HSBC Amanah Takaful sees Islamic insurance as the industry of the future

By Alfean Hardy
HSBC Amanah Takaful (Malaysia) Sdn Bhd is bullish on the local takaful sector both locally and internationally, said its executive director and chief executive officer Zainudin Ishak.
He said the players in the local Islamic insurance sector should count themselves lucky to be in Malaysia at this stage in the development of the takaful industry overall.
"The takaful industry is set to boom and the local industry is fortunate enough that we are here to witness what is probably the industry of the future. We're still at the infancy stage but we have the brain power to lead," he told The Malaysian Reserve in an interview yesterday [May 28, 2009].
Formed in 2006, HSBC Takaful is a joint venture (JV) that is 49%-owned by HSBC Insurance (Asia Pacific) Holdings Ltd, 31% owned by Jerneh Asia Bhd and 20% owned by the Employees Provident Fund (EPF).
Zainuddin said initiatives from Bank Negara Malaysia and the government, like the MIFC (Malaysia International Islamic Financial Centre) and changes to the framework of how Islamic finance, Islamic insurance and the Islamic capital markets work and work together, had created a platform for Malaysia to reach its target of becoming a global Islamic financial hub.
MIFC was launched in 2006 by the government to strengthen the country's position as a centre of excellence in Islamic finance by creating a vibrant, innovative and competitive Islamic financial services industry.
Such vibrancy, Zainudin said, was important for the country as it would be difficult for Malaysia to be a centre for conventional finance and insurance when there were more established rivals out there.
"If you want to compete on conventional, a country like Singapore has been a conventional financial leader many years before us. They have superb infrastructure and regulation and self-regulation. Then there are financial super markets like Tokyo and Hong Kong. We can't compete on conventional," he said. "So, if you want to be a leader, you need a niche market. This means that the Islamic insurance industry here has huge potential. The journey will be a long journey but based on the aspirations and direction of the government, Malaysia will be a centre for takaful." he added.
Zainudin said one challenge that the industry here faced was talent. "You need enough talent. Take London for example. As a centre for insurance, you have talents that are attracted to it," he said.
However, short, medium and long term programmes being implemented by the government, he said, would help as it was the new frame work by the central bank that made it easier to bring in expatriate talent.
"Under the new framework, it's easier to import foreign talent if there are any. Bank Negara is doing the right thing. Previously you had to move Heaven and Earth to bring in expatriate talent," he added.
For HSBC Amanah Takaful, aside from wanting to maximise its bancassurance relationship with HSBC Bank Malaysia, Zainudin said there were bigger plans afoot that could only be a benefit to both the HSBC group as well as the takaful industry as a whole.
"This is all hypothetical and I'm not saying that this will happen but what can happen is that we can expand the same model here to any other part of HSBC's world. Malaysia can be a pioneer and then bring some of the business from the world back here," he added.

(This story appeared in The Malaysian Reserve on May 29, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)