AP Newsletter Q4 2018 PDF

MALAYSIAN
INSURANCE AND
GLOBAL TAKAFUL
UPDATE
4th QUARTER 2018
• Applying IFRS17 to Takaful: An Alternative Approach

• What Do Accountants Think of Takaful?
• IFRS17 and Capital Standards: Together or Independent?
• Pricing Takaful Under IFRS17
• What Does it Mean to be an ASEAN Insurer?
• Uzbekistan Takaful
• Fitbark: It's a dog's world
Malaysian Insurance and Global Takaful Update Q4 Actuarial Partners Consulting
APPLYING IFRS17 TO TAKAFUL:

AN ALTERNATIVE APPROACH
IFRS 17 is an accounting standard that would come into force for
financial years beginning 2021. It is an accounting standard that would
apply for those account preparers which conduct insurance business, not
just insurers. It applies to risk sharing business not just risk transfer as
ultimately both operating models involve a pooling of risk, the difference
being who ultimately will carry the insurance risk.
In Malaysia takaful operators that report on an IFRS basis would have to comply with IFRS
17. It is then necessary to determine how accounting will have to change to accommodate
this Standard. The current thinking is to apply the Building Block Approach (BBA) or General
Model to takaful. This article looks at the implications of applying this model to takaful and
suggests an alternative which may be more appropriate for the business model.
Under the BBA it is first necessary to group the contracts by risk and duration. The diagram
below illustrates such a grouping for a portfolio of contracts issued in 2018:
Figure 1
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Then it is necessary to further classify these groups of policies between three basic
categories:
– Onerous
– Non-Onerous
– Others
Figure 2
Based on the assumptions adopted it is then possible to calculate Residuals for each
category of contracts. A Residual is the balancing amount at inception of the contract after
deducting all the expected contractual benefits from the expected income. This is effectively
an estimate of the life time surplus to be generated by the contract. As would be expected
the residuals for Onerous contracts would be negative whilst the residuals for Others would
be necessarily smaller per contract as compared to that for the Non-onerous contracts. For
takaful the so called onerous contracts deficit would be funded through a qard as illustrated
below:

Figure 3
The Standard also says that contracts cannot be grouped if they ae incepted more than one
year apart. This means that accounting wise it is necessary to determine qard and residuals
by yearly cohorts as illustrated in the figure below:
Figure 4

Under this application of IFRS 17 then each year’s grouping of separate onerous contracts
would require a separate qard! On this basis the concept of risk sharing in takaful would
be compromised severely as the qard for onerous contracts in each year is unlikely to be
repaid resulting in effectively a risk transfer to the operator. Furthermore the operator’s
business model will be affected as takaful operators in Malaysia are underwriting 100% of
losses but are only entitled to 50% of any surplus.
IFRS 17 however provides an alternative to the approach above. B67 to B70 of the Standard
deals with Contracts with cash flows that affect or are affected by cash flows to policyholders
of other contracts. Under such contracts there is effectively a transfer of the liability
(fulfilment cash-flow) from one group of policies (e.g. onerous policies) to another group of
policies. The standard provides an example:
Suppose that payments to policyholders in one group are reduced from a share in the
returns on underlying items of CU350 to CU250 because of payments of a guaranteed
amount to policyholders in another group, the fulfilment cash flows of the first group would
include the payments of CU100 (i.e. would be CU350) and the fulfilment cash flows of the
second group would exclude CU100 of the guaranteed amount. After all the coverage has
been provided to the contracts in a group, the fulfilment cash flows may still include
payments expected to be made to current policyholders in other groups or future
policyholders. Furthermore the standard says that an entity is not required to continue to
allocate such fulfilment cash flows to specific groups but can instead recognize and measure
a liability for such fulfilment cash flows arising from all groups.
It can be surmise that this alternative applies to insurance contracts where there is effective
a risk sharing among the policyholders.

