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Extracts from the address of the Chairman, YM Tunku Dato' Ya'acob bin Tunku Abdullah , at the 34th Annual General Meeting on 29th March 2007
Annual report on the activities of National Insurance Association of Malaysia ("NIAM") for the year ended 31 December 2006. The year was a satisfactory period for the Association, with much activity being attained on a broad front, which I am proud to say, was achieved, under still fairly difficult insurance market conditions. Details of the Association's achievements are highlighted in the subsequent paragraphs. This high level of activity has been brought about principally, by the cooperation of member companies, in working together, on exciting projects, for the betterment of the industry.
Committee For the year under review, the Association operated under the following committee structure: • Executive Committee • Education Sub-Committee • Finance Sub-Committee • Sihat Malaysia Standing Committee • Teras Malaysia Standing Committee • Bancassurance Standing committee • Anuiti Malaysia Standing Committee • Tani Malaysia Standing Committee The Executive Committee held 5 meetings during the year, together with a total of 34 meetings being conducted by Sub-Committees and Standing Committees. This level of activity is reflective of the commitment of the committee members towards the goals of the Association.
Finance I am happy to report that the finances of the Association are healthy. For the financial year ended 31 December 2006, the Association recorded a Net Surplus of RM 16,547 (2005: RM 23,453 ) from its operations, bringing the Net Funds of the Association to RM 146,052 (2005: RM 129,505 ). The Association's cash balances are strong with total Cash at Bank totaling RM 48,332 as at 31 December 2006 (2005: RM 172,407 ). Whereas, Fixed Deposit at Bank totaling RM205,935 as at 31 December 2006 (2005: RM103,307). Membership As at 31 December 2006, the Association's membership increased to thirty three (33) companies, an analysis of which is as follows:
With Takaful companies's participation, the Association will continue its work to optimise members' interest. As Malaysian controlled insurers become a rare breed, it becomes even more imperative that our members bind and work together, to face the challenges of the 21 st century. The Association welcomes Takaful Ikhlas, MAA Takaful, Prudential BSN Takaful and invites the other Takaful companies to be our members. Our effort to constantly project the "Buy Malaysian" campaign logo has reflected the unique strength and nationalistic spirit of our member companies, and has given a significant competitive edge in terms of identity and recognition amongst the consumers of Malaysia. Our motto, "Owned By Malaysian, For Malaysian", is key to our survival today and tomorrow.
Sihat Malaysia Project "Sihat Malaysia" is a hospital and surgical product for both life and general insurers. The product was launched by the Association in September 1999, and was created out of the joint effort of member companies, with the objective of introducing a profitable block of business, using a common pricing, coverage and promotional strategy, to attain strong brand awareness and economies of scale. The Sihat Malaysia product, offers "cashless" hospital admission and discharge facilities, with comprehensive coverage of medical, hospital and surgical insurance benefits. In the last seven (7) years since its launch, NIAM had invested heavily in product promotion through aggressive advertising campaigns in the press, billboards, radio and television. The Association will continue to take advantage of its economies of scale, of having eleven (11) member companies share advertising and promotional cost, to promote a common brand name. The total cumulative number of Sihat Malaysia cardholders since its inception has reached over 1,121,131 with total cumulative annual premium income of RM289 million. In view of the high medical inflation experience, the Standing Committee has introduced the 3 rd enhancement. The Actuarial Certificate has successfully submitted to Bank Negara on 22 February 2006. The enhancement is specifically in the areas of Premium Rates is to ensure the continued profitability of the Sihat Malaysia product. The last Sihat Malaysia repricing was made in 01 April 2003. Due to the introduction of several new health insurance plans by our participating member companies subsequent to NIAM's successful launch of Sihat Malaysia, sales of the Sihat Malaysia plan during 2006 declined by 14.4 % to RM 28,450,455 million (2005: RM 33,230,957 million). For the year 2007, the Standing Committee expects to launch a new rider for the Sihat Malaysia plan, known as the "ExPan" rider, which offers the policyholder an Extended Panel of "cashless" hospitals, not currently available with the basic Sihat Malaysia plan. We hope that with its new rider, the premium income for Sihat Malaysia will a positive growth for the years 2007/2008.
