| Extracts from the address of the Chairman, En Majid Mohamad, at the 31st Annual General Meeting on 31st March 2004.
As the Constitution, our Association's members comprise of local controlled insurers, 4 of which are Life Insurers, 6 of which are Composite Insurers, 18 of which are pure General Insurance Companies and the balance 3 being Re-insurers. Highlight some of the activities that the Association has carried out: • TERAS MALAYSIA Teras Malaysia , which is a life insurance product that caters for the insurance needs of the middle and working class, has now entered its fifth year of operation. Teras Malaysia has been well-accepted by the public and the eight participating companies have achieved a sales record of over 160,000 policies with an annualised premium of RM132 million for the 5 years since October 1998. The Committee has held five Super Bonanza Lucky Draws for agents since its launch. The Grand Prize for the 5 th Super Bonanza Competition being a Kenari car was won by AmAssurance Bhd. The 6 th Super Bonanza lucky draw contest is currently in progress and is scheduled to end in December 2004. All Agents are entitled to one lucky draw coupon for every ringgit of new premium during the contest period, and for your information, a budget of RM100,000 for the prizes has been allocated. In addition, for the first time, the Committee has planned to present a reward for three (3) Top Life Agents during the upcoming Super Bonanza contest. The prizes are worth about RM2,000 each. The Teras Malaysia Steering Committee is now chaired by En Mohd Salihuddin of Malaysian National Insurance Bhd. This Committee under En Salihuddin's leadership has also planned the next phase of their marketing campaign for even better results from Teras Malaysia in 2004. • SIHAT MALAYSIA Sihat Malaysia is a hospital and surgical product for both life and general insurers. The product was created out of the joint effort of member companies in September 1999 with the objective of using common pricing, policy conditions, coverage and promotional activities. In the last four years, the participating companies have invested heavily in product promotion through aggressive advertising campaigns in the press, billboards, radio and TV. The same continues for this year. The committee will continue to take advantage of the economies of scale of having 15 member companies sharing the advertising and promotional expenditure, to promote the Sihat Malaysia brand name which qualify the criteria of being a Malaysian 'Super brand' soon. The Sihat NIAM Committee had worked together with Joint Committee of PIAM and LIAM to implement the JPI12: Minimum Standard on Product Disclosure and Transparency in the Sale of Medical and Health Insurance Policies. Further, the Joint Committee is in the midst of implementing the Standardized Medical & Health Insurance Underwriting Guide. To-date, the total number of Sihat Malaysia cardholders have reached 958,000 and with total annual premium income of RM230 million with the continued support by member companies. The Sihat Malaysia Standing Committee is chaired by YM Tunku Ya'acob, with the Sub-Committees headed by Mr Sonny Tan, Ms Foo Mei Yuen and Pn Nora Ishak. • PENSION ANNUITY The Pension Annuity Standing Committee, together with their actuaries have been working on an Investment-Linked based annuity plan. The product will be named "Annuity Malaysia ". The members of the Annuity Committee have agreed that the product for the accumulation of retirement fund will be the investment-linked product which will be filed commonly by all participating companies. The product for the post-retirement is an annuity product and the Committee agreed that filing of the post-retirement product would be left to individual participating company. The Committee is currently at the stage of drafting the common policy terms. The unique feature of the investment-linked product is the portability of policy among the participating companies by the policyholder, that is to say that policy holder can transfer their policies from a participating company to another with minimum cost of switching. With strong advertising, the public will take up the Annuity Malaysia product in large numbers and the problem faced by the industry in marketing of EPF Annuity Scheme will not be repeated. The Annuity Standing Committee is chaired by Mr. Ng Lian Lu of AmAssurance and the representatives from all the seven NIAM Life Insurance companies. • TANI MALAYSIA The Government is pushing very hard on the Third National Agricultural Policy, which aims to transform the agricultural sector to meet local food requirements and enable Malaysia to become a food processor and exporter for the region. With the appointment of new Prime Minister and the new Agriculture Minister, the efforts to realize the potential of agriculture sector as a new engine for economic growth has become important priority and should be able to capitalize on this positive mood. The latest development of our