By Toh Mei Ling
Takaful operators need to change their outlook and continuously better their business in order to face the various challenges in the modern society, said a lecturer from Universiti Kebangsaan Malaysia's Faculty of Economics and Business, Datuk Dr Kamaruddin Sharif.
"Takaful operators must shift their paradigm by constantly reforming and reengineering their business in order to face the increased competition within and outside the industry," he said at an International Conference on Doing Business in Islamic Asia held in Kuala Lumpur on June 21.
Despite being introduced to Malaysia over 20 years ago, one of the main challenges faced by Takaful operators is the lack of public awareness on the product and its benefits. Takaful is basically insurance based on Islamic principles.
Kamaruddin said Takaful is "still alien to some" and "vague to many". He added that the marketing strategies are not open enough, highlighting the need for better positioning and more extensive promotions.
"Takaful being a relatively recent phenomenon needs to be known, broadcasted and campaigned (for) so as to increase the awareness of the masses. Such awareness will increase the desire to opt for an Islamic-based financial product," he added.
Positioning of Takaful also plays an important part in growing the business for both Muslims and non-Muslims. Kamaruddin said that religious compatibility is directly linked to the product for Muslims whereas for non-Muslims, the product needs to be competitively priced and better featured.
Takaful operators should also look into offering appropriate new general Takaful products to cater for potential liabilities arising from the changes in technology, workplace, environment and privacy issues.
"Operators need to have an active research and development department to handle proliferation of new risks, newly packaged products and customised products," Kamaruddin said.
Another challenge which Kamaruddin suggested Takaful operators should look into is retakaful, or reinsurance. The presence of retakaful in the market at the moment is negligible, he said.
"More retakaful operators should come into the scene to beef up the industry. More Islamic investment instruments are necessary from the various financial institutions so as to ensure takaful moves forward with a more dynamic and progressive outlook," he added.
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