This article first appeared in Personal Wealth, The Edge Malaysia Weekly on September 30, 2019 - October 6, 2019

FWD Takaful Bhd made a splash during its debut in July, with Richard Li, son of Hong Kong billionaire Li Ka-shing, and Finance Minister Lim Guan Eng officiating at the launch. Huge billboards with the brand’s signature shade of orange were soon seen around the Klang Valley.

The attention was expected, given how the takaful provider is backed by two tycoons. A substantial stake (49%) in the company, which was previously known as HSBC Amanah Takaful (M) Bhd, was acquired by Hong Kong-based insurer FWD Group in March. The company is part of Pacific Century Group.

The remaining equity interest in FWD Takaful is held by Malaysian tycoon Robert Kuok via JAB Capital Bhd (31%) and the Employees Provident Fund (EPF) (20%), according to reports.

This may pile on the pressure for CEO Salim Majid Zain. But he is no stranger to the industry. Salim was CEO of MAA Takaful Bhd for 10 years before it was acquired by Zurich Insurance Group AG in 2016. He continued to serve as its CEO until January this year.

Salim is currently the longest continuously serving CEO in the Malaysian takaful industry at 13 years. “I joined the insurance industry in 1992. I worked for a local company [MAA] for a long time. I was happy to see it grow from a small company to a big one that was eventually sold off,” he tells Personal Wealth.

“When I went on to work for Zurich, it opened my mind. I had never learnt from a multinational corporation before. Now, I have both local and foreign experience.”

Salim was happy to work for Zurich. While other companies courted him, their offers were never tempting enough for him to leave. But when FWD Group contacted him and shared its vision, he was impressed.

“The 26 years in the insurance industry taught me a lot. I did not even consider leaving the company [Zurich]. But I think that when you reach a certain point in life, you want to make a difference. So, when FWD Group contacted me, I researched the company and knew that it wanted to do a lot of things,” says Salim.

“One of the companies had actually courted me twice. When I came here [after accepting FWD Group’s offer], the late chairman of HSBC Amanah Takaful said, ‘I have seen your résumé twice. What made you decide to join us?’ I said it was FWD Group. I had studied the company and knew its direction.”

Trying to make a difference

FWD Group is relatively new in the insurance industry, but it has made an aggressive push into the market. It was established in 2013 with the acquisition of ING’s operations in Hong Kong, Macau and Thailand. Now, it is in nine Asian countries, with Malaysia being the latest. According to the company, it has more than 5.5 million customers and US$33.8 billion in assets.

“The vision of FWD Group is to make a difference. There is no way that in 10 years, we can have an asset size similar to that of a company that has been around for a few hundred years. We need to make it exciting and seamless for the customer,” says Salim.

This includes introducing digital and innovative solutions to improve accessibility for customers. FWD Group’s motto is to create fresh customer experiences and easy-to-understand products that are supported by digital technology.

For instance, FWD Group is completely digital in Singapore, where policyholders can interact with a chatbot and buy policies online. In fact, its automated underwriting system enables customers to get an instant quotation for some of its products. The FWD Flyer app digitises the claims process for its travel insurance.

In Hong Kong, policyholders can receive claim reimbursements at 7-Eleven stores and access their policies via the eServices app. Some claims can be made via the app and receive approval within three hours. In most of the countries it operates in, FWD Group is completely cashless. This means customers need to use an e-payment system to pay for policies, even if it is through an agent.

“FWD Group has all the channels — digital, agency and bank partners. But for all of them, we try to make them digital because we spend 60% of our budget on digital [tools],” says Salim.

If it is suitable, FWD Group can bring to Malaysia the innovations of its sister companies across the region, he adds. “We can plug and play or change it for Malaysia. Most importantly, we can learn from the things they have done.”

To create easy-to-understand products, FWD Group cuts down on the number of exclusions and steps to make a claim.

“Do you really need to fill up a form when someone has died? It is our duty to search and check to see if something is claimable and pay it [to the surviving relatives],” says Salim.

This is done in Malaysia via the three-step claim process and a simplified exclusion list. To make a claim, a policyholder merely needs to collect the supporting documents, fill out the claim form and send in the documents, either by mail, email or fax, according to its website. FWD Takaful only has three exclusions for its policies — suicide or self-inflicted acts, unlawful acts and war.

Salim observes that some companies may add loading for policyholders with risky hobbies such as mountain climbing. “But not this company. We want you to celebrate life. We want the process [of buying insurance] to be seamless. We have drawings and diagrams to show you what the policy means,” he says.

FWD Group is not the only insurer that is going big on digital initiatives. While FWD Takaful has the advantage of using the resources of its sister companies, what else can set it apart from its peers, which may have a longer history and a wider network?

