MALAYSIA: A public-listed lender in Malaysia will be turning its latest acquisition into a digital insurance firm, offering both Takaful and conventional insurtech services, as it seeks to expand its insurance business.
AEON Credit Service has received the greenlight from Bank Negara Malaysia (BNM) to fully acquire Takaful and insurance broker Insurepro in a RM1.7 million (US$400,896) deal involving the purchase of 1.44 million ordinary shares. The sale is expected to be concluded by October.
“The acquisition will allow AEON Credit to grow its insurance business through the insurance broking platform under Insurepro for distribution of both commercial and personal insurance products, including life insurance products by leveraging on our AEON Group retail network and ecosystem,” AEON Credit said in a bourse filing. “The company plans to offer insurance products from multiple insurers and Takaful operators through Insurepro to meet the needs of both consumer and business sectors in Malaysia.”
Having built a strong presence in the Malaysian credit scene over the last two decades through a variety of products including motor and personal financing as well as card services, insurance however is but a small part of its business. Insurance sales account for less than 5% of AEON Credit’s total income.
The firm nonetheless sees “a huge potential” in the insurance sector. COVID-19 has delivered severe blows to the Malaysian insurance industry, threatening insurance and Takaful operators’ topline. Analysts nonetheless see pockets of growth opportunities, particularly within the Takaful sector: Fitch Ratings expects Takaful penetration to increase, driven by government initiatives to aid Malaysia’s bottom 40% (B40) income earners to access Takaful and insurance coverage under the ‘Perlindungan Tenang’ scheme.
As a wholly-owned subsidiary of AEON Credit, Insurepro will be converted into a digital insurtech company, utilizing a direct-to-consumer approach.
“With the new insurtech availability in the market, Insurepro can offer vast insurance and protection schemes to consumers via online tools with more pricing and product options as an advantage of being a broker. Furthermore, we shall provide a one-stop service to our customer base of more than three million mainly from the B40 group as well as enhance our service offerings as compared to aggregators with stricter compliance from BNM guidelines,” AEON Credit explained. The digital entity is hoping to capture the underserved market through microinsurance products, a plan in line with AEON Credit’s main strategy.