Applying this option to takaful we can instead conceptualize takaful accounting as the
diagram below would suggest:
Figure 4
Under this approach one Residual covers the entire portfolio. We envisage that the lowest
level of aggregation under this approach would be at the Participants Risk Fund (PRF) level.
Thus for takaful operators with multiple PRFs each PRF would have its own residual.
The advantages of this approach are significant enough for takaful operators to investigate
its practicality to its own operating model as:
i) There is no need to segregate onerous contracts. These can be grouped with

other contracts as long as there are sufficient surplus from other contracts in the
pool to meet the shortfall in such contracts.
ii) There is no need to segregate by year of issue as the “surplus sharing” in takaful
applies portfolio wide in each PRF.
More importantly this approach mirrors very closely the takaful operating model in Malaysia;
specifically a qard is only payable when the PRF is in a position of deficit.
There are many implementation issues under this model and the reader is advised to contact
Actuarial Partners for advice on how to apply IFRS 17 to their takaful business under this
alternative approach.
WHAT DO ACCOUNTANTS THINK OF

TAKAFUL?
With IFRS17 we have seen significant discussions on Takaful, in
particular how to classify Takaful under IFRS17. Whilst this is a very
technical discussion a more fundamental discussion is what is Takaful
and what do accountants think of Takaful? Is Takaful actually a mutual
insurance product or perhaps Takaful is simply participating insurance
in another form?
Takaful has different forms by country and even within a country. The current IFRS17
discussions on Takaful have been active in Malaysia. Thus we can start with Malaysian
Takaful models as an example. The typical Takaful model in Malaysia is one with a risk fund
(PRF) and operators fund (OF), with a savings fund (PIA) also present sometimes. The
Takaful operator receives fees (Wakalah fees) to pay for expenses, commissions and profit
in the OF with benefits paid from the PRF. Surplus is shared 50:50 between the operator
and the participant.
At one extreme Takaful might be considered mutual insurance. If it is considered mutual

insurance then we have a certain methodology under IFRS17 (slides given from IASB in July
2018 discussing this). IFRS17 would still apply, but participants play two roles: one role as a
shareholder and another role as a policyholder. Thus under IFRS17 we would determine the
rights and payments to a participant purely as a policyholder and then any residual amount
due to being a shareholder. The key is in the treatment of surplus. In a pure mutual
structure it is understood that all participants have joined together to help one another. Thus
the surplus being shared to a participant might not simply be the actuarially derived surplus
for that policy but rather every policy in the pool share in the risks and there is an element of
cross subsidization. This cross subsidization might be for different products in the pool as
well as different issue years. Of course it is good actuarial practice to ensure the expected
surplus for each product and issue year would be the same, but that there are natural
variations over time. This is what we like to think of as Takaful, the element of mutuality with
large groups of participants helping each other in times of need. From an actuarial point of
view as well we like the concept of large groups of participants in the same pool as this
allows the law of large numbers to be valid to the greatest extent possible, minimizing the
risk of deficits in the fund. Should there be deficits in Malaysia an interest free loan (Qard)
must be given from the operator, thus guaranteeing the benefits would be paid. This
guaranteeing is a complicated issue in Takaful, and something we would like to minimize to
the extent possible. An alternative structure would be discretionary mutual, whereby benefits
are reduced or delayed if needed to avoid deficits in the fund.
WHAT DO ACCOUNTANTS THINK OF

TAKAFUL?
At the other extreme Takaful might be considered similar to participating insurance. With
participating insurance the policyholders are paid discretionary benefits depending on the
experience of the fund. Worldwide there are two general views of participating: those where
the discretionary benefits (bonuses) are basically fixed or vary according to a particular index
such as investment yields and those where bonuses vary according to asset shares. Asset
shares are a methodology used by actuaries to ensure all policies are given a fair amount of
surplus in relation to its contribution to the overall surplus of the fund. In this case depending
on the level of detail used the experience of each product and each issue year is used to
minimize cross subsidization and maximize fairness. With this in mind there is little in the
way of mutuality, which is seen in that participating products are rarely if ever considered
mutual in nature. Takaful on the other hand regularly allows and even encourages cross
subsidization between issue years as well as plan types. As an example, there could be a
major loss in the risk fund which causes a loss (qard). When a new policy enters the fund
the following year it had nothing to do with that loss, but nonetheless would not receive
surplus sharing until the loss is paid off. Going one step further, if that new policy is
profitable it would have negative reserves (for a regular contribution plan, future outgo is less
than future income). This negative amount is not saved for that particular policy but is also
used to pay off the qard.
Globally these are not the only models in use. There are also models where participants
receive surplus from the PRF but not the operator. There had been some companies using
this model in Malaysia as well, but it is currently not in use. For this model the operator does
not receive any share of surplus in the PRF but reaps the profit from the wakala fee.
The goal of IFRS17 is the fair and accurate depiction of the accounts (and thus profitability)
of an insurer. Thus the question: what do accountants (and auditors) think of Takaful? Is
there mutuality whereby different products and issue years (cohorts) assist each other, or is
it more of a participating plan where mutuality is not present or at least minimized? The
current thinking is for the PRF to be split into cohorts by issue year (at least) and likely by
product type. The PRF itself will not be an integral part of the accounts but rather be
relegated to the back of the accounting statements in the notes. This implies that the PRF is
simply a notional means of allocating surplus rather than its own entity whereas traditionally
it has been said or at least implied that the participants are the owners of the PRF.
IFRS17 is coming worldwide, including the Takaful world. This is inevitable. It is vital for
your voice to be heard, what is Takaful currently and what should Takaful be? If you are a
Takaful operator you must understand how these nuances will affect your accounts and
affect the perceptions of your participants towards you. Will they continue to consider you to
be an Islamic structure which is unique from conventional insurance or are you simply a
name change from conventional insurance?
IFRS17 AND CAPITAL STANDARDS:

TOGETHER OR INDEPENDENT?
One source of confusion sometimes is the difference between regulatory
capital standards such as risk based capital (RBC) and IFRS17. If we are
solvent under regulatory standards does that mean we will look good
under IFRS17? Written differently: can we rest easy or do we still need
to worry about IFRS17?
In Malaysia we have been blessed with regulations which have ensured that regulatory
reserving (gross premium valuation, GPV) is consistent with accounting standards, IFRS4.
This has not been the case in many markets, where the regulatory basis has differed from
the IFRS4 basis. The regulatory basis in Malaysia and elsewhere consists of two pieces:
reserving (GPV) and solvency standards (RBC). GPV ensures that we have sufficient funds
to cover future outgoes such as benefit payments, expenses and commissions. This is done
on a best estimate basis with padding. Under IFRS17 this is equivalent to fulfillment cash
flows, with a risk adjustment being used rather than padding. The risk adjustment and
padding might be the same or could be different. Although both GPV and fulfillment cash
flows use best estimate assumptions, the discount rate used could be different. Thus with
some (or a lot of) effort GPV and fulfillment cash flows could be the same or provide similar
results. If nothing else the spirit and purpose of both are similar. This skims over some
details, but this is the overall message.
The challenge in comparing regulatory capital standards and IFRS17 is in the other piece,
namely the calculation of RBC and the contractual service margin, CSM. For regulatory
standards, above and beyond GPV is the need to ensure there is enough capital available
by the shareholders in case any adverse events happen to the insurance company. These
events might be related to insurance activities, investment activities or operational risk.
Some regulations have a simplified methodology for this calculation whereas in markets
such as Malaysia the calculation is rather precise. In Malaysia the methodology for
calculating the various risks is specified, and becomes the total capital required. If we have
just enough capital (beyond our GPV reserves) to cover this capital required we are said to
have a capital adequacy ratio, CAR, of 100%. We then have a minimum CAR ratio as well
as company specific target CAR and whatnot, perhaps 200% being a common target CAR.
These calculations purely specify how much capital the regulator feels is needed to run the
business. It does not differentiate to whether the products are profitable or unprofitable or
might become unprofitable in the future. It is up to the insurer to price the products
appropriately and manage the risks of the company to keep the CAR to acceptable levels.
IFRS17 AND CAPITAL STANDARDS:

TOGETHER OR INDEPENDENT?
On the other hand CSM makes no reference to the potential risks of the company. The CSM
simply takes the future profit of the product (split into cohorts, one year tranches of business)
and releases it over the lifetime of the product. It would simply be luck that the CSM and the
RBC produce similar results. What will this relationship be and how can we manage the
risks of the company and pricing of the products to ensure a similar message is given with
respect to the ability of the company to cover the CSM requirements as well as target CAR?
PRICING TAKAFUL UNDER IFRS17

