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Extracts from the address of the Chairman, Mr Sonny Tan Siew Hock , at the 35th Annual General Meeting on 27th March 2008
Annual report on the activities of National Insurance Association of Malaysia (“NIAM”) for the year ended 31 December 2007. The year was a satisfactory with much activity being attained on a broad front, which I am proud to say, was achieved, under still fairly difficult insurance market conditions. In the spirit of sharing our knowledge and strengths with each other, the Association has shown that the concept of “Malaysia Incorporated” can actually work, for the betterment of all members of the Association. NIAM’s uniqueness is not in its attainment of these achievements, but more so, in that it was achieved in an industry that, by its very nature and tradition, is supremely competitive. Highlights on the activities that our Association has carried out and issues deliberated upon by the EXCO during this term:
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 • Bijak Malaysia Standing committee • Anuiti Malaysia Standing Committee • Tani Malaysia Standing Committee The Executive Committee held 5 meetings during the year and with a total of 33 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 2007, the Association recorded a Net Surplus of RM5,240 (2006: RM16,547) from its operations, bringing the Net Funds of the Association to RM151,292 (2006: RM146,052). The Association’s Cash at Bank amounts to RM29,834 as at 31 December 2007 (2006: RM48,332). Whereas, Fixed Deposit at Bank is RM151,008 as at 31 December 2007 (2006: RM205,935). Membership As at 31 December 2007, the Association’s membership is thirty two (32) companies, analysis of which is as follows:
As you may have noticed that our membership has decreased by one (1) company for last year. It was due to Commerce Assurance being taken over by Alliance Assurance Bhd. This insurer ceased to be Member because of their inability to comply with Malaysian shareholding requirements as set by our Constitution. Our Membership will increase by two (2) companies for this new term. The Association welcomes, AXA Affin Life Insurance Bhd and CIMB Aviva Takaful Bhd. 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 Malaysians, For Malaysians”, is key to our growth 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 eight (8) 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. Sihat Malaysia had its 3rd Repricing effective 01 August 2007. The new premium for Individual portfolio ranges from a reduction of 13.9% to an increase of 34.8% whilst for the Group Individual, the new premium ranges from a reduction of 16.7% to an increase of 26.9%. The total cumulative number of Sihat Malaysia cardholders since its inception has reached over 1,212,596 with total cumulative annual premium income of RM 334 million. The sales of the Sihat Malaysia plan during 2007 increased by 16.8% to RM33,230,561.18 million (2006: RM28,450,455 million). The Standing Committee realizes the growth of Sihat Malaysia is decreasing although it has created a brand name recognized by consumers. Sihat Malaysia was started with a basic health cover but now Members have their very own health product with various additional features. The Standing Committee has decided to enhance Sihat Malaysia product features by setting a life time limit as guaranteed renewal. Once the papers are finalized, it will be submitted to Bank Negara for approval and target to launch in July 2008. We hope that the guaranteed renewal for Sihat Malaysia will spur a positive growth.
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 companies have achieved cumulative sales of over 289,000 policies, with an annualised premium income of RM 260 million, since its launch in October 1998. For the year under review, new business sales had declined by 10.61% to RM22,191,841.09 million (2006: RM24,826,309 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 Standing Committee has organised a total of eight (8) “Super Bonanza Competitions” for agents of the plan since its launch. The 9th Prize Draw is scheduled to be held on 27th March 2008 with a budget of RM150,000 comprising of 39 prizes to be won. In anticipation of Risk Based Capital (RBC), the Standing Committee is working on enhanced features with a RBC friendly product under new name. More Life Insurers will be invited to participate in the enhanced product. The working papers will be submitted to Bank Negara and target to launch the new product in July 2008. Meanwhile, the Standing Committee has decided to downplay all the Advertising and Promotions Campaigns and Bonanza Competition in order to reduce visibility of the current product till the enhanced product is being officiated. Anuiti Malaysia Project The NIAM Executive Committee has decided not to pursue further with Anuiti Malaysia at this stage due to participating company’s heavy work for RBC and repricing of their existing products under RBC. Hence, the Standing Committee has decided that the individual companies to pursue themselves in near future. Tani Malaysia Project Bank Negara has given approval on 31 January 2008 on Poultry and Livestock scheme. The participation of Members will be by way of Pool arrangement which will be managed by the Malasysian Re. The Takaful Membes are also invited to participate. Their structure will be in accordance to Syariah compliance. On 05 February 2008, the Standing Committee extended invitation to NIAM Members on setting up a new Tani Malaysia scheme geared toward commercial Livestock and Poultry Farm to capitalize on new opportunity. As at today, 10 members have signed up with a total of 70 units equivalent to RM1,750,000 million. We hope for more participation from Members. We are eagerly looking forward to the successful launch of Tani Malaysia’s first agriculture insurance programme soon. Bijak Malaysia Project Bijak Malaysia was successfully launched on 17 July 2007 with 6 participating Insurers and 9 participating Banks. The main targets are the substantial customer base of the participating Banks. Bijak Malaysia is a first of its kind whole life insurance plan that provides superior protection coverage. Guaranteed Triennial cash payment for life and at maturity benefit age 88, 100% of sum assured is payable. Not only does its excellent protection coverage give extra to the insured during productive working years, it doubles the benefit should death occur due to accidents. The 6 companies have achieved cumulative sales of over 8,000 policies, with an annualised premium income of RM13 million, since its launch in July 2007. We believe that the Bijak Malaysia Plan is another successful initiative by NIAM. 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 2007, we have successfully conducted a total of nine (9) 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 nine (9) programmes for this year. This programme includes a Top Management seminar, which is planned for July and will be held in Korea. We are organizing a talk on Overseas Risk by Korean Re, visit to Hyundai Heavy Industry and POSCO steel manufacturer. I hope all CEO 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, I am pleased to inform that the Association has re-distributed 80% of the nett surplus earned from 2007 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 2008. I take this opportunity to thank Malaysian Reinsurance Bhd, and specially the Managing Director, En Anuar Mohd Hassan and the Senior General Manager, En 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. 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 2007, 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 Oh with support from nineteen (19) Executive Committee members. For the year 2008, NICS had successfully co-organised with Malaysian Health Ageing Society (MHAS) and UPM, programme on “Assessing & Determining Quality of Life for People with Medical Disabilities” attended by 132 participants in April 2007. Further the Society organized two more programmes on Anti Money Laundering and The Role of Forensic Science & Difficulty in Injury Assessment. Recently, the Society has organised a Workshop on “Road Survival” attended by 133 participants. The Society also has organized visitation to Puspakom at Wangsa Maju and Perodua’s Car Assembly Plant at Sg Choh, Rawang 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. I hope that 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 I would also like to place on record my sincerest appreciation for the support and confidence of our member companies. It is indeed rare for companies, who are in fact competitors, come together to develop goodwill and mutual support for the common good of all. NIAM take this opportunity to thank the officers at Bank Negara Malaysia for their guidance and support in strengthening local participation in our industry. In particular, Director of Insurance Regulations, Ms Yap Lai Kuen for her 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. Lastly, I would like to express my appreciation to my fellow Executive Committee members, Sub-Committee members, and the members of the various Standing Committees, as well as to our Secretariat for all their valued support and assistance. They have contributed immensely to NIAM and I thank them for their commitment and perseverance for the projects we have undertaken, for the common good of the membership at large. Thank you.
SONNY TAN SIEW HOCK |
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