|
Dubai: The GCC is the largest takaful market globally contributing more than 50 per cent of the total contributions, according to Ernst and Young's inaugural World Takaful Report 2008 released on Monday at the Third Annual World Takaful Conference.
The GCC contributions exceeded $1 billion compared to global contributions of $2 billion in 2006. Of the world total of 133 takaful operators, 59 are within the GCC, with forecasts of 20 per cent growth rate of the industry to be maintained and contributions to reach $4.3 billion in 2010.
According to the report, growth in the takaful sector has outpaced that in conventional sectors in most Middle East countries. The main drivers of have been high economic growth, a young population, increasing awareness and a greater desire for Sharia-compliant offerings and increasing asset-based Sharia-compliant financing.
Takaful is a type of Islamic insurance, where members contribute money into a pooling system in order to guarantee each other against loss or damage. Takaful-branded insurance is based on Sharia and explains how it is the responsibility of individuals to cooperate and protect each other.
Opportunities
"It is clear that there are significant growth opportunities for the takaful industry, especially when the estimated global insurance premiums are as high as $3.7 trillion," said Noor Ur Rahman Abid, managing partner at Ernst and Young Middle East.
"Most countries belonging to the Organisation of Islamic Conference (OIC) have underdeveloped insurance sectors. Premiums in the Middle East are at one per cent of nominal GDP compared to eight per cent in North America. In addition, high levels of market liquidity and rising income levels in the region should contribute to a future rise in the global takaful industry."
On the supply side, the report points out, key challenges remain: a fragmented and undercapitalised landscape, limited retakaful capacity, problematic asset management and lack of local solution offerings and local distribution channels.
Also, as the industry develops and expands, issues relating to corporate governance and risk management are also surfacing, the report said.
In his keynote address, Nasser Al Sha'ali, CEO of the Dubai International Financial Centre Authority, highlighted the importance of good corporate governance to all takaful models.
"Adapting and implementing corporate governance codes and principles will enable the takaful industry to access financial markets, resulting in better performance and company valuations, and allow insurers to help develop the market and grow by protecting the rights of the stakeholders, notably investment accountholders."
|
