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55590
Wed, 04/15/2009 - 13:45
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https://oananews.org//node/55590
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Global takaful market could reach US$11b
Dubai, April 15, 2009 (WAM) - The global market in Sharia-compliant insurance, or takaful, has the potential to reach US$11 billion by 2015, but must surmount significant challenges to reach this goal according to a report in “Gulf News.”
The Gulf Cooperation Council (GCC) region will be a leading market for takaful growth. Within the region, Saudi Arabia remains the largest market for takaful.
Takaful managers and experts from around the world met in Dubai yesterday for the fourth World Takaful Conference 2009, against the backdrop of the global economic downturn, from which the industry, like all others, has not been immune.
Yet industry players are optimistic of continued growth in a sector whose potential still remains largely untapped.
Nasser Al Sha'ali, chief executive of the Dubai International Financial Centre (DIFC) Authority, said: "As Islamic finance enters a new phase of development, takaful is one of the sectors within the industry that holds considerable potential for growth.
"Over the last few years, takaful has grown in profile as an alternative to conventional insurance and transformed itself from a regional to a global industry."
Estimates vary but it is generally accepted that the takaful industry has grown by 20 to 25 per cent in recent years. The Gulf has consistently represented around one third of the global takaful market.
Ahmad Al Janahi, Managing Director at Dubai-based Noor Takaful, and Deputy Group Chief Executive of Noor Investment Group, said: "The global takaful industry is currently estimated at US$2 billion and takaful is growing 35 per cent faster than conventional insurance worldwide."
Al Janahi said conventional insurance grew by 41 per cent in the UAE in 2007, but takaful grew by 70 per cent.
"In the short term, the GCC market is a key market for takaful growth& and takaful will continue to grow faster than conventional insurance," according to Gul Khan, global head of wealth management at HSBC bank's Islamic banking arm, Amanah.
A report on the insurance industry in emerging economies by Swiss Re in 2008 reveals that Muslim countries represent 23 per cent of emerging market growth, yet insurance penetration remains comparatively very low.
Insurance penetration in Muslim countries is 1.3 per cent versus 2.8 per cent in emerging markets and well below the developed economies. A fast-growing, young, and well-educated population will be key to growth.
Yet, experts pointed to several persistent challenges stunting growth prospects. A lack of awareness about the takaful products offered as well as a shortage of relevant skills within the sector need readdress.
Ernst & Young, a global professional business services provider, launched its World Takaful Report 2009 at the 4th World Takaful Conference on Tuesday.
The report estimates the global takaful market to reach US$ 7.7 billion in 2012 a more conservative estimate than others presented by industry practitioners at the conference.
Saudi Arabia remains the largest market for Takaful with contributions totalling US$1.7 billion in 2007, and the GCC is the largest market regionally, followed by Malaysia and Sudan.
Despite challenges, the report said that the long-term outlook on fundamentals remained strong. These include shifting demographics, and increased earnings, as well as a change in social attitudes towards insurance and growing consumption levels.
"The financial crisis is a moment of opportunity," said Salmaan Jaffery, director Islamic financial services group, at Ernst&Young.
The Gulf Cooperation Council (GCC) region will be a leading market for takaful growth. Within the region, Saudi Arabia remains the largest market for takaful.
Takaful managers and experts from around the world met in Dubai yesterday for the fourth World Takaful Conference 2009, against the backdrop of the global economic downturn, from which the industry, like all others, has not been immune.
Yet industry players are optimistic of continued growth in a sector whose potential still remains largely untapped.
Nasser Al Sha'ali, chief executive of the Dubai International Financial Centre (DIFC) Authority, said: "As Islamic finance enters a new phase of development, takaful is one of the sectors within the industry that holds considerable potential for growth.
"Over the last few years, takaful has grown in profile as an alternative to conventional insurance and transformed itself from a regional to a global industry."
Estimates vary but it is generally accepted that the takaful industry has grown by 20 to 25 per cent in recent years. The Gulf has consistently represented around one third of the global takaful market.
Ahmad Al Janahi, Managing Director at Dubai-based Noor Takaful, and Deputy Group Chief Executive of Noor Investment Group, said: "The global takaful industry is currently estimated at US$2 billion and takaful is growing 35 per cent faster than conventional insurance worldwide."
Al Janahi said conventional insurance grew by 41 per cent in the UAE in 2007, but takaful grew by 70 per cent.
"In the short term, the GCC market is a key market for takaful growth& and takaful will continue to grow faster than conventional insurance," according to Gul Khan, global head of wealth management at HSBC bank's Islamic banking arm, Amanah.
A report on the insurance industry in emerging economies by Swiss Re in 2008 reveals that Muslim countries represent 23 per cent of emerging market growth, yet insurance penetration remains comparatively very low.
Insurance penetration in Muslim countries is 1.3 per cent versus 2.8 per cent in emerging markets and well below the developed economies. A fast-growing, young, and well-educated population will be key to growth.
Yet, experts pointed to several persistent challenges stunting growth prospects. A lack of awareness about the takaful products offered as well as a shortage of relevant skills within the sector need readdress.
Ernst & Young, a global professional business services provider, launched its World Takaful Report 2009 at the 4th World Takaful Conference on Tuesday.
The report estimates the global takaful market to reach US$ 7.7 billion in 2012 a more conservative estimate than others presented by industry practitioners at the conference.
Saudi Arabia remains the largest market for Takaful with contributions totalling US$1.7 billion in 2007, and the GCC is the largest market regionally, followed by Malaysia and Sudan.
Despite challenges, the report said that the long-term outlook on fundamentals remained strong. These include shifting demographics, and increased earnings, as well as a change in social attitudes towards insurance and growing consumption levels.
"The financial crisis is a moment of opportunity," said Salmaan Jaffery, director Islamic financial services group, at Ernst&Young.