proposal for agriculture insurance product called 'Tani Malaysia '. On 15 January 2004 , Bank Negara advised NIAM that Ministry Of Agriculture is of the view that the rating structure for pilot Paddy Yield Shortfall Insurance Programme is on the high side. NIAM has informed Bank Negara that the original rating was actuarially developed by our reinsurers using data provided by MADA and statistics published by Department of Agriculture. Subject to provision of updated statistics, NIAM would seek reinsurer's assistance to review the rating structure. However, due to December 2003 floods where large track of Paddy crops were destroyed, NIAM is of the view that the rates may not improve. The realistic option for further rate reduction is for Ministry Of Agriculture to consider lowering Insured Threshold from 80% to 70%. In addition, Bank Negara has asked NIAM to propose a mechanism to finance farmers' share of premium contribution by way of No Claim Bonus. NIAM is working in consultation with reinsurers and soon formalise the modus operandi. NIAM also suggested that the government kick start the programme by providing 100% premium subsidy to the farmers. Such a model has been successful in many countries including the Philippines , India and Europe . NIAM will see great prospects in this landmark venture. The Technical Committee is chaired by Mr Lai Poong Shen of Oriental Capital Assurance. • SEMINARS NIAM has been focusing its attention on the improvement in professionalism, leadership and marketing skills of Managers in the industry. In the year 2003, NIAM have successfully conducted a total of 9 seminars for middle and top management. In view of favourable support and feedback from our member companies, NIAM shall be continuing the seminars and will be carrying out 9 programmes for this year. To encourage Members to send more staff for training, NIAM will continue giving 10% discount to member companies who register 3 or more participants. Further, starting from this year, NIAM have awarded seminar vouchers worth RM1,500 to eight (8) member companies who have sent ten (10) or more participants to NIAM seminars held last year. These vouchers can be utilized for any seminars during the Year 2004. NIAM thank AmAssurance , Malaysia National Insurance, Malaysian Assurance Alliance, Oriental Capital, RHB Insurance, Uni.Asia General Insurance and Mayban General Insurance for their good support towards NIAM Education & Training. NIAM looks forward to the continuous support from all the Members to join in the pursuit of knowledge excellence. NIAM thank the Board of Directors of the Malaysian-Re, and specially the Managing Director, En Anuar Mohd Hassan and the Senior General Manager, Encik Mustaffa Ahmad, for continuously supporting NIAM, by sponsoring the course fees of the Facilitators. With the Malaysian-Re's kind and generous subsidy, the seminar fees charged to members are much lower, thus enabling more participants from member companies to improve their skills and knowledge. • NATIONAL INSURANCE CLAIMS SOCIETY (NICS) NICS or the National Insurance Claims Society, was sponsored and launched by NIAM in 15 December 1998 . The Society is presently chaired by Mr Eddie Lim from Hong Leong Assurance, with support from his 10 Executive Committee Members. For the year 2003, NICS organized two (2) training programmes on Customer Service Skills for Claims Examiners and Executives, which was attended by 55 participants from claims industry. Further 25 participants from higher level in the claims industry have attended the seminar on Decision Focus which was held in Bangkok . The Committee is now in the midst of printing the Claims Guidelines Book to promote claims best practice in the industry. For your information, the members of NICS are all NIAM member companies. Individuals from the Claims Department of member companies and from the loss adjustment industry may participate in NICS in the capacity of Associate members. NICS will continue to have the full support from member companies, for if the industries are serious about managing claims and must commit the time and resources to this very worthy organisation. The impact of claims, as the single largest cost component of our operations to the survivality of the companies, should never be underestimated. The development of professional and highly competent claims management is paramount for the long-term success of insurance industry. • GUIDANCE AND SUPPORT FROM BANK NEGARA MALAYSIA NIAM would like to thank the Officers of Bank Negara Malaysia for their guidance and support for all the projects that NIAM have undertaken. Their invaluable guidance to our various proposals help NIAM to realize Teras Malaysia , Sihat Malaysia , Annuity Malaysia and of late, Tani Malaysia . No industry can progress without a caring Regulator; and NIAM are certainly progressing, and NIAM are certainly being well taken care of.
MAJID MOHAMAD Chairman 1st March 2004
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