When we formally move to IFRS17 the methodology for pricing will not
change: we still need to develop product and Takaful model designs,
contributions and profit tests. The challenge will be in the details.
Our current methodology for profit testing is to project all the incomes and outgoes in each
Takaful fund and determine the resulting profitability. For instance for a drip MRTT plan we
would project the cash flows in the risk fund, the savings fund and the operators fund. One
of these cash flows is the increase in reserves. This would now need to be under a
regulatory basis as well as an IFRS17 basis as we need to ensure the product is not hurting
the solvency of the company and also is giving shareholders the level of profits it desires.
For some products profitability will go down significantly under IFRS17. For instance,
currently for an MRTT product the operator receives a wakala fee at policy inception which is
considered an income in the operators fund at time zero. Over the policy term expenses are
assumed and other outgo, with a corresponding regulatory reserve calculated. This reserve
has a ‘cost of capital’. The cost is the difference between the investment return you can
earn on the reserve and the required rate of return on capital by the shareholders. For
instance in Malaysia perhaps a 4% investment return is reasonable, meaning you can earn
4% p.a. on the reserves held. The required rate of return on capital tends to be 10% or
more, meaning the higher reserves are the more return on capital a product must earn. With
CSM being held this holds back profit which also incurs this cost of capital.
Another issue is with the investment income assumptions for products which have a savings
fund (PA). For instance a drip MRTT plan has a PA fund which earns an investment return
and drips into the risk fund (PRF). In pricing we have tended to use the expected investment
return whereas under IFRS17 we will likely use the risk free rate as the investment
assumption. This means that the PA will be expected to run out of money before the last
drip into the PRF. In our reserving in the PRF under IFRS17 we would thus continue to have
claims outgo but no more drip income once the PA is used up. This will cause an increase in
our PRF reserves which again increases the cost of capital requirements.
Different Takaful models will behave differently under IFRS17. We will need to show
management the effect of changing models on product pricing. For instance some
mudharaba models result in expenses being incurred before profit sharing from the risk fund
can be received. Products using this model might be profitable, which means CSM is
required, but the operators fund has not received enough income to cover this CSM.
Adjusting the model where possible may be the best pricing strategy here to avoid
distortions to the accounts. In Malaysia the proposed new Takaful Operational Framework
(TOF) gives a range of acceptable Takaful models. Each model might result in differing
IFRS17 treatment with resulting effects on the company accounts. Our role in pricing is to
model this for management to understand the long term effects of differing models.
PRICING TAKAFUL UNDER IFRS17

Currently we tend to price on a net basis, meaning if our benefits are 100% retakaful we will
simply assume the retakaful rates in our pricing. As an example, perhaps our best estimate
assumption is 60% M8388 (typical Malaysian mortality table) but our retakaful rates are 50%
M8388. We could simply price using the retakaful rates and achieve a lower contribution
rate than if we priced using 60% M8388. We can do this as we get reserve credit for the
retakaful rates upfront, meaning our reserves are based on 50% M8388 rather than 60%.
The ‘benefit’ of the retakaful is thus the present value of the difference between 50% M8388
and 60% M8388. Under IFRS17 we will need to hold this difference as retakaful CSM and
release it over time. Thus the effect of cost of capital could be large and depending on the
view of the regulators the treatment of retakaful itself may change.
Under IFRS17 operators will need to show their accounts gross of retakaful and the value of
retakaful clearly shown. For operators that heavily rely on retakaful this will be very clear in
the accounts, as will whether this retakaful is costing the operator or providing a benefit.
This will put retakaful practices into clear view for anyone reading the accounts. The pricing
actuary will thus need to justify the costs of retakaful to a much wider audience, with little or
no room to hide these costs. Anyone who has presented to the Takaful AGM where public
shareholders are involved can attest to the presence of shareholders who may only own a
few shares but have a large voice in asking many questions on the accounts. This could
prove challenging!
Due to this transparency of retakaful under IFRS17 Takaful operators will need the help of
retakaful operators more than ever. For instance in the prior example the retakaful operator
could share experience and justifications for why 50% M8388 is reasonable for the Takaful
operator. The Takaful operator could then use that for its gross pricing assumptions.
IFRS17 is coming, this is a reality. There is nothing we can do about practices and pricing in
the past. However, we CAN make a difference by quickly pricing products favorable under
IFRS17.
WHAT DOES IT MEAN TO BE AN ASEAN

