Regulatory and Marketing Challenges

of Takaful in Non-Takaful Markets(Sri Lankan Experience)

Presented By

Ehsan ZaheedDirector / Chief Executive OfficerAmana Takaful PLC – Sri Lanka

Presentation Outline

• Brief Country Profile• Glimpse of - Amana Takaful PLC • Regulatory Challenges• Marketing Challenges• Our Approach

Country Profile

An island country in the Indian Ocean off southeast India. History records the coming of the first King – Vijaya in 544 BC

The lucrative spice trade on the island was controlled successively by Arab, Portuguese, Dutch, and British traders from the 12th century.

It became a British colony in 1798 and achieved independence in 1948. it was then called ‘ Ceylon’ and was famous for tea, rubber and coconutsIn 1972 the island was declared a republic, and it adopted the name of Sri Lanka.

Since 1978 the island adopted the Executive Presidential system in the administration of the State

Brief Country Profile

• Total Land Area – 65,610 sq km• Population – 20 m• Age distribution

– 0 - 14 yrs: 5.4m– 15 – 64 yrs: 13.6m– Over 65 yrs: 1.2m

• Literacy Rate: 92.5%• Life Expectancy: 73 yrs• Per capita: US$ 2,014/-

Source: Central Bank of Sri Lanka - 2008 Annual Report

Country Profile ……continued

• Composition of Population (1981 Census)

By Ethnicity• Sinhalese - 73%• Sri Lankan Tamils – 12%• Indian Tamils – 5%• Moors – 8%• Others – 2%

By Sector• Rural - 72%• Urban - 22%• Estate - 6%

Glimpse of Amana Takaful PLC

* The Beginning * Operating Style

* Our Success story !

Our Mission Statement

“Providing total TAKAFUL solutions

within the guidelines of Shariah

and serving all in an admirable manner”

• Commenced Operations in 1999

•Products Range – 7 products•Turnover – LKR 5m•Customer Base – 25

customers•Branches – Nil •Conventional Players in the

market – 12

Our Growth

• Products Range – 30• Turnover – LKR 1 Bn.( USD 9Mn)• Customer Base – 60,000 customers• Branches – 19 (including one in

Maldives)• Conventional Players in the market –

16

Regulatory Challenges

• Sri Lankan Insurance Industry is regulated under The Regulation of Insurance Industry Act, No 43 of 2000.

• Insurance Board of Sri Lanka (IBSL) is the regulatory body .

• There is no separate Takaful Act or any Takaful provisions under the RII Act No 43 of 2000.

Regulatory Framework

Compliance Under “RII Act”

• Has to be a Public Company

• Paid up Share Capital of Rs.100 million per class

• Has a principle officer, a specified officer and actuary

• Maintaining a Technical Reserve (Sec 24).

• Investments in Government Securities (Sec 25(1)).

• Solvency Margin (Sec 26).

• Re-Insurance and acceptability of Re-Insurers (Sec 31 & 50).

• Accounting Requirements (Sec 86).

Regulatory Challenges

• Regulatory framework – not in line with emerging trends

• Rating / Benchmarking by an Independent

Authority

• Lack of investment opportunities

• Government Securities • Equity• Bank Deposits • Corporate Debts,Bonds etc.• Land and buildings• Unit trusts• Mortgage Loans on immovable properties

Regulatory Guidelines for Investments

Marketing Challenges

• Reservations amongst Muslims

• Low awareness & appreciation – both at corporate and individual levels

• Unable to differentiate – leading to confusion in customers mind

• Benefits of Shariah-compliant to the community not conveyed

Continued…

• Low level of market penetration

• Conventional insurance – hyped up (heavy advertising)

• Lack of innovative products (specific customer need)

• Rating / Benchmarking by an Independent Authority

• Marketing / Brand Positioning / Distribution Channels – still on a low scale

• Lack of published data / information on takaful

Our Approach

• ProductsMeeting Specified Customers Need

• ProcessSimple and User-Friendly

• PlacePleasant working atmosphere

• PeopleAlignment with Strategic Business Plans

Products (Based on customer need)

Our Unique – Marketing and Strong Branding initiatives that created Takaful as leading brand

Display at the Colombo Airport

Process (Operating System)

• IT integration in most of the activities

• Issue of SMS alert for policy renewal

• 24 hours – kiosk at our Head office• All data / information – fast

retrieve

24 hours - Kiosk

Place (Pleasant working atmosphere)

People - Takaful HR Model• Sourcing & Recruitment• Orientation & Placement• Job Profile & Performance Appraisal• Training & Development• Recognition & Remuneration• Reward & Motivation• Retention & Re-location (Job)• Retirement (Succession Planning)• Model operated via SOP’s

Thank You