This perception is not true. In this competitive landscape, it would be detrimental for players to be short-sighted and to dismiss this class of business as unworthy. With the right business model, microinsurance/ takaful could become commercially viable, profitable and sustainable. Based on Microfinance Information Exchange Market Data (2009) by CGAP, the data for microfinance providers; profit margin 8.43%, return on assets 1.5% and return on equity 7.27%. Microfinance or microbusiness will be profitable if the pricing is right, the portfolio size appropriate and strong risk management practices are put in place. On its part, the Bank will issue a microinsurance/ takaful regulatory framework to facilitate the provision of commercially sustainable micro products whilst offering protection to consumers. We have held dialogues on this, which I hope would lead to a positive outcome in furthering microinsurance/ takaful as a significant business venture going forward. It is timely for industry players to review relevant methods as well as approaches in repositioning their value propositions to attract this segment of the population. A first major step forward that  BIS central bankers’ speeches  3  could be taken is to collaboratively launch nationwide awareness campaigns to promote the benefits of microinsurance/ takaful to the public. The Bank stands ready to provide appropriate avenues of support in rolling out this agenda. Evolve in tandem with customer’s preferences and assist customers in the decisionmaking process Industry players that can offer guidance to their customers will set the building blocks for developing long-term relationships.

The study also revealed bias towards highlighting the benefits of a product in explanation given by sales agents, while risks and costs were not adequately explained. The Bank is concerned with these findings as they undermined informed decision and judgements by consumers. We shall act on this findings. Insights drawn from the study will serve as input to the Bank’s comprehensive planned review of the mandatory disclosure regime, next year. 2  BIS central bankers’ speeches  The Bank will also work with key stakeholders including industry’s representatives to undertake targeted financial education strategies to elevate public awareness on the importance of reading and understanding product disclosure materials and financial agreements. Offer customised solutions that meet the needs of consumers It is no great secret that truly great businesses have one thing in common; they cultivate customer trust, every step of the way. Cultivating trust requires a systematic process, first, traditional distribution models of products and services must adapt with targeted solutions that meet individual needs and risk appetites. Second, marketing strategies must adopt a paradigm shift from product-push to an advisory model and provide better service orientation. Third, the industry must reflect to ask if it has done enough for its customers to meet their needs and demands. On many occasions, the industry has been reminded that in transitioning into the new landscape, it can no longer afford to rely solely on traditional business models and delivery channels.