INSURER?
In the news recently Etiqa Takaful announced it will be expanding into
more ASEAN markets in the next year. Whilst this is certainly great
news for Muslims in ASEAN and Takaful globally, this begs the question
of what does it mean to be an ASEAN insurer as opposed to a global or
local insurer?
There are few ASEAN insurers which have expanded beyond its home market. Great
Eastern has been in both Malaysia and Singapore for over a century, meaning when they
started operations Malaysia and Singapore was not yet split. Great Eastern is also in Brunei
as well as Indonesia and had been in Vietnam. From Malaysia Etiqa has already expanded
into Singapore, Indonesia and Philippines. Tune has also expanded from Malaysia into
Thailand. Out of Thailand Bangkok Insurance has expanded into Laos and Bangkok Life
has expanded into Cambodia.
These insurers are the trailblazers of the Asean Economic Community, AEC. AEC has been
discussed (and delayed) for a long time, but eventually will result in the ability of insurers
from one country to freely set up operations throughout ASEAN (and of course follow the
rules of each country).
In ASEAN culture is extremely important and not separate from the business world. Thus an
ASEAN insurer would understand the importance culture plays in business, and understand
that the many different cultures in ASEAN each need to be respected. Balancing with the
respect for local culture would be the multinational branding. This branding implies that the
insurer understands best practices of other local markets and what types of products and
services would be effective in the country.
In terms of pricing and product profitability an ASEAN insurer has the potential to offer more
affordable products as compared to a global insurer as resources are within ASEAN rather
than potentially from more expensive global and regional offices.
WHAT DOES IT MEAN TO BE AN ASEAN

INSURER?
Return on capital requirements are also potentially lower than global insurers as there would
be relatively less currency risk (which would normally be accounted for in return on capital
calculations).
Finally from an AEC point of view ASEAN insurers are more likely to encourage knowledge
transfer amongst ASEAN nations and keep resources within ASEAN.
So, what do you see as the advantages of an ASEAN insurer and what is needed to
encourage more such activity?
ASEAN Key Statistics:
Health Education Cellphones

GDP Per Expenditure Expenditure per
Country Population Capita % GDP % GDP inhabitant
Singapore 5,888,926 $93,900 4.90% 2.90% 1.44
Brunei 443,593 $78,200 2.60% 4.40% 1.23
Malaysia 31,381,992 $29,000 4.20% 4.80% 1.35
Thailand 68,414,135 $17,900 6.50% 4.10% 1.78
Indonesia 260,580,739 $12,400 2.80% 3.60% 1.76
Philippines 104,256,076 $8,300 4.70% 2.70% 1.11
Laos 7,126,706 $7,400 1.90% 2.90% 0.52
Vietnam 96,160,163 $6,900 7.10% 5.70% 1.25
Myanmar 55,123,814 $6,200 2.30% 0.80% 0.87
Cambodia 16,204,486 $4,000 5.70% 1.90% 1.15
The original article is here:
https://www.thestar.com.my/business/business-news/2018/08/15/etiqa-to-expand-into-more-asean-markets/
UZBEKISTAN TAKAFUL
Uzbekistan has recently announced its intention to promote Islamic
finance including Takaful. This is of course a welcome announcement as
Uzbekistan is the most populous nation in Central Asia and 90% of its 32
million people are Muslim. Other nations in the region have made
similar attempts, for instance in Kazakhstan there have been regulatory
hurdles and in Azerbaijan its largest bank closed Islamic banking in
2015. The advantage Uzbekistan has going for it is that a working group
has been created which will cut across all government agencies. With a
success story in Uzbekistan we can use this as a blueprint for the rest of
the region.
As practitioners of Takaful elsewhere, what advice would we have for Uzbekistan?
• Takaful will follow Islamic banking, as Islamic banking grows, sales of Mortgage
Reducing Term (MRTT) will correspondingly grow. Thus any discussion of Takaful
must start with Islamic banking, what risk management products such as MRTT do
they need and with such products how can Islamic banking grow.
• If a tariff structure is used for compulsory classes of business such as motor and fire
Takaful has the potential to truly disrupt conventional insurance due to surplus
sharing. Regulations will need to find a balance between encouraging Takaful and
cannibalization of conventional insurance business.
UZBEKISTAN TAKAFUL
• Takaful can be extremely useful for micro type coverage, but a pure mutual structure
is needed. With these structures pools are created for groups of people, whether
neighbors, colleagues, associations or whatnot. These pools cover the participants
on a best efforts basis with no guarantees. This provides coverage at a minimum
cost with some simple regulations to ensure participants understand the pool and its
limitations.
• Developing life insurance products in the conventional insurance world normally

