Monthly Archives: December 2016

Working with some Recruiters

Working with Chicago financial recruiters to find the right candidates for job vacancies is increasingly seen as a cost-effective and productive way of working for many companies. The old misconception of “agencies will just send any candidates’ CVs and charge expensive fees” may still be held by some companies but this is often down to a lack of understanding about the features and benefits of a financial advisor recruiter’s service or from having bad experiences in the past with less than reputable agencies.

When a company has identified the need to recruit their Human Resources team they have to decide how they are to manage the process; do they deal with all stages of the recruitment process themselves, use a head hunter Chicago as well as their own advertising and selection of candidates or outsource to one or more agencies? Some issues to be considered and how the services of financial advisor recruiting firms can be of benefit include;

Cost: The majority of head hunter Chicago services for the recruitment of permanent staff are provided on a ‘no placement, no fee’ basis, even then there is, in most cases, a rebate period, usually of up to 3 months from the candidate commencing employment if the candidate does not work out.

Time: Companies often consider how much of their HR staffs’ time will be taken up by; preparing, writing and posting job advertisements, sorting through the applications, pre-screening candidates etc. This can often take up several hours of every day and at an expense to the company, especially when compared to meeting and briefing a financial advisor recruiter and then only looking at pre-screened qualified candidates.

Expertise: By working with specialist financial services headhunters for vacancies such as financial advisor jobs and stockbroker jobs, companies can get easy access to candidates already on the agencies’ books and can also seek advice on industry trends, candidate availability, salary surveys and changes in employment legislation. Financial advisor recruiting firms will often have access to industry specific job boards, journals, networking / social networking and industry contacts and can identify candidates from less commonly used sources.

Confidentiality: There can be several reasons, internally and externally, why a company will not want to let it be known that they are recruiting for particular job roles. Financial services recruiters will not normally advertise the company’s name unless requested.

Suitability of candidates: When advertising for financial advisor jobs there are often two outcomes; not enough applications or too many applications. Not enough applications and it is time to look at other methods of candidate attraction, too many and it’s all about picking the best. A head hunter Chicago will usually have a detailed brief and will be able to identify potentially suitable candidates sooner.

Smartphone Penetration is on rise at India

Ken Research declared the recent publication on “Consumer payments country snapshot: India 2016,” which offers insights on the consumer payments market in India, considering payment cards, online payments, P2P payments, and newer payment technologies such as mobile wallets and contactless. Further it includes the shrewd examination of the main regulatory players in the Indian market and analyzes the consumer attitudes to financial services by life stage and the major payment card types in terms of both card holding and usage. Moreover, publication identifies the major competitors in card issuing and how their positions in the market have evolved over the last five years. This publication helps in exploring the online payment market in India by merchant type and payment tool, as well as providing a five-year forecast for the development of the market. India will remain the fastest growing G20 economy. Private consumption will be supported by the increase in public wages and pensions and by higher agricultural production, on the back of a return to regular rain fall. Private investment will revive gradually as excess capacity in some sector decreases, infrastructure projects mature, corporate deleverage, banks empty their loan portfolios, and also the Goods and Service Tax (GST) is implemented.

Despite commendable fiscal consolidation efforts at the central government level, the combined debt of states and central government remains more as compared with other emerging economies. Inflation expectations are adjusting down at a slow pace. Overall there is little space for accommodative policies, although some monetary impulse is still to come, as recent cuts in policy rates are yet to be reflected fully in lower lending rates. Reforming public banks’ balance sheets and improving their governance would support the comeback in investment. Creating more and better jobs will require policies to enhance the ease of doing business further, in specific faster and more predictable land acquisition, and upgrading social and physical infrastructure.

Despite the high public deficit compared with other emerging economies, there is space to make public finance more growth-friendly and inclusive. The ongoing landmark GST and subsidy reforms are promising. The government plan to cut the corporate income tax rate while broadening the base. More revenue could be raised from the personal income tax, and its redistributive impact developed, to finance higher spending on health, education, housing, transport and water infrastructure and make growth more inclusive. Recent Trends

India is the second largest consumer market globally; India being a cash-driven economy. However, digital payments will see growth in the Indian market. The key opportunity is the digitization of payments only if they are as easy to access, convenient, and secure as cash then they will contribute to the growth of financial inclusion in the country. The driving factors in such process will be the expansion of Smartphone penetration, enhancing access to the internet, and the development of a digital payments infrastructure. As the move to non-cash payments accelerates, cards will be used more frequently by Indian consumers. Providers should increasingly promote card adoption and use through merchant partnerships, reward programs, and benefits on day-to-day spending as well as educating consumers about the advantages of using payment cards over cash.

