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Dubai: The world's fast-growing Islamic insurance sector needs standardisation and unified guidelines as per Sharia that will provide it the right impetus, said a top official.
The Jeddah-based Islamic Development Bank (IDB) last year constituted a Takaful and Re-Takaful Committee (TRC) to create greater awareness and prepare guidelines for this emerging sector across the globe.
"Right now, takaful and re-takaful operators are guided by their own Sharia board. I think we need to prepare a unified code or guidelines for the entire industry so that there is uniformity among the takaful operators," A.B.M. Nurul Haq, a member of the TRC, told Gulf News recently.
Haq, who is also the managing director of the Dhaka-based Global Insurance Ltd, was in Jeddah to participate in the TRC's second coordination meeting that sought ways and means to support this growing sector.
Assets held in Sharia-compliant accounts worldwide total $200 billion to $500 billion and are growing 10 per cent to 15 per cent a year, according to Britain's Financial Services Authority.
Although Muslims represent a fifth of the world's six billion population, global takaful premiums are estimated to have reached only $3 billion, of which 60 per cent is general takaful and the remaining is family takaful.
This is much lower compared to the market potential of the 57 Muslim-majority nations across the world. While Middle East accounts for 36 per cent of premiums, about 56 per cent is generated in South East Asia.
Ajmal Bhatty, global head of takaful, HSBC Amanah recently told delegates at a conference that the takaful industry needed to make itself more competitive in order to attract a greater share of the insurance sector.
"The potential for growth was enormous. The industry was worth $2 billion in 2003 and estimates suggest it would grow to between $12 billion and $14 billion by 2015," he said.
Until last year, premium generated through Islamic insurance products stands at Dh150 million compared to Dh2 billion earned annually by the conventional insurers in the UAE.
The IDB and the Malay-sian Central Bank has undertaken certain steps that will help the takaful and re-takaful sector to flourish. "Last week's meeting of the TRC mapped an action plan to promote takaful and re-takaful industries in the OIC countries and provide technical assistance," Haq said.
The history of takaful goes back only about quarter of a century. It is only recently that we have witnessed a higher level of activities in this sector, he said.
"Besides, Muslims are traditionally very sceptical over conventional and interest-based insurance, which otherwise is regarded un-Islamic.
"However, as the Sharia-compliant programmes under takaful are becoming very popular and successful, we see a need to structure and nurture the sector by offering the right guidelines so that everyone understands it."
Takaful premium in Bangladesh jumped 68.66 per cent to $33.16 million in 2004, compared to $19.66 million in 2003.
Conventional insurance premium fetched $319.04 million in 2004, compared to $285.92 million in 2003, recording a growth of 11.62 per cent.
"There are 63 insurance companies in Bangladesh, of which only six offer takaful products while 16 others have some takaful windows," Haq said.
"Takaful is relatively new in Bangladesh. The government only started giving permission in 2000."
Among the 63 operators, 43 are general insurance operators while 17 are life. Among the six takaful companies, three are general.
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