Growing under a Large Tree’s Shadow Maintaining Shari’a Compliance in a Conventional Market
Dr. Ludwig Stiftl Munich Re Retakaful, Kuala Lumpur Takaful Summit, London 2 July 2009
Munich Re Retakaful
Agenda
Pressure from many directions The Prisma of Halal Industry Objectives Porter’s Big Five Applied
A Survival Strategy An Example
2
Munich Re Retakaful
Pressure from many directions….. Time Pressure
Curse of Conversion Costs
Time to achieve critical size (market power) LONG
Takaful Industry
Curse of strong growth promises
Market Pressure
Time until loss of reputation “It takes 20 years to build a SHORT reputation and 5 minutes to ruin it.” 3
Munich Re Retakaful
The Prisma of Halal Industry Objectives
2nd July 2009
4
Munich Re Retakaful
Porters Big Five applied to Shari’a Sealing Pressures and Leeways + Increases Market Weight New (Takaful) Entrants
+ Increases Innovation - Increases Race for Volume
Suppliers: Brokers Reinsurers
(Conventional) Competition
Buyers
- Shifting efforts
+ New Buyers support Takaful
- Cost of Knowledge
+ Some Pricing Leeway
- Optimized conventional processes (off-the-mill)
Substitutes (PseudoTakaful) - See race for volume
2nd July 2009
5
Munich Re Retakaful
Conclusion: A Survival Strategy until Maturity 1. New entrants are allies
2. Buyers are your friends. Do marketing (Premium Provider)
3. Win the Suppliers over, by - Creating Standardised Processes (“off the mill�) - Developing Standard Wordings - Solve the Halal screening issue (risk categories, thresholds)
6
Munich Re Retakaful
Example: Facultative Placements and Acceptances 1. Provide “positive list” of occupancies
2. Agree on “negative lists” and thresholds (country-wide) 3. Choose and educate distribution partners 4. Optional: create industry-owned distribution channels 5. Work and Wait
7
Munich Re Retakaful
Takaful Pooling Solutions
26 February 2009
8