Oman and Turkey are new entrants to the takaful industry, offering strong first mover advantage to takaful operators, according to Ernst & Young’s (EY’s) latest report, titled
‘Global Takaful Insights 2014
Takaful, a co-operative system of reimbursement in the event of loss, is regarded as a bellwether of consumer appetite for Islamic financial products. The report suggests that established takaful markets in Africa such as Sudan, offer greater prospects for efficient replication across new African markets endorsing Islamic finance,
The report forecasts that the Gulf Cooperation Council (GCC) countries’ gross takaful contribution will reach around US$8.9bn in 2014 from an estimated US$7.9bn last year.
It also expects continued double-digit growth momentum for the global takaful market of approximately 14% from 2013 to 2016 with the industry reaching US$20bn by 2017. This is against a backdrop of continued buoyancy in the estimated US$2 trillion global Islamic finance markets.
Saudi Arabia is expected to remain the core market of Islamic insurance business, with 77% of total gross takaful contributions within the Gulf region and 48% of global contributions while United Arab Emirates (UAE), Qatar and more recently, Oman, continue to set the pace for the development of takaful products in the Middle East and West Asian markets.
The GCC countries and Association of Southeast Asian Nations (Asean) markets are likely to maintain their current growth path in the next five years, subject to their economies remaining strong.
“The continued strong growth of the much larger Islamic banking sector will help sustain the progress of the takaful industry,” said Abid Shakeel, senior director of EY’s global Islamic banking centre
“The rapid-growth markets, particularly UAE, Malaysia and Indonesia, are key markets to watch as they improve on market practices, widen distribution channels and strengthen the regulatory front.
“The low insurance penetration rates, on average just 2%, across key Muslim rapid-growth markets signify a huge opportunity and growth potential for takaful products, particularly in the areas of family takaful and medical insurance.”
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