Takaful product growth
AM Best’s report also noted that the general takaful (Takaful) sector has grown strongly with a five-year compound annual growth rate of 10% (2015-2019). This growth is mainly due to the relatively low base and penetration of the industry’s growth, as well as the country’s large Muslim population and the increased attractiveness of takaful products given its surplus-sharing concept. Although the segment is relatively small and highly concentrated, AM Best believes the segment will grow faster than traditional non-life insurers.
Insurance product distribution channels
Research and Markets notes that the growing number of digital distribution channels benefits insurers adopting new technologies that allow easy access to insurance policies: Investments in insurtech, messaging platforms and online sales channels are boosting the country’s insurance industry .
Through different distribution channels, insurance companies in Malaysia offer a variety of products with varying degrees of sophistication to different groups of businesses, individuals and other organisations. This will provide the means to meet the emerging needs of each end-use customer and drive net sales.
The era of “one-size-fits-all” policies and a one-size-fits-all approach is coming to an end, as customers expect highly relevant products and efficient processes directly from their travel provider – especially during their insurance claims process
Arijit Chakraborty, Managing Director, Asia Pacific, Cover Genius, told ITIJ how digitalization is changing the way consumers buy products and make claims: “Customers around the world are interacting online in some way in almost every aspect of their lives, and this is driving insurance product offerings. The digitalisation of services and services. The old days of ‘one-size-fits-all policies’ and a one-size-fits-all approach are coming to an end, as customers expect highly relevant products and efficient processes directly from their travel providers – especially during their insurance claims process .”
In a recent survey of the Southeast Asian market, travelers specifically cited their dissatisfaction with the slow claims processes of traditional and online insurers, which take up to 10 days to process, and the average post-claim NPS (Net Promoter Score) ) is -15. “In fact, when comparing preferences for recent versus future travel insurance, nearly half of travelers in Southeast Asia (47%) would prefer to purchase travel insurance directly from their travel provider or agency for use on their next trip ,” Chakraborty said.
“In order to improve the claims experience and increase customer satisfaction with travel brands, we are seeing many regional players adopt application programming interfaces (APIs) that provide instant claims payments and processes. For example, Agoda, a leading digital travel platform, has Operating in more than 30 countries, including Malaysia, it recently integrated XCover, Cover Genius’ global distribution platform, to provide travelers with comprehensive travel protection and instant claims payment,” added Chakraborty.
Etiqa Insurance & Takaful Group CEO Kamaludin Ahmad spoke to ITIJ about the personal accident insurance market in Malaysia, to which travel insurance belongs. There are no published market share figures, as they are classified as personal accident industry figures, but Ahmed said he believes his company is “probably the number one seller of travel insurance online”.
The company focuses on several distribution channels, with the internet becoming increasingly important: “Our main channels,” he told ITIJ, “will be online, agency and banking, in addition to our underwriting support for corporate partners. Insurance. Over the past few years, more and more Malaysians have started buying their travel insurance online. Before the pandemic, we were selling 25,000 policies online each month.”
The role that evolving technology is playing in the adoption of travel insurance is evident in many parts of the world, enhancing the ability of insurers to respond to consumer demand in ways the industry has not been able to do before. Ahmad noted: “In many areas, technology has improved the service we provide to our customers. For example, we can access flight data and cross-check flight times so that payments are automatically credited to our travel policyholders in the event of delays, even when they before making a claim.”
Recovery of outbound travel is good for future travel insurance sales
Before the Covid-19 pandemic, the Malaysian outbound travel market was growing significantly, with more than 13 million outbound trips, and spending by these travelers was also increasing. The average number of nights spent on vacation was 9.9, and the average travel cost per person (Europe) was $1,500. According to research by ETC Corporate, the top European destinations that Malaysians are most likely to visit are Switzerland, the UK, France, Italy and Austria in that order – none of which have cheap healthcare and all require tourists to provide minimal medical insurance in Schengen outside the area.
Most important to insurers, though, is information about how these travelers research and book vacations online. Partnering with these outlets can provide insurers new opportunities to engage with potential customers during the buying process. The top five online sources of information used were:
- 64% social media
- 53% of travel review sites
- 39% search engine
- 35% off travel booking and comparison sites
- 26% of travel agency/travel agency sites.
Statista researcher Raudhah Hirschmann commented in the report that despite Covid-19, economic challenges are not an obstacle for Malaysians to travel: “Malaysians may complain about rising prices for everyday items; however, they are reluctant to sacrifice holidays.
North Asian countries such as Taiwan and South Korea are increasingly popular with Malaysian tourists
While the state of the economy has not stopped Malaysians from travelling, it has influenced the type of travel, with remote destinations being more popular than long-haul trips. Neighboring Indonesia has long been a favourite destination for Malaysians, with Malaysian tourists contributing an average of US$720 per visit in 2016, much more than their Singaporean counterparts. “
She continued: “North Asian countries such as Taiwan and South Korea have become increasingly popular with Malaysian tourists in recent years. With the huge success of Korean culture, especially K-Pop in Malaysia, more and more Malaysians are using Korea as a Their preferred holiday destination. South Korea’s recognition of the booming halal tourism market has also made it easier for Malaysians, who are overwhelmingly Muslim, to travel there.”
As Asia reopens to travel, awareness of travel insurance and its benefits will continue to rise, and there will be opportunities for affinity trading and distribution partnerships in more countries. With Malaysians keen to travel again, industry insiders are confident there is plenty of room for growth ahead.
Ahmed told ITIJ: “There is no doubt that as more and more Malaysians are bitten by travel bugs, the total target market for travel insurance and the online market will become stronger both in terms of number of policies and policy value. Malaysians have gone further and longer.”
Cover Genius’ Chakraborty concluded: “Due to the current market uncertainty, customers around the world, including those in Malaysia, want to feel safe when buying. They want to know that they are protected from anything that may happen, and They want their online experience to be seamless. If brands don’t embrace the digitization of insurance processes, such as claims, they will be left behind.”