Teras Malaysia Project The "Teras Malaysia" plan is an individual life insurance product that caters for the insurance needs of the middle-income and working-class, a sector which up till now, has had minimal insurance penetration. The plan which is basic by design, and affordable by nature, has been well accepted by the public. The original 8 participating companies have achieved cumulative sales of over 271,000 policies, with an annualised premium income of RM238 million, for the eight (8) years, since its launch in October 1998. For the year under review, new business sales had declined by 25 % to RM24,826,309 million (2005: RM33,065,433 million), principally due to the number of participating life insurers falling to five (5) in numbers, brought about by the withdrawal of Bancassurance participants following the introducing of new commission regulations by BNM. The Teras Malaysia Steering Committee has organised a total of eight (8) "Super Bonanza Competitions" for agents of the plan since its launch. To celebrate the 8 th anniversary of Teras Malaysia, the 8 th Bonanza Competition was budgeted for RM250,000 comprising 88 prizes. The prize draw is to be held on 29 March 2007. The 9 th Super Bonanza is currently in progress and scheduled to end in December 2007 with a budget of RM150,000 comprising of 23 prizes to be won. In support of the existing billboard advertising campaign, the Steering Committee has planned a fresh marketing campaign for 2007, and we can look forward to better results in the year to come. Anuiti Malaysia Project The "Anuiti Malaysia" plan is a yet-to-be launched life insurance plan designed as a retirement programme for the public, with two key elements; a pre-retirement and a post-retirement component. The pre-retirement component will be managed by an investment-linked policy, while the post-retirement component by an annuity policy to provide lifetime income. With seven (7) participating member companies, all sharing in a common advertising and promotion programme, we believe the take-up of the Anuiti Malaysia plan by the public will be strong. Combined with an added feature that allows for free switching between the funds managed by the seven (7) participating member companies, the plan boasts of investment flexibility that is second to none in the industry. I am pleased to report that the Anuiti Malaysia Standing Committee, together with their actuaries has successfully re-submitted a revised Actuarial Certificate to BNM on 12 March 2007 in accordance with the revised JPI/GPI 33 - The Guidelines on Investment-Linked Business. We are hopeful that approval will be forthcoming in the near future to enable the Standing Committee to launch the plan soon. Tani Malaysia Project In line with Government's initiatives in the Agriculture Sector under the Ninth Malaysia Plan, the Committee is now working on a framework for a National Livestock and Poultry Insurance Scheme to cater for commercial farms. The Committee has reviewed various market models and hopes to finalize its proposal which is expected to involve pooling of resources for research, underwriting, reinsurance and claims management under Tani Management (Malaysia) Sdn Bhd, a special purpose vehicle created earlier by NIAM with the approval of Bank Negara. The EXCO was disappointed that the National Paddy Yield Shortfall Insurance Scheme was not taken up by the Government in 2005 considering the huge amount of efforts put together by Bank Negara, Ministry of Agriculture, NIAM and Partner Re, and is hopeful that the Livestock and Poultry programme will see better light of day. As such, we are eagerly looking forward to the successful launch of Tani Malaysia's first agricultural insurance programme in the near future. Bancassurance Project Due to the new bancassurance commission limits imposed by BNM last year, the sales of Teras Malaysia between the two channels of distribution, namely agency and bancassurance, has become difficult to reconcile. Following the success of Teras Malaysia and Sihat Malaysia, the Association is set to chart another significant milestone to benefit and protect Malaysian via Bancassurance channel. The product created with an objective of using common pricing, policy conditions and promotion activities. This Bancassurance product is whole life superior protection coverage at very affordable premium with extra protection coverage during the productive / working years. Guaranteed Triennial cash payment for life and maturity benefit age 88, 100% of sum assured is payable. It would be extensive distribution network at the costumer's convenience at all participating bank branches. Four (4) member companies