KUALA LUMPUR (April 12): Malaysia’s takaful industry recorded a strong performance in 2022, driven by increasing demand for Islamic finance products and the acceptance of takaful products as preferred protection schemes, said the Malaysian Takaful Association (MTA)

The family takaful new business industry grew by 18.3% to RM10.06 billion in gross contributions in 2022, from RM8.5 billion in the previous year.

The segment achieved a penetration rate of 20.1% in 2022 versus 18.6% the year before, based on the number of certificates in force against the total Malaysian population.

According to MTA chairman Elmie Aman Najas, the number of certificates in force for 2022 increased to 6.63 million compared with 6.07 million in 2021.

“We are witnessing strong demand for Takaful products, as more and more Malaysians recognise the importance of protecting themselves and their families against financial risks,” Elmie said during his presentation of the Takaful industry 2022 performance.

He said that annual Takaful contributions of new businesses has maintained above the RM2 billion mark, recording RM2.19 billion, a slight decrease of 1.9% from RM2.23 billion in 2021.

However, Elmie said that the amount was higher compared with the pre-pandemic level.

“This is due to lower recruitment numbers (of takaful agents) — but compared with the previous year (2021), the number of people who have registered to become takaful agents has actually increased.

“This has helped the (takaful) industry, and has managed to enable the industry to achieve better penetration rate (in 2022),” he told a press conference.

Last year, MTA registered 39,027 new agents, which is an indication of the continued strong recruitment trend in 2021.

“The numbers are higher than those seen pre-pandemic before 2019, which served as an important indicator of the industry's continued strength as we transitioned from the post-pandemic to endemic phase in our economy,” he said.

In parallel, a total of 1.31 million new business certificates were issued in 2022, a 15.6% increase from the 1.14 million certificates in 2021.

The gross contribution of total business in force was RM8.34 billion in 2022 compared with RM7.42 billion in 2021.

Meanwhile, the general takaful business registered gross direct contributions of RM4.64 billion in 2022, with motor takaful business contributing RM3.07 billion, and the fire takaful business with RM0.84 billion.

“These are increases of 21.1%, 20.7% and 23.5%, respectively from their performances in 2021.

“Motor takaful remained at the top position in terms of portfolio mix of general takaful at 66.2%, followed by fire takaful at 18.2%,” he said.

For 2022, the takaful industry paid out a total of RM7.02 billion in net claims, a 25.9% higher from RM5.58 billion previously.

“Out of this, family takaful recorded total net claims payout of RM5.53 billion which has a spike in growth of 23.09% from the year 2021 of RM4.50 billion,” he noted

For General takaful, the total net claim payout jumped by 38% to RM1.49 billion, from RM1.08 billion previously.

MTA remains optimistic that the takaful industry will maintain its growth momentum in 2023, albeit at a moderate rate.

“Despite a challenging outlook, I can assure you that takaful operators remain focused on providing reliable and comprehensive protection to individuals and businesses,” he said.

Amidst the increased costs of living, which have led to inflation, MTA expects that this will see a potential increase in the visibility of takaful products.

“Inflation, from a protection perspective, means that more individuals should increase their protection or coverage against unexpected incidents,” he said.

Nonetheless, he assured that the takaful industry will continue to provide dynamic and innovative products that are easily accessible to the target audience, provide good protection value, easy to understand as well as easy to access.

“We are confident that the industry will continue to play a vital role in supporting the growth and development of the Malaysian economy,” he added.