Regulatory and Marketing Challenges of Takaful in Non-Takaful Markets (Sri Lankan Experience)

1. Regulatory and Marketing Challenges of Takaful in Non-Takaful Markets (Sri Lankan Experience) Presented By Ehsan Zaheed Director / Chief Executive Officer Amana Takaful PLC – Sri Lanka

2. Presentation Outline • Brief Country Profile • Glimpse of - Amana Takaful PLC • Regulatory Challenges • Marketing Challenges • Our Approach

3. Country Profile

4. An island country in the Indian Ocean off southeast India. History records the coming of the first King – Vijaya in 544 BC The lucrative spice trade on the island was controlled successively by Arab, Portuguese, Dutch, and British traders from the 12th century. It became a British colony in 1798 and achieved independence in 1948. it was then called ‘ Ceylon’ and was famous for tea, rubber and coconuts In 1972 the island was declared a republic, and it adopted the name of Sri Lanka. Since 1978 the island adopted the Executive Presidential system in the administration of the State

5. Brief Country Profile • Total Land Area – 65,610 sq km • Population – 20 m • Age distribution • 0 - 14 yrs: 5.4m • 15 – 64 yrs: 13.6m • Over 65 yrs: 1.2m • Literacy Rate: 92.5% • Life Expectancy: 73 yrs • Per capita: US$ 2,014/- Source: Central Bank of Sri Lanka - 2008 Annual Report

6. Country Profile ……continued • Composition of Population(1981 Census) By Ethnicity • Sinhalese - 73% • Sri Lankan Tamils – 12% • Indian Tamils – 5% • Moors – 8% • Others – 2% By Sector • Rural - 72% • Urban - 22% • Estate - 6%

7. Glimpse of Amana Takaful PLC * The Beginning * Operating Style * Our Success story !

8. Our Mission Statement “Providing total TAKAFUL solutions within the guidelines of Shariah and serving all in an admirable manner”

9. Commenced Operations in 1999 • Products Range – 7 products • Turnover – LKR 5m • Customer Base – 25 customers • Branches – Nil • Conventional Players in the market – 12

10. Our Growth • Products Range – 30 • Turnover – LKR 1 Bn.( USD 9Mn) • Customer Base – 60,000 customers • Branches – 19 (including one in Maldives) • Conventional Players in the market – 16

11. Regulatory Challenges

12. Regulatory Framework • Sri Lankan Insurance Industry is regulated under The Regulation of Insurance Industry Act, No 43 of 2000. • Insurance Board of Sri Lanka (IBSL) is the regulatory body . • There is no separate Takaful Act or any Takaful provisions under the RII Act No 43 of 2000.

13. Compliance Under “RII Act” • Has to be a Public Company • Paid up Share Capital of Rs.100 million per class • Has a principle officer, a specified officer and actuary • Maintaining a Technical Reserve (Sec 24). • Investments in Government Securities (Sec 25(1)). • Solvency Margin (Sec 26). • Re-Insurance and acceptability of Re-Insurers (Sec 31 & 50). • Accounting Requirements (Sec 86).

14. Regulatory Challenges • Regulatory framework – not in line with emerging trends • Rating / Benchmarking by an Independent Authority • Lack of investment opportunities

15. Regulatory Guidelines for Investments • Government Securities • Equity • Bank Deposits • Corporate Debts,Bonds etc. • Land and buildings • Unit trusts • Mortgage Loans on immovable properties

16. Marketing Challenges

17. Reservations amongst Muslims • Low awareness & appreciation – both at corporate and individual levels • Unable to differentiate – leading to confusion in customers mind • Benefits of Shariah-compliant to the community not conveyed

18. Continued… • Low level of market penetration • Conventional insurance – hyped up (heavy advertising) • Lack of innovative products (specific customer need) • Rating / Benchmarking by an Independent Authority • Marketing / Brand Positioning / Distribution Channels – still on a low scale • Lack of published data / information on takaful

19. Our Approach

20. 4 P’s • Products Meeting Specified Customers Need • Process Simple and User-Friendly • Place Pleasant working atmosphere • People Alignment with Strategic Business Plans

21. Products (Based on customer need)

22. Our Unique – Marketing and Strong Branding initiatives that created Takaful as leading brand

23. Display at the Colombo Airport

26. Process (Operating System) • IT integration in most of the activities • Issue of SMS alert for policy renewal • 24 hours – kiosk at our Head office • All data / information – fast retrieve

27. 24 hours - Kiosk

28. Place (Pleasant working atmosphere)

29. People - Takaful HR Model • Sourcing & Recruitment • Orientation & Placement • Job Profile & Performance Appraisal • Training & Development • Recognition & Remuneration • Reward & Motivation • Retention & Re-location (Job) • Retirement (Succession Planning) • Model operated via SOP’s

30. Thank You