PolicyStreet secures approval for Takaful operations to raised serve Muslims in M’sia

PolicyStreet, a Malaysian insurance coverage know-how startup, introduced at the moment (January 8, 2024) that it has acquired approval from the Labuan Financial Services Authority (LFSA), an accredited Financial Adviser and Islamic Financial Adviser by Bank Negara Malaysia (BNM) to determine Takaful and Retakaful operations. 

Established in 2017, PolicyStreet is a regional full-stack insurance coverage know-how (insurtech) group of corporations offering digital insurance coverage options to companies and shoppers in Southeast Asia and Australia.

The Kuala Lumpur-based startup works with over 40 life, basic, and Takaful suppliers globally to supply a complete vary of services.

According to its press launch, this accreditation positions PolicyStreet amongst a choose group of accredited Takaful and Retakaful operators in Malaysia. 

BNM is at present the regulating physique for the native Takaful and Retakaful business. Some accredited Takaful and Retakaful operators you may know of are corporations like Etiqa, Prudential, and Zurich. 

For context, Takaful is a sort of Islamic insurance coverage the place members contribute cash right into a pool system to ensure one another towards loss or harm. It’s primarily based on shariah legal guidelines, and sometimes consists of insurance policies that cowl well being, life, and basic insurance coverage wants.

Investopedia states that Takaful insurance coverage corporations have been launched as a substitute for business insurance coverage, which is believed to go towards sure Islamic restrictions. Namely, riba (curiosity), al-maisir (playing), and al-gharar (uncertainty) rules, that are all outlawed in shariah.

Dictionary time: Just as reinsurance refers back to the idea of “insurance for insurance companies,” Retakaful refers to “Takaful for Takaful companies.” Elements of shariah compliance are the principle elements differentiating between a Retakaful and a traditional reinsurance operation.

Source: World Bank Group

Through this approval, the insurtech firm is granted the power to reinsure and underwrite Takaful merchandise. In different phrases, this permits PolicyStreet to seize a bigger Muslim buyer base that values shariah-compliant insurance coverage protection.

Based on the Malaysian Takaful Association’s report final 12 months in April, the household Takaful sector recorded a notable RM10.06 billion in gross contributions. This marks an 18.3% enhance from RM8.5 billion in 2021. 

Expanding its viewers segments in Malaysia and the area

In the center of 2023, PolicyStreet bagged US$15.4 million (RM67 million) in its collection B funding spherical.

Led by Khazanah Nasional, Yen Ming Lee, the co-founder and Group Chief Executive Officer of PolicyStreet acknowledged that the funds raised could be used to strengthen its know-how and underwriting capabilities.

Speaking on this new improvement, Lee mentioned, “We are thrilled to receive the approval for the establishment of the Takaful and Retakaful window, which opens up new opportunities for us to contribute significantly to narrowing the protection gap in the region.”

He elaborated that the corporate’s entry into the Takaful market is a testomony to their dedication to monetary inclusivity. They imagine this enterprise will contribute to the achievement of nationwide insurance coverage penetration targets and usher in a brand new period of insurance coverage options tailor-made to the Takaful market.

Meanwhile, BNM’s Financial Sector Blueprint has additionally set an bold goal of attaining a 4.8% to five% insurance coverage and Takaful penetration price by 2026. 

At the second, RAM Rating Services Bhd estimates the present penetration price to be at 4.6%, signalling appreciable room for growth inside the market and a rising demand for shariah-compliant insurance coverage merchandise.

PolicyStreet acknowledged that it’s dedicated to introducing progressive and aggressive Takaful options, notably ones that align with the values and preferences of its numerous buyer base. 

• Read different articles we’ve written about Malaysian startups right here.

Featured Image Credit: (From left) Winnie Chua, PolicyStreet Group Chief Product Officer; Yen Ming Lee, PolicyStreet Group Chief Executive Officer; Wilson Beh, PolicyStreet Group Chief Operating Officer.