JEDDAH – The worldwide Takaful insurance market is being predicted to reach a value of over $12 billion in 2011, which signifies a 31 percent increase from the $9.15 billion figure posted in 2010, according to a recent report from Ernst and Young, one of the world’s leading professional services organizations.
The report also ranks the UAE in third place in the global Takaful market, which was reportedly worth over $640 million in 2009.
The report, entitled ‘World Takaful Report 2011: Transforming Operating Performance,’ shows that Takaful, an Islamic compliant insurance concept, has now become a rapidly growing industry, concentrated mainly in Saudi Arabia (making up $3.86 billion of the industry in 2009), Malaysia ($1.15 billion), UAE ($640 million), South East Asia and North Africa. Takaful insurance products are positioned to bring in a compounded annual growth rate (CAGR) of more than 24 percent from 2010 to 2012 and will be driven by the increased demand for more motor and energy insurance solutions.
Further, property and aviation insurance policies are also expected to emerge as fast growing segments of the general insurance sector.
Takaful operators have returned better results than their Malaysian counterparts.
However, they have suffered through the crisis from having aggressive investment strategies. Returns have again picked up in 2010 after a significant fall during 2008 and 2009. Takaful operators retain more business than conventional insurers due to focus on less complex business classes and potentially excess capacity.
On a whole, the GCC industry cedes more to reinsurers than Malaysian players. This broking approach causes excessive reliance on investment returns to generate profitability. – SG