1. 0 0 International Takaful Summit 2007 Langham Hotel, London 1 st & 2 nd November 2007 The Bancassurance Route to Takaful Distribution by Mohd Tarmidzi bin Ahmad Nordin CEO, Takaful Nasional

2. 1 1 Key Messages Maybank Insurance & Takaful Sector3 Maybank’s Banca Experience4 2Bancassurance What & Why? Malaysian Takaful Industry1 End

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

4. 3 3 Exchange Rate: US$1 = RM3.40 Malaysian Takaful Industry

5. 4 4 Growth of Bancatakaful in Malaysia Bancatakaful has emerged as a major distribution channel: 2004: 6.9%; 2005: 19.3% 2006: 29.6%. Bancatakaful has emerged as a major distribution channel: 2004: 6.9%; 2005: 19.3% 2006: 29.6%.

6. 5 5 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. 6 6 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. 7 7 Takaful Conventional Maybank Insurance & Takaful Sector Mayban Fortis MNI Takaful Nasional Mayban General Mayban Life Mayban Takaful 197720021993 Maybank 70% 30% 2001 Fortis International

9. 8 8 Evolution of Maybank’s Banca business 2001 (RM million) 2002 (RM million) 2003 (RM million) 2004 (RM million) 2005 (RM million) 2006 (RM million) 2007 (RM million) Mayban 245.8 325.1 518.1 989.0 951.6 1,397.9 1,852.2 Life * 32%59%91%-4%47%32% Mayban 181.6 181.5 160.3 166.8 276.4 298.1 287.2 General 0%-12%4%66%8%-4% Mayban - - 16.3 41.1 101.8 185.8 163.9 Takaful 152%148%83%-12% Total NPW 427.4 506.6 694.7 1,196.9 1,329.8 1,881.8 2,303.3 growth 19%37%72%11%42%22% figures as at 30th June each year *excluding Annuities US$1 = RM3.40

10. 9 9 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: 1.Greater integration.Greater integration. 2.Customer Centricity;Customer Centricity; 3.Maximise sales capacity;Maximise sales capacity; 4.Suitable end-to-end processes;Suitable end-to-end processes; 5.Best Value For Money Product & Service Packages;Best Value For Money Product & Service Packages;

11. 10 Distribution Strategy 1.Bank staff sell takaful / insurance products while the takaful company / insurer provides sales support. or 2.Takaful company / insurer place their staff or agents at the bank premises to sell takaful / insurance products; or 3.Bank provides leads for takaful company’s / insurer’s own staff or agents to sell; or 4.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. 11 Product Strategy 1.Bank sells existing on the shelf takaful / insurance products with home or auto financing such as MRTA, fire, houseowners, motor, PA or 2.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. 12 Branding Strategy 1.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 2.Maintain takaful / insurance company’s own branding by keeping it separate from the bank.

14. 13 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. 14 IT System Strategy 1.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 2.Systems are not integrated thus policies have to be manually processed.

16. 15 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; Distribution Agreement Model Integrated Model Intermediate Model

17. 16 KSF2: Customer Centricity Simple for Customer Solution to a clear need Easy to Understand Avoids ambiguities Bancassurance Products Competitively Priced Matches competitiveness offerings Reflects value of customer relationship Simple for Bank Increase potential for cross selling Integrates into system Integrated Maximize cross over opportunities between bank and takaful / insurance products Flexible Adopts coverage to range of situations Tailors payment to different possible solutions

18. 17 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. 18 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. 19 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. 20 Wassalam Peace to All from Mohd Tarmidzi bin Ahmad Nordin Takaful Nasional