have agreed to support the project, which will further accelerate the joint development of a new bancassurance plan for the industry. The Actuarial Certificate has successfully submitted to Bank Negara on 28 February 2007. Seminars Over the years, NIAM has been focusing its attention on the improvement in professionalism, leadership and marketing skills of our managers. In the year 2006, we have successfully conducted a total of eight (8) seminars for middle and a top management. In view of favorable support and feedback from our member companies, we shall be continuing with our seminars and will be carrying out ten (10) programmes for this year. This programme includes a Top Management seminar, which is planned for June and will be held in Shanghai, China. Our guest Speaker Mr Toi See Jong will talk on "China Experience" and we have planned a visit to Shanghai Port and a shipbuilding yard. I hope all CEO's will be able to attend this seminar, for I would like to assure you, that you will really benefit and enjoy this trip. To encourage our members to send more staff for training, NIAM will continue giving 10% discount to member companies who register 3 or more participants per course. Further, as a show of appreciation, and for the benefit of members, I am pleased to inform that the Association has re-distributed 80% of the nett surplus earned from 2006 seminars back to members, in the form of Credit Notes, on a pro-rata basis based on the amounts spent by members. These Credit Notes can be utilised for any seminars conducted during the year 2007. I take this opportunity to thank Malaysian Reinsurance Bhd, and specially the Managing Director, Encik Anuar Mohd Hassan and the Senior General Manager, Encik Mustaffa Ahmad, for continuing to support the Association, by sponsoring the course fees of the facilitators. With Malaysian-Re's kind and generous subsidy, the seminar fees charged to our members are much lower, thus enabling greater participation of member companies. Social Activities The Association has been organising cocktail receptions, with the objective of bringing together CEOs and senior management of member companies, to build on trust and co-operation within the local industry. During 2006, two cocktail receptions were held with strong representation from members companies. National Insurance Claims Society (NICS) NICS, or the National Insurance Claims Society, was sponsored and launched by NIAM on 15 December 1998. The Society is presently chaired by Mr Melvin Ho (Mayban Life Insurance Bhd) with support from ten (12) Executive Committee members. For the year 2006, NICS organised a training programme on "Critical Thinking skills" and "Creative Thinking & Problem Solving" attended by member companies' Claims departments. The Society had also co-organised with Malaysian Insurance Institute for regional seminar on "Insurance Fraud - Detection Investigation and Privatisation. Recently, the Society also has organized visitation to Puspakom at Wangsa Maju for members holding the posts of Claims Examiners to gain further understanding with regards to the operations as well as to have a better over view as to the procedures involved in inspection process. The Society is current working closely with Bank Negara and PIAM on comprehensive study in Third Party Bodily Injury Claims Fraud (TPBI). The general consensus is that TPBI Fraud is an area of major concern of most insurers. Bank Negara and PIAM believe that NICS, representing Claims personnel of the insurance companies for both life and general insurance sector, is in good position to take up this Fraud initiative. NICS will continue to have the full support from our member companies, for if we are serious about managing claims we must commit our time and resources to this very worthy organisation. The impact of claims, as the single largest cost component of our operations, should never be underestimated. The development of professional and highly competent claims management is paramount, for the long-term success of our industry.
Summary NIAM would like to take this opportunity to also thank the officers at Bank Negara Malaysia for their guidance and support in strengthening local participation in our industry. In particularly, the previous Director of Insurance Regulations, En Donald J Jaganathan, and the current Director, Mdm Yap Lai Kuen for their attention, positive responses and invaluable guidance to our various proposals. No industry can progress without a caring Regulator; and we are certainly progressing, and being well cared of. Thank you.
TUNKU DATO' YA'ACOB BIN TUNKU ABDULLAH |
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