

The industry is united in its commitment to accessible and affordable takaful protection for the rakyat as part of its efforts to support the country’s economic development.

In line with this, MTA announced its four-year strategic transformation plan to elevate and innovate takaful to be a household name in Malaysia and inspire a new generation of participants.

The mandate is to make takaful more relevant, accessible, and impactful.

Named Hijrah27, the strategic transformation plan embraces change with purpose and aligns MTA’s mission with the visionary goals of the Financial Sector Blueprint 2026 and the industry’s Value-Based Intermediation framework.

Hijrah27 is the continuation of the successfully concluded MTA Reform Plan 2022-2023, known as ISLAH 23. It will guide the industry and the overall Islamic ecosystem in working together to advance takaful.

While Hijrah27 is still undergoing finalisation, MTA envisions it will provide impetus to maintain the growth momentum of takaful towards becoming a leader in Malaysia.

There will be continued emphasis on collaborations, comprehensive awareness, product and service innovations, and the expansion of the takaful’s role in the whole ecosystem to widen protection and meet the underserved and underserved rakyat at their level of need to ensure every Malaysian has a safety net.

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