entails designing the product and features and then determining an appropriate
investment strategy. In the early years there will not be sufficient Islamic assets for
proper asset liability management of all product types. Thus in product development
the available asset classes and characteristics should be taken into account.
Conversely, if such products are desired by the industry and encouraged by
regulations then relevant Islamic asset classes must also be encouraged.
• Takaful will start out small and must be nourished and cared for. Conventional
insurers should be allowed to sell Takaful through carefully designed window
operations. This will ensure expenses overruns can be kept to a minimum. Where
possible composite Takaful operations can be allowed to further enable family (life)
Takaful and general Takaful to assist each other in the growth phase of Takaful.
• At the earliest stage of development decisions should be made as to what Takaful

should look like, will it look distinct from conventional insurance or simply be another
product line. Similarly will there be consistency in the model used or will differing
Takaful operators be allowed to innovate with respect to the model.
UZBEKISTAN TAKAFUL
These are exciting times for Takaful in Central Asia. It’s up to us to use our experience to
nurture Takaful in Uzbekistan and beyond.
Key statistics (CIA World Factbook):
Uzbekistan
Population 29,748,859
% below 25 42.40%
% age 25 - 55 44.49%
% above 55 13.10%
Insurance
Penetration rate
(2013)^ 0.3%
Proportion of
Insurance non-Life 87.8%
Life Expectancy 74
Health Expenditure
(%GDP) 5.8%
GDP Per Capita $6,900
GDP by Sector
Agriculture 19%
Industry 34%
Services 47%
Population below
poverty line 14%
Proportion of total
income of the
highest 10% 29.60%
Cellphones per
inhabitant 0.82
^ Business Wire
The original article is here:

http://www.meinsurancereview.com/News/View-NewsLetter-Article/id/43688/Type/MiddleEast/Uzbekistan-Govt-
to-promote-Islamic-finance-including-takaful/1/sid/56188?
INSURANCE AGENTS: EVOLUTION OR

EXTINCTION?
Two recent articles published in the Asia Insurance Review highlight the
incredible potential of online insurance sales and by correlation the
dangers facing agents with their relatively high commissions.
The first article highlighted the Indonesian digital insurance startup, PasarPolis.com, which
recently received a Series A funding round from ride hailing company Go-Jek, e-commerce
firm Tokopedia and travel booking startup Traveloka.
With the goal of tapping Southeast Asia’s growing internet economy, the deal is described as
a strategic move as it offers the potential of developing products with these three companies
and is expected to provide access to an estimated 100 million insurable hits per month.
Of particular note is the potential to bundle insurance coverage with ride hailing trips, e-
commerce sales and travel deals. This type of insurance, focused onto the immediate
needs and wants of the insured is likely to be the future of insurance i.e. embedding
insurance into the risk management practices of the insured.
The second article focuses on China where online accident & health insurance grew 79% in
the first half of 2018, with a premium income of USD1.05 billion, according to data released
by the Insurance Association of China (IAC).
So what does this growth in online insurance sales mean for existing insurance agents?
Life insurance agents currently focus on savings type products as the high premium rates
result in lucrative commissions to the agent. These products as well are fairly easy to sell
and require relatively little explanation or planning work.
It should be noted that with the new IFRS17 reporting standard approaching, insurers will no
longer be showing gross premiums as their top line. Instead it will be risk premiums, so
these easy to sell savings products will be less desirable than products with more risk
protection. With this transparency created by splitting premiums into risk premiums and the
savings portion separately there is the possibility that this business is partially lost to banks
and other savings channels.
Where insurance agents will need to add value is with complex risk management products.
Simple risk management products will be increasingly bundled with other purchases online,
reducing the need for agents in this market, or bypassing them completely. Simple savings
products will also increasingly be lost to other channels. Thus agents will need to venture
into more complex risk management products or face extinction.
For the insurance industry it is up to us to assist in this transformation. Risk management

will need to become a part of the culture in our markets. This starts with school education,
where risk management including the use of insurance needs to be taught as a subject.
INSURANCE AGENTS: EVOLUTION OR

EXTINCTION?
This has been started in Australia already. With education and awareness and continued
focus on professionalism, insurance agents will have both the tools and potential client base
to avoid extinction and thrive.
The original articles mentioned can be found here:
http://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/43867/Type/eDaily/Indonesia-3-startups-
unite-to-fund-digital-insurer
http://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/44426/Type/eDaily/China-Online-accident-
health-insurance-sales-grow-fastest-in-1H2018
FITBARK: IT’S A DOG’S WORLD

