New Fund: Public Ittikal Sequel Fund

The Public Ittikal Sequel Fund (PITSEQ) is a Shariah-compliant capital growth fund that invests in a diversified portfolio of index-linked companies, blue chip stocks and companies with growth prospects listed on the Bursa Securities. The fund may also invest in sukuk such as sovereign sukuk, corporate sukuk and Islamic money market instruments to generate returns.

The Fund will focus its investments mainly in the domestic market, capitalising on opportunities arising from Malaysia’s resilient economic growth prospects in the medium-to long-term. Some of the sectors that the Fund may invest in include consumer, industrial, telecommunications and utilities sectors.

How about foreign investment?

To achieve increased diversification, the Fund may invest up to 30% of its NAV in selected foreign markets. The foreign markets which the fund may invest in include Singapore, Taiwan, South Korea, Japan, Hong Kong, China, Thailand, Indonesia, Philippines, India, Australia, United States of America and other permitted markets.

Free Takaful?

The fund comes with free takaful coverage on Group Term Life with Total and Permanent Disability plus Group Personal Accident for unitholders aged between 18 to 59 years with a minimum NAV of RM5,000 at any point of time. The amount of takaful is equal to the NAV of units held in the ratio of RM1 takaful coverage for every RM1 NAV of units held, subject to a maximum amount of RM100,000 per unitholder of the fund.

Source: Public Mutual

Fraudulent Insurance Claims and YOU

Recently, theStar highlighting a serious issue pertaining to insurance claims - Fraud Claims. It even started with staggering paragraph "Fingers have been chopped off, medical ailments exaggerated and even death faked - all for the purpose of fraudulent insurance claims".

Among the issues:

• RM500 mil in bogus insurance claims are detected each year
• At least 2 insurance firms have folded as a result of high compensation claims compounded by fraud
• Insurance firms fight back by setting up special fraud detection units

Regarding to this topic, Finance Malaysia would like to shares some views here pertaining to the effects on Malaysians as a whole. And, most importantly, the impact of insurer would definitely pass it to people insured. Why I said so?

First, you must understand how insurance companies compute their premiums charged to each clients. If the insurer is financially stronger, it may charged a lower premium for the same amount of coverage on its policies. In other words, if an insurer is facing financial problems, it may raised its premium charged, even to their existing loyal customers.

If your friend is making a fraud case, let it be?

For example, one of your friend is making fraud claims by collaborating with a particular doctor and agent to issue a false physician statement. Subsequently, your friend could received compensation from insurance company based on that statement. Of course, you can closed one eye and let it be. But, your inaction would lead to higher claim amount being paid by that insurance company for the wrong reasons. If those act was rampant everywhere, insurance companies could raised its premium imposed. So luckily, if you're insured by the same company, you could be a victim of your friend's unlawful act.

Supposedly, we should advise whoever out there to stop making fraud claims as it may abuse the whole insurance systems. Objective of getting an insurance is to transfer our risk to third party, hoping that we could financially went through unfortunate events which may happened,  NOT to gain from an insurance.

Think about this:

What is the purpose of insurance?

Protection or Investment?

New Deposit Insurance Limit At RM250,000

Effectively today (31st December 2010), the deposit insurance limit will be increased to RM250,000 per depositor per bank, announced Perbadanan Insurans Deposit Malaysia (PIDM).

Below is the summary of the said announcement:-

• The new PIDM Bill 2010 has been passed in Parliament.
• The limit of RM250,000 will protect 99% of retail depositors in full.
• Under the new Bill, foreign currency depositors will now enjoy deposit insurance protection.
• The enhanced financial consumer protection package also includes the expansion of PIDM's mandate to include the administration of the Takaful and Insurance Benefits Protection System (TIPS).
• Licensed insurance companies and registered Takaful operators will automatically become member institutions of PIDM.
• PIDM was given the powers to intervene in or resolve troubled insurer members and ensure prompt payments to claimants.

PIDM is Malaysia Government agency, mandated by Parliament, to protect depositors against the loss of their funds in the event of a member bank failure. Member banks comprise all commercial and Islamic banks, including locally incorporated foreign banks, in Malaysia.

Source: www.pidm.gov.my

Why Great Eastern chose KATM as its partner?

Referring to previous article "Issuance of New Family Takaful Licenses" on 1st September 2010, many people are skeptical about Great Eastern's (GE) partner -- Koperasi Angkatan Tentera Malaysia (KATM). Given the other 3 new consortium which partner with banks, I am not surprise by those reactions.

To recap, the 4 new family takaful licenses:

1. AIA with Alliance Bank
2. Ambank with Friends Provident Fund (UK)
3. ING with Public Bank and Public Islamic Bank
4. GE with KATM

KATM, the country's Armed Forces multi-purpose cooperative, is however, no stranger to the insurance industry and it is a substantial shareholder of PacificMas with 16.4% stake. Meanwhile, Pacific Insurance Bhd is a wholly-owed subsidiary of PacificMas. (See picture below to see the GE-KTAM relationship)

Why with KATM?

KATM has 140,000 members which could be a huge market for GE to tap into. Another reason is that GE has to look into it's agents rice-bowl as well, if GE was to tied up with a local bank. Instead, GE dive into the 'blue ocean' where KATM is an untapped market of their existing agents. Other than that, this kind of partnership is well-isolated from political view, as KATM is not a company and it was not linked with government either.

Going forward...

Business Times had reported almost a year ago that Great Eastern had roped in former Prudential BSN Takaful Bhd chief executive officer Mohamad Salihuddin Ahmad to head its Islamic insurance operations.

Great Eastern would have a clear head-start compared to the other new takaful operators come next year and its reputation itself would give its an extra mileage.

Great Eastern is the largest insurance group in Singapore and Malaysia, with assets of S$48.5 billion (RM112 billion) as at February 10 2010 and 3.8 million policyholders in both countries.

On 30th August 2010, PacificMas saying it plans to sell its entire stake in Pacific Insurance Bhd to Fairfax Asia Ltd (Canadian company) subject to Bank Negara Malaysia's approval.