Buletin Takaful 2010

Source: The Star, 8th March 2010

An acute shortage of talent in the local takaful market, coupled with two new takaful licences to be issued this year in line with the financial sector liberalisation, are expected to put a dampener on the Government’s move to turn Malaysia into an international Islamic financial hub.

An industry observer, who declined to be named, told StarBiz that for the two takaful start-ups to run efficiently, they would need around 100 to 200 people in the first two years of operations.

“The new players can’t afford to just rely on fresh talent and this is where the shortage happens. The emergence of two new takaful operators will definitely create the demand for talent, hence causing them to hire or pinch from existing operators. The main areas where (there is) shortage is actuarial, finance and accounting and business development.

“Islamic finance is globally facing shortage of takaful talent and the Middle East and North America region itself has recruited many Malaysians to work in Dubai, Bahrain and Saudi Arabia, further aggravating the existing shortage of talent in the industry,” he said.

The “pinching” strategy, he noted, would not bode well for the industry although the operating knowledge between conventional and takaful was almost similar.

Nonetheless, the underlying principles are different and the industry needs talent, not only professionally but morally qualified personnel too, according to the industry observer.

MAA Takaful Bhd chief executive officer Salim Majid Zain agrees that the two new takaful licenses, which are currently being processed by Bank Negara, will lead to stronger demand for takaful talent, especially in the syariah risk management and technical areas.

“We will need at least six more syariah scholars, two CEOs and presumably two actuaries. Then we need several more in syariah compliance and risk management plus those competent in family and general takaful operations.

“On top of that, the agency force and other distribution channels need to be familiar with shariah aspects as well. There is no definite figure. It depends on the strategies and objectives of the current and future players,” Salim said.

Syarikat Takaful Malaysia Bhd group managing director Datuk Hassan Kamil takes a different view, saying the two new licenses will likely be given to companies with a conventional insurance license, which means there will not be much movement of people since these companies will have most of their talent from the conventional business to support the takaful operations.

He reckoned that these companies would only need to establish a syariah division.

Hassan said it was inaccurate to say the industry was suffering from a shortage of takaful talent as in reality, the whole industry – both takaful and conventional – was facing a shortage of talent.

“The talent needed for takaful is the same as conventional from an operational standpoint because the takaful model is fixed and not evolving much – mudarabah (profit sharing) or wakalah (agency) – and a person from the conventional insurance can easily understand the takaful model.

“We are not looking for more syariah scholars. The industry needs more people in actuarial, finance, information technology and operations,” he said.

MAA’s Salim said the shortage in the syariah aspects of takaful was in the advisory and operational levels.

The World Takaful Report 2009, he noted, has rightly pointed out that the takaful industry was lacking syariah scholars who understood the takaful business.

As for risk management, he said the recent global credit crisis, which also affected the insurance industry to a certain extent, has shown that the takaful industry was not impervious to financial risks.

While irresponsible financing has been blamed for the catastrophe, Salim said a new syariah-based architecture on risk management was urgently needed.

There are currently eight takaful operators and two retakaful operators in Malaysia, of which five are foreign from countries like Britain, Bahrain, Germany and Japan.

These takaful operators conduct both domestic and foreign currency business.

As at 2008, the total assets of Malaysia’s takaful industry amounted to US$240.2mil with market penetration of 7.5%.

Takaful assets and net contributions experienced strong growth, advancing at an average 21% and 29% respectively, from 2004 to 2008.