As actuaries we love data. The more data we can get and manipulate into
more accurate insurance premiums the better. With greater accuracy
comes better risk management as our understanding of the underlying
risks increase. Also with greater accuracy comes greater fairness for the
insured, and with greater fairness a likely greater willingness to purchase
insurance products. This extends beyond traditional pricing strategies
and products into cutting edge markets such as for pet insurance.
Fitbark works conceptually like Fitbit but for dogs. Fitbark can be attached to a collar around
a dog’s neck and monitors activity, sleep quality, distance travelled, calories burned and
overall health and behavior of dogs via BarkPoints. It also provides medical insights
(changes in mobility, anxiety and skin conditions) on dogs through their behavior and
sleeping habits. This alone provides data which actuaries can use to price pet insurance
products significantly more fairly, but importantly provides the ability to embed this coverage
into other activities of the pet.
Fitbark comes with an exclusive app to provide insightful comparison and interaction with
other users/dogs. These interactions can be the basis for activities for the dog such as
travel plans, medical appointments and whatnot. Insurance thus can embed into these
activities, seamlessly adding value and making the purchase of insurance both logical to the
insured and profitable to the insurer. Beyond the app developed directly by FitBark, Fitbark
API enables developers to seamlessly integrate FitBark data sets into third party mobile and
web apps. This means an insurer can design apps which use the data of Fitbark to
determine appropriate insurance products and rates whilst embedding these products into
other dog related services.
To see an example of some of the data available from Fitbark see the link below:
https://www.fitbark.com/explore/
LEARNING AND DEVELOPMENT
learn@AP will be introducing an Intensive Course Series on Statistical Data Analysis over the next
couple of months. This series is suitable for professionals in all fields including finance, healthcare,
education, social sciences, business, agriculture, transportation and econometrics.
For more information please contact learn@actuarialpartners.com

Bootstrapping Method for Capital and Reserves Estimates – 28 August 2018
Group photo of the participants of the Bootstrapping Workshop.
Dr Frank Ashe explaining an example of applying boostrapping in a business case.

IFRS17 for General Insurance Workshop in Bangkok – 29 August 2018
Group photo of the participants of the IFRS17 General Insurance Workshop.

This workshop was jointly conducted with Team Excellence, our partner firm and member of APACS.
Mr Piya from Team Excellence explaining to the audience about IFRS17
Ms Ema from Actuarial Partners with a participant during the hands-on session.
HAPPENINGS AND EVENTS

OIC Par Project
Actuarial Partners Consulting and Team Excellence Consulting had been appointed alongside Barnett
Waddingham, our associate in the UK and Lewis and Ellis, our associate in the US to assist Thailand’s
Office of Insurance Commission (OIC) to study, analyse and compare principles and rationales behind
participating fund regulations in Thailand and other countries and recommend relevant guidelines and
policies to regulate participating funds in the Thailand market as well as the Thailand Life Insurance industry
including its impact to the industry as well as to propose recommendations and time frames to review and
amend the regulations to participating funds.
Mr. Suteam Pattaramalai, FSA, FSAT and Ms. Sutthinuch Tiensawad from Team Excellence
Consulting delivered the presentation to Thailand’s OIC officers and Life Insurance Industry.

Takaful Rendezvous 2018
Hassan Scott Odierno seen here moderating the session on retakaful, in particular debating the use
of a Musyarakah model for managing expense strains. Seen here also in the picture are Dr Rafik,
Mahomed Akoob and Marcel Omar Papp
The panelists sharing a light moment during the session.

Actuarial Society of Malaysia (ASM) 40th Anniversary
Senior Partner Zainal Kassim seen here with other past presidents of the
Actuarial Society of Malaysia during the 40th anniversary dinner of the ASM.
Each spent a few minutes giving words of wisdom to the younger actuaries.
During a recent project in Bhutan, Zainal Kassim

had the opportunity to visit Paro Taktsang, also know as
the "Tiger's Nest". It was a challenging trip that involved a 5 hour
trek and reached an elevation of more that 10,000 ft!
PARTNERS
Zainal Kassim
FIA, FASM, FSAS, ASA
Zainal is senior partner and managing director. He

is a pioneer in the actuarial field in Malaysia have
been active in the scene since 1982.
Chin Chee Yen
Since joining the company in 1992, Chee Yen has

been involved in various areas of actuarial work,
particularly in General Insurance.
Aiza Yasmin Benyamin

