Amãna Takaful Life confident of growth prospects

Recent initiatives including changes to the product portfolio of the company has positioned it well to benefit from social, demographic and economic changes according to its CEO  

Early indications of a new trend visible: Sri Lankan consumers beginning to actively seek insurance products as opposed to the present insurer-driven model: ATLL CEO 

Amãna Takaful Life Ltd. (ATLL), which offers a unique portfolio of Life and Health Insurance products as well as Wealth Management Solutions – both for individuals and corporates, is laying the groundwork to tap into the significant growth potential of the country’s life insurance industry and thereby embark on a new phase of expansion.

In this interview, Amãna Takaful Life Ltd. CEO Reyaz Jeffrey elaborates on a range of topics. These include the unique aspects of the company’s product offering, its existing products, recent performance, plans for growth and industry trends – including early indications of a shift to a model in which the consumer actively seeks for insurance products. Following are excerpts:

Q: How does Amãna Takaful Life differ from other Life Insurance providers in the country?

A: Amãna Takaful Life differs from other local players in the sector based on our operational model, the Takaful concept – which is about mutuality and partnership. The concept embodies principles of goodness in its practices, especially in investments and strongly advocates that its benefits should be for everyone. 

The term ‘Takaful’, which revolves around the practice of contribution towards the wellbeing of the community, is derived from the Arabic word ‘Kafala’ – which means Mutual Protection and Joint Guarantee. The principles of Takaful bring together a group of people who contribute to a fund that is designed to meet agreed eventualities of its participants.

Participants contribute into a pooling system out of which the affected, due to loss or damage, are benefited by the help of all. In Takaful, customers participate, and their risks are pooled as opposed to the usual transfer of the risk to the insurer. Hence, they become the joint owner of the fund. As opposed to conventional insurance, the Takaful concept not only benefits claimants but also takes care of non-claimants, where non-claimants receive a proportionate share of the surplus from the risk fund at the end of the agreed period.

Besides our adherence to the Takaful concept, a key characteristic which sets Amãna Takaful Life apart is innovativeness. Amãna Takaful Life accounts for several Sri Lankan industry firsts, including its Shari’ah compliant unit linked Investment Policy and Shari’ah compliant Retirement Policy. 

Q: In line with these Takaful principles what are the products and services offered by the company?

A: Our Life products have been designed to meet the needs of all Sri Lankans from different segments and to enable customers to enjoy excellent living and protection benefits in keeping with or above market offerings of an international standard.

Our ‘Surakshitha’ product bundles several living benefits such as critical illness and hospitalisation cover along with non-living benefits. The policy is packaged in an affordable way so that everyone can benefit from it. The best part of ‘Surakshitha’ is that the spouse of the insured can also be covered in the same policy for a small additional premium and the hospitalisation cover is provided on a comprehensive basis and covers the entire family. 

For more discerning individuals we offer the ‘Platinum’ cover, which offers the same benefits mentioned earlier but with higher limits – for instance an annual hospitalisation cover of up to Rs. 300,000 – and additional features as well. It offers comprehensive hospitalisation for the whole family, including overseas surgery, on prior approval. It incorporates the ‘Second Opinion’, a unique feature/option which was the first of its nature to be introduced by a Sri Lankan insurer. It is an option that is built into the critical illness cover where, in the case of a critical illness, the policyholder is entitled to obtain a second opinion from a doctor of his/her choice, even from overseas; subject to prior approval. 

It should be noted in particular that all Amãna Takaful Life policies cover the policyholder and the eligible family members up to the age of 70. 

Amana Takaful Life also offers the ‘Adhyapana’ product, which is intended to support parents in their efforts to provide a good education for their children. With ‘Adhyapana’, if a parent is no longer there to support the education of a child, their education can go on undisturbed. On the other hand, if the parent completes the policy period, the policy will reach an attractive maturity value, that can be used to fund higher education. It’s a double benefit policy. The ‘Adhyapana’ policy also has a comprehensive child hospitalisation cover that includes both surgery and non-surgical hospitalisation. 

Our ‘Prosper’ a fund management plan is Sri Lanka’s first Shari’ah compliant investment linked insurance plan and at present is one of the best-performing wealth management plans in Sri Lanka. In ‘Prosper’ we offer four investment options reflecting different risk appetites. It should be noted that all funds are invested in accordance with Sharia’h principles, which are essentially principles that are based on goodness and in the best interests of humanity and therefore are open to all. Further, investments are managed by a reputed fund manager who manages the funds with a long term view.

