International Takaful Summit 2007 Langham Hotel, London 1 st & 2 nd November 2007 The Bancassurance Route to Taka

1. International Takaful Summit 2007 Langham Hotel, London1st & 2nd November 2007The Bancassurance Route to Takaful Distribution by Mohd Tarmidzi bin Ahmad Nordin CEO, Takaful Nasional <tarmidzi@maybantakaful.com.my>

2. 2 Bancassurance What & Why? 3 1 Maybank Insurance & Takaful Sector Malaysian Takaful Industry 4 Maybank’s Banca Experience Key Messages End

3. Market Structure Reinsurance 9 Composite 9 General 27 Retakaful 2 Takaful Operators 9 Life 7 The industry Loss Adjusters 40 Brokers 35 International Offshore Financial Centre (I.O.F.C.) Reinsurance 24 Other* 1 General / Life / Underwriting Managers 9 Brokers 14 Captive 4 Information Source: MNRB - The Malaysian Insurance Directory * Recoveries Management (L) Ltd.

4. Malaysian Takaful Industry Exchange Rate: US$1 = RM3.40

5. Growth of Bancatakaful in Malaysia • Bancatakaful has emerged as a major distribution channel: • 2004: 6.9%; • 2005: 19.3% • 2006: 29.6%.

6. What is bancassurance? • In Malaysia, this includes any distribution or marketing arrangement with banks that involves: • Sale of takaful / insurance products: • by the staff of the bank; • using the bank’s distribution channels which includes its call centres, internet, branches and marketing booths as well as third parties providing such marketing support services to the bank; • Using the bank’s customer database other than direct mailing arrangements that are limited to the acquisition of a name list of bank customers for the mailing of takaful / insurance brochures for a limited period at a nominal fee. • Joint marketing of takaful / insurance products with banks.

7. Why Bancassurance? For banks’ customers: • Total financial solutions • Differentiated customer experience; • Value for money products For Banks: • Increased product range; • Can earn fee income. • Can achieve deeper and stronger customer relationships (better customer retention); • Opportunities to bundle and improve product offerings; • Better customer lifecycle management; For Takaful Companies / Insurers: • Broader distribution and market coverage; • Opportunity to save cost and improve distribution efficiency • Become more competitive • Can leverage on banks’ brand, infrastructure and organizational workforce.

8. Fortis International Maybank 30% 70% 2001 MNI Takaful Nasional Mayban General Mayban Life Mayban Takaful 1977 1993 2002 Conventional Takaful Maybank Insurance & Takaful Sector Mayban Fortis

9. Evolution of Maybank’s Banca business

10. Maybank’s Banca Experience Bancassurance = Bank Strategy • The bank must lead the implementation of bancassurance strategy not the takaful company or the insurer. • To deliver a differentiated customer experience unique strategies need to be developed specifically for bancassurance, such as: • Distribution • Product • Branding • IT Systems • Key Success Factors: • Greater integration. • Customer Centricity; • Maximise sales capacity; • Suitable end-to-end processes; • Best Value For Money Product & Service Packages;

11. Distribution Strategy • Bank staff sell takaful / insurance products while the takaful company / insurer provides sales support. or • Takaful company / insurer place their staff or agents at the bank premises to sell takaful / insurance products; or • Bank provides leads for takaful company’s / insurer’s own staff or agents to sell; or • Combination of 1 and 2 or 3 where bank’s sales force sell the simple products while takaful / insurance company’s own staff or agents sell the more complicated products.

12. Product Strategy • Bank sells existing on the shelf takaful / insurance products with home or auto financing such as MRTA, fire, houseowners, motor, PA or • In addition to existing products Bank also sells takaful / insurance products exclusively designed for the bank channel Some findings from own experience: • Bank’s sales force: • reluctant to promote insurance / takaful products if they are too expensive. • do not like to sell products they do not understand (too complicated, too many features) • Prefer to sell simpler products with shorter sales process time with efficient back office processing. • Need to identify with the products they sell.

13. Branding Strategy • Ride on the bank’s brand / reputation • some advantages: • Lower marketing investment; • Higher customer acceptance • Better identification by bank’s sales force • However reputation of takaful company / insurer can be affected if bank’s image is damaged and vice versa; or • Maintain takaful / insurance company’s own branding by keeping it separate from the bank.

14. Before the acquisition of MNI / TN we chose to ride on Maybank’s brand / reputation but now we are reviewing this. underwritten by Mayban Takaful Berhad

15. IT System Strategy • Integrated IT system with the bank allowing policies to be issued by the bank upfront: Other advantages of integrated system: • Better customer experience; • One view of the customer • Data mining and cross-selling capabilities • Better underwriting controls • integrated with payment systems or • Systems are not integrated thus policies have to be manually processed.

16. Integrated Model Intermediate Model Distribution Agreement Model KSF1: Greater Integration = Greater Success Bancassurance = Bank Strategy • Top management of the bank must give strong commitment to takaful / insurance as one of the core revenue generators • Bank must lead cohesive marketing strategy between bank and takaful company / insurer • Takaful / Insurance activities are fully integrated into banking operations;

17. KSF2: Customer Centricity • Simple for Customer • Solution to a clear need • Easy to Understand • Avoids ambiguities Integrated Maximize cross over opportunities between bank and takaful / insurance products Bancassurance Products • Simple for Bank • Increase potential for cross selling • Integrates into system • Flexible • Adopts coverage to range of situations • Tailors payment to different possible solutions • Competitively Priced • Matches competitiveness offerings • Reflects value of customer • relationship

18. KSF3: Maximise Sales Capacity Keep It Simple & Standardised (KISS) • Products • easy to explain, easy to understand (so that everybody can sell) • tailored to specific needs, not ‘one size fits all” • low advice content, high value content. • Processes • minimise administrative complexity • minimise exceptions / special features • clear & simple sales processes

19. KSF4: Suitable end-to-end Processes • Some typical features of successful bancassurance processes: • Straight through processing • Policy issuance upfront; • Industrialised sales process / simple underwriting; • Automation of premium payment / auto-debit, standing instructions; • Claims / benefit payments using auto credit; • Optimise Customer Profile Management; • To deliver top quality service (at low cost) need to invest in technology and re-engineer processes both in the front and back offices.

20. KSF5:Best Value For Money Product & Service Packages • Win - Win - Win situation • There must be an alignment between the value proposition to all involved parties: • Customers; • Banks (as distributor) • Takaful Company / Insurers (as manufacturer) • The product must also be among the best value for money offered in the market for the clients arising from: • Lower management expenses; • Lower distribution expenses • To share advantages with the customers

21. Wassalam Peace to All from Mohd Tarmidzi bin Ahmad Nordin Takaful Nasional <tarmidzi@maybantakaful.com.my>