FIA, FASM,
Aiza has over two decades of experience

consulting to insurance firms and providing advice
on social security funding requirements.
Hassan Scott Odierno

FSA, FASM
Hassan specializes in Life Insurance and Takaful

consulting and is an avid speaker in Takaful
conferences from Asia to Africa.
Nurul Syuhada Nurazmi

FCAS, FASM
Syuhada is one of the few Casualty qualified

fellows practicing in Malaysia.
Syed Hamadah Othman

FFA, FASM
Hamadah is one of the leading practitioners in the

actuarial retirement space with over two decades
experience advising private firms and government
agencies.
CONTACT
Actuarial Partners Consulting Sdn Bhd
(formerly known as Mercer Zainal Consulting Sdn Bhd)
Suite 17.02 Kenanga International
Jalan Sultan Ismail 50150 Kuala Lumpur
MALAYSIA
Phone
+ 603 2161 0433
Fax
+ 603 2161 3595
Websites
actuarialpartners.com
learn.actuarialpartners.com
learnduit.com
Twitter
@apcmy
Facebook
facebook.com/actuarialpartners
Linkedin
linkedin.com/company/actuarialpartners
Email
enquiry@actuarialpartners.com

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MALAYSIAN

• Applying IFRS17 to Takaful: An Alternative Approach

APPLYING IFRS17 TO TAKAFUL:

APPLYING IFRS17 TO TAKAFUL:

APPLYING IFRS17 TO TAKAFUL:

APPLYING IFRS17 TO TAKAFUL:

APPLYING IFRS17 TO TAKAFUL:

i) There is no need to segregate onerous contracts. These can be grouped with

WHAT DO ACCOUNTANTS THINK OF

At one extreme Takaful might be considered mutual insurance. If it is considered mutual

WHAT DO ACCOUNTANTS THINK OF

IFRS17 AND CAPITAL STANDARDS:

IFRS17 AND CAPITAL STANDARDS:

PRICING TAKAFUL UNDER IFRS17

PRICING TAKAFUL UNDER IFRS17

WHAT DOES IT MEAN TO BE AN ASEAN

WHAT DOES IT MEAN TO BE AN ASEAN

ASEAN Key Statistics:

Health Education Cellphones

The original article is here:

As practitioners of Takaful elsewhere, what advice would we have for Uzbekistan?

• Developing life insurance products in the conventional insurance world normally

• At the earliest stage of development decisions should be made as to what Takaful

Key statistics (CIA World Factbook):

The original article is here:

INSURANCE AGENTS: EVOLUTION OR

For the insurance industry it is up to us to assist in this transformation. Risk management

INSURANCE AGENTS: EVOLUTION OR

The original articles mentioned can be found here:

FITBARK: IT’S A DOG’S WORLD

LEARNING AND DEVELOPMENT

For more information please contact learn@actuarialpartners.com

LEARNING AND DEVELOPMENT

Group photo of the participants of the Bootstrapping Workshop.

Dr Frank Ashe explaining an example of applying boostrapping in a business case.

LEARNING AND DEVELOPMENT

Group photo of the participants of the IFRS17 General Insurance Workshop.

Mr Piya from Team Excellence explaining to the audience about IFRS17

HAPPENINGS AND EVENTS

HAPPENINGS AND EVENTS

The panelists sharing a light moment during the session.

HAPPENINGS AND EVENTS

During a recent project in Bhutan, Zainal Kassim

Zainal is senior partner and managing director. He

Chin Chee Yen

Since joining the company in 1992, Chee Yen has

Aiza Yasmin Benyamin

Aiza has over two decades of experience

Hassan Scott Odierno

Hassan specializes in Life Insurance and Takaful

Nurul Syuhada Nurazmi

Syuhada is one of the few Casualty qualified

Syed Hamadah Othman

Hamadah is one of the leading practitioners in the

Actuarial Partners Consulting Sdn Bhd

(formerly known as Mercer Zainal Consulting Sdn Bhd)

Suite 17.02 Kenanga International

Jalan Sultan Ismail 50150 Kuala Lumpur

+ 603 2161 0433

+ 603 2161 3595

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