The Motor Insurance Dominate Non-Life Insurance

Ken Research announced its recent publication on, “Non-Life Insurance in Malaysia, Key Trends and Opportunities to 2020”. Report provides a detailed outlook by product category for the Malaysian non-life insurance segment, and a comparison of the Malaysian insurance industry with its regional counterparts. It provides values for key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retentions during the review period (2011-2015) and forecast period (2015-2020). The report also analyses distribution channels operating in the segment, gives a comprehensive overview The report brings together modelling and analysis expertise, giving insurers access to information on segment dynamics and competitive advantages, and profiles of insurers operating in the country. The report also includes details of insurance regulations, and recent changes in the regulatory structure.

General insurance is typically defined as any insurance that is not determined to be life insurance. General insurance or non-life insurance policies including automobile and homeowners policies. The payment is made proportional to the loss from a particular pecuniary event. The Malaysian non-life insurance segment expanded during the review period at a review-period CAGR of 6.0%. Notable recent mergers and acquisitions include AIA Group Ltd.’s purchase of ING’s Malaysian insurance business and the acquisition of MUI Continental Insurance Bhd by Tokio Marine Holdings Inc

The Malaysian non life insurance industry is among the fastest emerging markets of the global insurance industry; its stable economic growth and well-developed regulatory framework have drawn the attention of international insurers. With the proposed Financial Services Act 2013 and Islamic Financial Services Act 2013, the implementation of the Internal Capital Adequacy Assessment Process (ICAAP) and the liberalization of the insurance sector, Malaysia provides a competitive operating environment with financial stability and a well-framed regulatory system for the finance and insurance sectors. The small increase in numbers i.e. growth rates reflect more challenging business conditions, especially in the marine, aviation and transit line of business. Malaysia’s central bank, Bank Negara Malaysia (BNM), regulates all insurance entities in the country, including brokers, adjusters and financial advisors. Insurers can only obtain a licence from the Ministry of Finance on the recommendation of BNM, while brokers and financial advisors must be approved by BNM and adjusters are required to register with the bank.

The major lines of business in the general or non-life insurance sector for both conventional and Takaful insurance remain motor, fire, and personal accident and medicalThe composition of general insurers’ funds has remained stable over the past five years, with the majority of assets held in debt securities. In 2012, private debt securities and Malaysian government securities accounted for 25% and 20% of general insurers’ funds respectively. The remainder are cash and deposits (25%); other investments and assets (20%); amounts due to clients (7%); property, plant and equipment (2%); and loans, investment properties and foreign assets (1%). According to BNM data, this segment is concentrated, with the 10 leading companies accounting for 72.5% of the segment’s gross written premium in 2015. Leading companies include: Allianz General, Berjaya Sompo Insurance, Etiqa Insurance, Lonpac Insurance, MAA Assurance, MSIG Malaysia, Tokio Marine Insurance (Malaysia) and Uni. Asia General Insurance.

The BNM has announced plans to restructure motor and fire insurance business through detariffication. The act of removing the pricing regulations of an industry, set forth by tariffs created by a regulatory body. Detariffing allows an industry to price its goods or services at market value, as regulation is discontinued to promote market equilibrium. In Malaysia, fire and motor insurance premium rates are currently tariff-controlled, but the underwriting performance of these two lines of business in recent years diverged. Malaysia has not been impacted by any major natural catastrophes in recent years. Malaysian general insurance industry strictly follows fire tariffs, except that some flexibility is allowed for larger risks. Fire business’ underwriting performance has been favourable. Fire tariffs in Malaysia have been adequate and provided general insurers with good profits in recent years. Motor tariffs in Malaysia had not been changed for many years until 2012, which addressed insurance buyers’ affordability concerns on one hand, but resulted in poor underwriting performance in this segment. Gradual revision of motor tariffs began in January 2012 and will be implemented incrementally in the years to come. However, motor business remains unprofitable for many Malaysian general insurers, and the underwriting losses from motor business must be cross subsidized from underwriting profits made in other lines. Malaysia’s general insurance market expects fire and motor tariffs to be abolished in 2016, which have introduce increasing competition in the fire segment and help addressing the unsatisfactory underwriting performance of the motor segment. Abolition of tariffs has benefited insurance buyers, the insurance industry and society in the end.