Salim says that was the first question he asked FWD Group’s senior management before joining the company. “I told them, ‘Any company can do this as well.’ But the difference is that this company is agile. We started on the right footing. It began when the owners bought the first company in Hong Kong and Macau. They said they were going to make a difference and change the way people feel about insurance.”

If they wanted to introduce an innovation for the sake of customer convenience, it can be done effectively, he adds. “My vision for this company is the same as that of FWD Group. Like the group, we have almost no legacy issues. So, I think we can expand very fast.”

Aiming for big goals

Next month, FWD Takaful will be rolling out its digital platform so that customers can buy policies online. By the end of the year, it hopes to have 600 agents. Its policies are also sold through HSBC Amanah Bank.

The company’s three-pronged focus will serve customers with different needs, says Salim. Someone who wants advice or service can contact an agent while someone who understands the product can buy it online.

However, as with most other insurers in Malaysia, the products sold on these channels will be slightly different. The online version, for instance, may have a lower sum assured than an agency product.

“We believe that one day, at least 30% or more of the insurance business will come from online channels. Right now, it is not even 1%. But you cannot figure out how to do direct-to-consumer business only when that future happens. You have to do it now as an investment for the future,” says Salim.

“All our channels have the digital element with the human touch. That is the strategy because we still need the human element.”

Salim emphasises that digital does not mean only buying products online. The company’s agents are also equipped with digital tools. “It is no longer handing out forms to be signed first and photocopying your identification card. It is all electronic now,” he adds.

Salim has big goals for the company. He is aiming at 15% market share of the local family takaful industry within five years, from less than 2% last year. He also wants the company to be the fifth-largest family takaful provider in terms of new businesses over the next five years. FWD Takaful is currently ranked No 11 out of the 12 family takaful providers in Malaysia.

According to Salim, FWD Takaful currently has about 30,000 policyholders, most of whom were policyholders under HSBC Amanah Takaful, which previously sold most of its policies through its bancatakaful channel.

He is confident that FWD Takaful can achieve these goals. He is not daunted by the presence of the company’s high-profile owners. Instead, he is grateful for the exposure they provide the company.

“I think it is better for us because people will be more confident in us, especially as a new player. If we were a new player with owners nobody knows, that would be harder. We have committed shareholders who understand Asia and have a strong ambition to succeed in this region,” says Salim.

He wants to explore the affordability and accessibility of takaful for the higher-income segment of the B40 group. These people may be able to pay up to RM10 a month for a takaful policy, for instance.

“It has to be an affordable product, perhaps one that is worked through certain associations or through the EPF. All of them have a phone, so that is something we have to think about as well, in terms of how they can buy a policy through the phone,” says Salim.

Observing the industry’s growth

FWD Takaful Bhd CEO Salim Majid Zain observes that the takaful industry has grown rapidly from just two players in the 1980s to 12 currently.

He is a fellow with the Malaysian Insurance Institute and the Chartered Professional in Islamic Finance, as well as a senior associate Certified Insurance Professional with the Australian and New Zealand Institute of Insurance and Finance. He studied insurance at Institut Teknologi Mara (now known as Universiti Teknologi Mara).

After graduating, Salim applied for a job at Malaysian Assurance Alliance Bhd (MAA Assurance) in 1992. He rose through the ranks and eventually became CEO of MAA Takaful in 2007.

An interesting fact about Salim is that he can speak Mandarin, Hokkien and Teochew, which he picked up while he was studying at a Chinese-medium primary school.

The insurance business has been a part of this country’s history. The oldest insurer was set up in 1908. The first takaful operator was launched in 1984, according to Bank Negara Malaysia. New operators were given licences in batches in the subsequent years.

According to a report by Fitch Ratings Inc in January, the takaful business is expanding faster than the conventional insurance business. The family takaful business recorded a growth of 12.9% in the first half of last year, compared with the 5.4% of the life insurance industry. The family takaful segment accounts for 32% of the overall life insurance market, based on new business premiums.

Salim observes that the growth of the takaful industry has come from a low base as it is relatively new. “There were only three or four companies initially and then came another batch of companies. That is why you see double-digit growth in some of the years. It is coming off a small base. Now, since almost all insurers have a takaful counterpart, the industry’s growth is relatively stagnant,” he says.

The takaful penetration rate is still far from Bank Negara Malaysia’s target of 25% by 2020. According to the Malaysian Takaful Association, the penetration rate is only expected to grow between 16% and 17% this year.

Providers need to figure out how to expand their reach and offer affordable products to increase the penetration rate. “The Muslim market is under-tapped. It is one that we need to tap now. But maybe for half of this population, insurance is a luxury. So, these are the things we need to change, including the mindset on getting insurance,” says Salim.

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