The latest insurtech start-up accepted into Bank Negara Malaysia (BNM)’s regulatory sandbox has indicated potential interest in the Islamic insurance space.
Fi Life, co-founded by serial entrepreneur Malek Ali and Tan Jiann Meng, currently offers conventional life insurance products. Its product offerings cover life, total and permanent disability, critical illness and accidental insurance direct to consumers.
The company entered the Malaysian insurance market by acquiring direct-to-consumer online life insurance service U for Life back in 2018 and was admitted into BNM’s sandbox this month.
When asked about offering digital Takaful products, Malek, who is also CEO of the start-up, told IFN Fintech: “Not in the sandbox, but we acknowledge that Takaful has a high potential of adoption in the Malaysian market and is an area for future product development.”
Malaysia is the world’s third-largest Takaful market, according to the Islamic Financial Services Board. The Family Takaful sector generated RM8.5 billion (US$1.98 billion) in new contributions in 2021, up 29.1% year-on-year, far outstripping 2020’s 7% growth, according to Malaysian Takaful Association’s latest annual report.
Family Takaful penetration rate rose 10.1% to 18.6% and as at the end of 2021. The General Takaful segment on the other hand saw business gross contributions increasing by 10.6% over the same period at RM3.83 billion (US$890.36 million).
Despite healthy double-digit growth rates, only half of Malaysian working adults aged 20-59 have life insurance or Takaful protection, according to BNM.
Fi Life’s potential keeness is not surprising as the Islamic insurance opportunity in the Muslim-majority nation is deeply appealing. As one of most sophisticated Islamic finance markets globally, Malaysia has attracted more start-ups into its digital Takaful space than any other markets in the world. They include Ouch!, which is eyeing a digital Takaful operator license, and VSure which provides on-demand insurance and Shariah compliant financial assistance programs. TuneProtect, Lyndung, Senang and GrabInsure also distribute Takaful products via their digital platforms.