Three choices and the price of each

Asking branch employees to choose between their salary and their agency contracts

When I joined Kenanggawi in 2021, 46 of our 182 branch service employees also held takaful agency contracts. The arrangement came from a branch network the company had absorbed in 2014, and it had continued because it produced business: walk-in customers bought certificates from the employee at the counter, who earned commission on them. In 2022 those sales produced about RM9.4 million of annual first-year contributions. Then a participant complained that when she came to ask about surrendering a certificate, the employee helping her had suggested a new one that paid him commission.

The compliance review found no rule breach in that case, but the conflict was built into the role. An employee whose duty was to service existing participants had a financial interest in selling to them. The chief agency officer, Rosnaini Idrusman, argued for a commission cap and closer supervision instead. Two regional branch heads agreed with her, and the chief executive initially preferred the cap because it kept the revenue.

I recommended ending the dual arrangement. From January 2023 each of the 46 could remain an employee and relinquish the agency contract, or leave employment and contract as a full agent under the agency team. Those who stayed received a one-off transition payment equal to six months of their average commission, capped at RM18,000, and the branch service grade moved up one band, a recurring cost of RM1.1 million a year. Walk-in customers seeking advice were referred to an assigned agent.

Thirty-three stayed, nine became agents and four left the company. Walk-in new contributions fell to RM3.1 million in 2023, and the referral process remains slower than the counter sale it replaced. Branch service complaints fell from 58 in 2022 to 21 in 2024, although other changes contributed. I would do one thing differently. I announced the decision before meeting each person, and only afterwards learnt that three of them relied on commission for more than 40% of their income. Individual conversations should have come first.

Giving bereaved families one claims handler from first call to payment

In 2023 we received about 3,900 death and disability claims. Families usually began with our general contact centre, where 95 colleagues answered every kind of query. A bereaved relative called 4.7 times on average before payment, often reaching a different person, and often had to describe the death again. Contact-centre attrition had reached 31% in 2022, and exit interviews named these calls more often than any other kind of work.

I proposed a named-case team: sixteen experienced colleagues who would each hold a death claim from the first call until payment, with a cap of 45 open cases per handler, monthly group supervision from an external clinical psychologist and a role premium. The head of claims was concerned that we were duplicating the assessors, who would still decide each claim. The chief financial officer and the chief operating officer objected to the cost and to removing sixteen of the most experienced people from the general queue at once.

We went ahead with clear limits. Handlers coordinate documents and explain decisions but do not decide liability. Questions about faraid distribution or nomination status go to specialists rather than being answered on the telephone. The added cost was RM1.9 million a year, including four replacement hires. For five months the general queue answered 69% of calls within thirty seconds instead of 82%.

Calls per death claim fell to 1.8. The median time from complete documents to payment stayed at nine days; this was never a speed project, and I do not present it as one. Two of the sixteen left in the first year. The general queue returned to 80% once the replacements were trained.

What I would change is the minimum assignment. I set twelve months to protect the training investment. One handler asked to move after seven months and stayed, at my request, until the twelfth. She was right to ask, and I should have released her when she did. The team now allows a move at any point, with a handover period rather than a fixed term.

Staffing a separate sharia insurer without borrowing its control functions

Indonesian rules required insurers with sharia business units to separate them into standalone companies within a set period, and Lintaravi Life Indonesia chose to complete its separation early, in 2020. The sharia unit had contributions of about Rp 1.1 trillion a year, and around 140 employees worked on it fully or partly. The new company would need its own board of directors, its own sharia supervisory board and people able to run risk, compliance, actuarial and internal audit work for that company alone.

The chief financial officer proposed that the parent provide most functions, including actuarial work, under a service agreement. He estimated that separate control functions would cost Rp 9.6 billion a year more. The parent's appointed actuary also wanted to keep her deputy, the only internal candidate with sharia product experience, as her own successor.

I recommended dividing the work by what each role had to answer for. Payroll, technology and the call centre, covering 44 roles, would be shared under a service agreement. Control functions and the actuarial team, 96 roles in all, would transfer to the new company with service recognised and terms unchanged, subject to each person's choice. The deputy actuary would be proposed as the new company's appointed actuary, subject to the regulator's approval of key appointments. The president director accepted the recommendation and the higher cost.

Eighty-nine of the 96 transferred; seven chose to remain with the parent and were placed in other roles. The new company received its licence and began operating in 2020. The parent hired an external deputy actuary after an eleven-month search and ran for fourteen months without a ready successor, a risk the remuneration and nomination committee of the board of commissioners reviewed each quarter.

I would start earlier. The thin actuarial bench was visible two years before the separation, and we treated it as a future problem. I would also tell employees about the option to stay at the very first briefing. Rumours filled the three weeks before we did.