Motor insurance was the largest non-life category, more than fifty percent of the segment’s direct written premium in 2015. Agencies remained the dominant distribution channel in the Malaysian non-life segment during the review period. Motor insurance remains the dominant line of non-life business in Malaysia, with major market share. Although the overall industry’s net claims incurred ratio (NCIR) remained steady throughout 2015, falling in few decimal points, total claims incurred within the motor segment remained exceedingly high. Insurers have benefited from falling vehicle thefts, which dropped however, Malaysia’s high rates of road accidents and fatalities remain a major cause for concern. In 2015 third party, bodily injury claims rose. In the fire segment, meanwhile, growth jumped up, making fire the second-largest non-life segment. The NCIR for fire stayed stable in 2015. Developments in motor vehicle insurance are a grave matter, because the sub-sector accounts for nearly half of all non-life premiums. Health and personal accident insurance should sustain double-digit growth, thanks in part to new users of the latter and in part due to health expense inflation. Property insurance may face economic headwinds. Transport insurance premiums should benefit from the growth in regional trade.

Insurers are increasingly focusing on digitalisation to enhance their customer services platforms. Increasing price competition and providing more freedom to insurance companies to set the right price for the insurance risks they assume, can encourage innovation and make insurance products more affordable. This will benefit insurance buyers, but insurance companies need to be prudent in managing their insurance claims costs and expenses at the same time. Claims cost management initiatives also benefit insurance buyers by encouraging better risk awareness from the insurance buyer’s perspective – for example, promoting road safety to reduce frequency and severity of traffic accidents in the motor segment, or taking fire prevention measures for property risks. Further, price competition provides insurers with incentives to forecast insurance costs accurately, refine risk classification systems and underwrite carefully to avoid adverse selection. Promoting adequate rates is a key factor in ensuring insurers’ solvency and sustainable growth of the insurance industry in the long run, According to ken Research Analyst.

Topics Covered in The Report

Non-life insurance industry Malaysia Global life insurance industry research Life insurance businesses Malaysia Insurance sector worldwide Malaysia non- life insurance market research Non-Life insurance sector trends Malaysia Malaysia General insurance regulations Motor insurance market research Malaysia Property insurance sector Malaysia Health insurance demand Malaysia Malaysia automobile insurance industry research Malaysia four wheeler insurance demand Malaysia General Insurance Industry

Favourable of the Economic Conditions Supporting Life Insurance Industry

Ken Research has announced recent publication titled, “Life Insurance in Malaysia, Key Trends and Opportunities to 2020”. The report provides a detailed outlook by product category for the Malaysian life insurance segment, and a comparison of the Malaysian insurance industry with its regional counterparts. It provides key performance indicators such as written premium, incurred loss, loss ratio, commissions and expenses, total assets, total investment income and retentions during the review period (2011-2015) and forecast period (2015-2020). It analyses distribution channels operating in the segment, gives a comprehensive overview of the Malaysian economy and demographics and provides detailed information on the competitive landscape in the country. It gives insurers access to information on segment dynamics and competitive advantages and profiles of insurers operating in the country. The report also includes details of insurance regulations, and recent changes in the regulatory structure with its impact on the growing economy.

We still see Malaysia as a key growth market in this region, with a few point climb on an average per annum in growth up to 2020. Diverse factors account for this positive push seen within the industry:

The burgeoning upper middle class segment that is reaping the benefits of continued favourable economic conditions, as the government carries out initiatives to transform Malaysia into a high-income economy by the year 2020. This has underpin significant growth. This shall provide abundant opportunities for insurance in future as well. However, the industry itself is on the cusp of some major changes that may have potentially significant implications to the market.