We also have the country’s first Shari’ah compliant retirement product, ‘Deergayu’, launched in September 2015.

‘Safeguard’, our Mortgage protection plan, helps a borrower to protect his or her family from financial burden in the unfortunate event of his/her death. It entails a one-off premium that the borrower pays and Amãna Takaful undertakes to pay the loan balance in full, in case the borrower dies.

For corporates we offer ‘Group Life’, which is an annual protection plan that is generally subscribed to by employers as part of their employment benefits. Group Life covers employees both in and outside the workplace.

Q: What potential and opportunities does the company see in the country’s life insurance industry, especially following the mandatory segregation of Life and General insurance businesses?  

A: We see the Sri Lankan insurance market as one poised for growth, given several factors. 

Disposable income is a key factor affecting purchases of life insurance. We expect that there will be increased disposable income resulting from fiscal initiatives and reduced fuel prices in the years ahead. The Megapolis concept, stepped up infrastructure development and rise of key industries such as Tourism, Healthcare and Manufacturing will create new job opportunities which will augur well and create opportunities for life insurance. 

We are also attuned to demographic changes occurring in the country. We have one of the fastest ageing populations in Asia, which will give rise to retirement and wealth planning as well as long term medicare.  ATLL sees these changes as opportunities for growth. 

As Sri Lanka moves towards to the Middle Income nation status and past the $ 4,000 per capita income level, the demand for life insurance will also rise. The time that the Sri Lankan consumer will seek insurance solutions, contrary to the current ‘selling approach’, is not very far away. We are already seeing some early indications of this phenomenon. This will mean more informed purchase decisions, which will result in better persistency of policies over a period of time. 

Q: You referred to measures taken by the company to fast-track growth. What are the specific initiatives taken by Amãna Takaful in this regard?

A: Amãna Takaful made its foray into business in 1999 and Amãna Takaful Life has been functioning as a separate entity from January 2015, as a fully-owned subsidiary of Amãna Takaful PLC. We were among the first insurance companies to segregate in line with the regulations of the Insurance Board of Sri Lanka and we see this as an excellent opportunity to expand the Life Takaful business. 

As mentioned previously, we expanded our portfolio of wealth management solutions, with ‘Deergayu’, Sri Lanka’s first Shari’ah compliant retirement product, in September 2015. We will continue our track record of innovation to serve our customers and all Sri Lankans. Our initiatives to reduce policies lapsing have also borne fruit and significant advances have been witnessed in this regard.

We are in the pilot phase of partnering with Amana Bank for Bancassurance activities, promoting the Deergayu retirement plan. This arrangement will get in to high gear towards the latter part of the year. We are also in the process of launching a Business Intelligence (BI) tool, which is expected to significantly enhance field staff efficiency by providing real time information to field staff management and facilitating real-time monitoring of sales activity. 

One of our key focus areas will be to grow our Agency base, thereby increasing our footprint and reach to consumers. Specialised skill and talent have been inducted to the company and we are already seeing significant upside in this regard.  

Q: How has Amãna Takaful Life performed in the recent past?

A: Financially, we have performed remarkably well, especially considering the considerable post-segregation challenges. We have grown ahead of the industry for three consecutive years. For the last financial year (ended 31st December) our Gross Written Premium (GWP) was Rs. 928 million and year-on-year (YoY) growth was 35%. This was significantly above that of the growth in Gross Written Premium at the industry level for the same period – which was only 20%. 

I must mention here that Amana Takaful Life has grown significantly ahead of industry over the last five years. Our Compound Annual Growth Rate (CAGR) in terms of revenue growth has been 31%, compared to the industry growth of 11% CAGR over the same period. We have also grown in term of market share to notch up 1.7% as at end of 2015. We are confident that our measures for growth will continue to keep us ahead of our own historical performance.  

Despite challenges from increased costs arsing from post segregation operations, we recorded a modest Rs. 18 million Profit after Tax (PAT) for the year. 

Savings and Protection, our main business line, grew substantially to reach Rs. 538 million at the end of the last financial year. New business acquisition for the last financial year increased to Rs. 230 million, a 26% improvement year-on-year.

Many of our individual product lines too grew substantially while the initiatives to reduce policies lapsing have also been successful.  

Our achievements have been recognised by many independent organisations. At the SLIM Brand Excellence Awards 2013 Amãna Takaful Life clinched the Bronze Award in the Turnaround Brand of the Year category, and won a Silver in the ‘Islamic Finance Entity of the Year’ category at the Sri Lanka Islamic Banking and Finance Industry Awards.