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

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

Country Profile

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 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

Brief Country Profile Total Land Area – 65,610 sq km Population – 20 m Age distribution – 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 Annual Report

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%

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

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

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

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

Regulatory Challenges

Sri Lankan Insurance Industry is regulated under The Regulation of Insurance Industry Act, No 43 of 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 Regulatory Framework

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).

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

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

Marketing Challenges

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

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

Our Approach

Products Meeting Specified Customers Need Process Simple and User-Friendly Place Pleasant working atmosphere People Alignment with Strategic Business Plans

Products (Based on customer need)

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

Display at the Colombo Airport

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

24 hours - Kiosk

Place (Pleasant working atmosphere)

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

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