As Bruneians become more prosperous, the demand for insurance products has grown rapidly. Yang Mulia Shahrildin Jaya, Acting Managing Director of Takaful Brunei, discusses the evolving insurance industry landscape in the sultanate, the advantages of Takaful (Islamic Insurance), and promoting financial literacy in Brunei.
2016 marked the first year of the ASEAN Economic Community. This economic integration represents huge potential growth for many sectors of the economy, through increased levels of trade and investment flows. With the regional marketplace increasingly liberalized under regional trade agreements like the AEC, what potential opportunities do you see for Brunei Darussalam insurers?
Brunei Darussalam is a supporter and active member of the ASEAN Economic Community (AEC). With the increase in regional and international trade, and as many companies have more cross border interaction with the AEC, all of those interactions will have economic benefits for Brunei Darussalam’s Takaful operators and insurers.
With the expected increase in trade between small, medium and large enterprises, this is where Takaful (Islamic insurance) or conventional insurance can help. With more economic activity, then Takaful and conventional insurance can complement that as well.
Do you think Brunei is ready to establish itself as a base for regional or international insurance companies that want to take advantage of the AEC’s opportunities?
Absolutely. Takaful Brunei positions itself as one of the prime insurers or Takaful operators in Brunei and will be ready to grow with our fellow Brunei companies when they expand regionally and internationally. Takaful Brunei will be in a position to protect their assets not only in Brunei but also when they go abroad as well. This is definitely an opportunity where Takaful Brunei can be ready for and potentially expand our presence in the region.
According to the latest data, the premiums in ASEAN countries doubled between 2009 to 2015. However, market penetration in the region still remains low with an average 3.5% of GDP. What areas of potential growth do you see in the insurance industry?
When it comes to insurance or Takaful, we have to bear in mind that there are two sets of insurance or Takaful business classes. One is on the protection of the assets where it is more akin to what we called General Takaful or in conventional terms would be non-life insurance. This is protecting assets such as properties, machinery and equipment against many types of potential losses. This protection offering is readily available as and when the companies grow and require to do so.
But where penetration of Takaful or conventional insurance can be more focused is on life insurance. On the Takaful side, it is called Family Takaful. Family Takaful provide two types of benefits which include wealth protection and wealth generation. As people become more prosperous and in turn have more distributable income which can be allocated for participation in Family Takaful products. With wealth protection benefits, such as income protection, in the case of death or disability of the breadwinner, the surviving family members will receive some financial benefits from the Family Takaful product and assist them by lessening some burden of any financial income loss and hopefully provide a period of financial stability. In addition, with wealth generation products, there are products available to help grow the individual’s wealth for good use for their children’s education or family retirement. Generally, as people get more affluent they will require more financial services which will require a good level of financial literacy knowledge, which in turn will help them to fully appreciate the benefits of Family Takaful. Development in the overall financial literacy is fundamental basis for effective Takaful and insurance market penetration.
Another type of product that can potentially grow the industry is relating to medical protection where many types of medical centers can provide various types of treatments not only in respective home countries but also from respectable and renowned medical providers throughout the region. Overall, with more cross border economic activity, companies providing value-added benefits with Takaful-related products can be a positive factor in motivating the workforce to help the companies grow further.
Brunei’s Takaful insurance sector has seen steady growth over recent years, steadily gaining share over conventional insurance providers. What are the key elements behind the outstanding performance of the Takaful insurance industry and what are advantages of Takaful over conventional insurance?
The concept of modern takaful practices was formally established about 40 years ago and is relatively a young industry compared to the practices of conventional insurance which has been ongoing since the 1700s. From the onset of Takaful development, there was a resounding acceptance of Takaful as a sharia-compliant alternative to conventional insurance.
Takaful Brunei not only positions itself as sharia compliant, but puts great emphasis on being a highly ethical company where our customers are treated with high regard and can avail of excellent products and services.
Islamic finance is at the forefront when it comes to ethical products and services which perfectly fit with Islamic teachings of fairness, respect and dignity.
Syarikat Takaful Brunei Darussalam (STBD) was established in 1994, and has positioned itself as the market leading Takaful company in the sultanate, recognized for its innovative products and services. Can you share some of the major milestones achieved by STBD?
Takaful Brunei is humbled by the positive growth and public’s acceptance since its establishment in 1994 where the development of Takaful is greatly credited to the foresight and vision of His Majesty, The Sultan and Yang Di-Pertuan of Brunei Darussalam to propagate the benefits of Islamic Finance in Brunei Darussalam.
Over the years, we have provided General Takaful products not only for retail and individual customers but also successfully structured complex types of protection programs relating to energy, aviation, construction and other industries.
Takaful Brunei was a result of merger in 2010 between former Takaful IBB and former Takaful BIBD. With the combined strengths, Takaful Brunei’s advancement in developing its human capital with accredited training and certifications hopefully results in producing professional standards in the workforce and further propel itself as a market leader in the Takaful and conventional insurance industry.
One of the significant and recent milestones, was being awarded for the first time, ‘Best Takaful Company Brunei’ in July 2017 at the International Takaful Awards in London.
You have also mentioned a key concept in the previous question, which is raising financial literacy. What type of initiatives is Takaful Brunei taking to increase financial literacy among the Sultanate’s population?
With better economic prosperity and access to additional income the need to enhance financial literacy is of great importance for the individual and their family.
Takaful Brunei, being a financial institution, has taken on the responsibility to propagate the benefits of financial planning and in particular the promotion of Islamic Financial Planning (IFP). Takaful Brunei recently produced Certified IFP consultants representing half of the total Family Takaful workforce for the purpose of practicing and promoting Islamic Financial Planning.
In line with the government’s aspiration to instill a savings culture, Takaful Brunei continues to conduct several Islamic Financial Planning presentation talks to small and large organizations in the government and private sectors. Takaful Brunei believes financial literacy should also start at the grassroots levels such as schools where we have launched a special Islamic Financial Planning campaign for schools called a ‘50 Cents Challenge’ to promote and advocate a savings habit of just 50 cents a day. With good financial literacy and discipline savings habit, it will lead to the realization and benefits of Family Takaful’s purpose of wealth protection and wealth generation.
From your point of view, why would you encourage Japanese companies to invest in a country like Brunei?
Brunei Darussalam has many positive factors for investors. Among the factors are: political and social stability; advanced infrastructure which provides easy access and movement of goods and services; and a highly educated and skilled population workforce. Above all, the social fabric and affinity shared between both cultures is a fundamental basis for successful partnerships.