Bank Negara Malaysia (BNM), as the regulator of the industry, can be seen as one of the important harbingers of change to the industry. One of the significant legislation under the purview of BNM that came into force in 2013 was the Financial Services Act (FSA) 2013. FSA focuses on integrity, fairness and accountability of financial institutions, while trying to increase the protection of rights and interests of the consumer. This regulation resulted in the splitting of composite insurers, additional business conduct and consumer protection requirements to comply with, as well as the requirements that have implications to significant shareholders of insurance i.e. majority institutional shareholder of insurance came under the scrutiny of BNM and maximum permissible individual shareholding was seen as an outcome. More people invested in insurance agencies.

Under the mandate from the Economic Transformation Programme (ETP) increased penetration and at the same time, ensuring insurance and intermediaries give good quality advice to consumers. Among the many game-changing ideas contained in this concept paper were liberalisation of commissions for investment-linked products (ILP) and pure protection products, the establishment of an online insurance product aggregator, the requirement for companies/operators to offer products directly to consumers, increased disclosures at point of sales and the requirement for a balanced scorecard approach in compensating distributors. All of this has provided the major kick-start and park to this secured, fruitful and developing industry.

Outside of BNM, another major regulatory change instituted by the Malaysian government in the recent tabling of the Budget is the implementation of the Goods and Services Tax (GST). Another potential game-changer, the impact of the GST is unique to the life insurance industry, mainly because the supply of life insurance is GST exempt, so the purchaser of the insurance will not have to pay GST. This meant that the insurer would not be eligible to claim credit on input tax incurred for making these supplies. In other words, this will mean that commissions payable to distributors as well as expenses incurred (although excluding staff salaried expenses) will attract GST. This increased cost will erode the profit margins of insurers and this can only mean that eventually, the costs may be implicitly passed back to the policyholder in the form of either increased premiums or reduced benefits.

The introduction of the Balanced Score Card improve the productivity and professionalism of insurance agents and in turn enhanced the brand representation and the charisma of the insurance industry, which augurs well for the industry to meet the Government’s vision of accelerated growth by 2020.

Moving away from the regulatory changes in Malaysia to demographic changes, Malaysia itself is facing a problem in the increasing retirement gap: that is, the gap between the actual financial positions of retirees against what they actually need to continue to live comfortably. An oft-quoted statistic states that the majority of Malaysians will and are exhausting their retirement savings (i.e. their Employee Provident Fund (EPF) savings) within three to five years of retiring. This leaves them in a tragic problem of being unable to provide for themselves as they are past the working age, while needing to meet daily rising costs, which is made all the more acute if they transpire any medical condition. However, the increase in retirement age recently to 60 years old to a certain extent will mitigate some of these concerns. The government has stepped in by introducing the Private Retirement Scheme. Tax incentives have been provided as well. However, slow growth in the sector is attributed to poor take-up rate due to the strict withdrawal conditions, low commission cap being a disincentive to distributors, as well as the perceived lack of security compared to the guarantees meted out by the EPF. The support of alternative distribution channels will have a huge impact in expanding the reach and infiltration of insurance in Malaysia. The opportunities in the digital and direct channels, will not only improve transparency and enable easier product comparisons, but also increase the reach and diffusion of insurance among the new generation of consumers who are more educated and technology savvy. Agencies and bancassurance collectively accounted for 89.6% of the segment’s new business written premium in 2015, while brokers accounted for the remaining 10.4%. Increasingly, we see companies are involving themselves in the social media space, and undergoing a re-branding to lifestyle and wellness companies, and not just a company that sells insurance. In addition, the increasing and unparalleled progress in technology allows insurers the chance to really reduce and simplify their offerings to the customer, with a handy approach allowing them the chance to connect and integrate themselves into the lives of customers instantly from anywhere. 2020 will be the times of change, and both insurers and operators alike need to be keenly aware of the changes they face from 2016 and beyond. The impact of the way they run their business and their overall strategy is moving forward. Nevertheless, it is worth noting that with change always brings opportunities. The healthy performance of the life insurance industry reflects the continued increase in awareness among Malaysians on the importance of insurance protection.