KUWAIT, Sept 20 (KUNA) -- The global takaful industry continued to demonstrate a strong growth rate in 2010 at a rate of 22.9pct (USD13.7 billion) as compared to the previous year's 17.7pct (USD11.1 billion), said KFH Research Limited on Thursday.

The Gulf Cooperation Council (GCC) market contributed USD5.7 billion, Middle East (Non-Arab) at USD5.3 billion and South East Asia contributions stood at USD1.9 billion, said KFH, quoting the 2012 Global Islamic Financial Forum (GIFF) report.

Amongst the key markets, Malaysia, Indonesia and UAE achieved growth rates of over 24.0pct, whilst Saudi Arabia saw its gross contributions increase by 9.

7pct.

In 2010, growth in the GCC slowed to 16.3pct, from a CAGR of 44.7pct in 2004-2009, as the implementation of compulsory medical takaful in Abu Dhabi and Saudi Arabia was completed earlier.

Saudi Arabia remains by far the largest takaful market after Iran, contributing USD4.4 billion or 32pct of the industry at an average contribution per operator of USD141 million. Malaysia grew 24pct to reach contributions of USD1.4 billion at an average contribution per operator of USD141 million. The United Arab Emirates ranked third with contributions of USD818 million, growing at 28pct.

Outside of GCC, Middle East (Non- Arab) and South East Asia, Sudan is the most significant market, with contributions totalling USD363.4 million, growing by 7pct in 2010.

The takaful industry is facing strategic challenges as the market establishes itself. Significant investments are required to establish the Shariah board, develop technical expertise on Shariah compliance, train staff, create brand awareness among customers, as well as implementing the appropriate technology.

To ensure the success and sustainability of the takaful and retakaful industry, the companies will need to work with their respective national regulator to address impediments facing the industry. Despite all the challenges, takaful is a viable alternative to conventional insurance and is expected record gross takaful contribution of USD17.2 billion by end of 2012.

Factors supporting the growth of takaful are the growing demand for Shariah-compliant products, abundant liquidity and increasing levels of foreign direct investment, concluded the report.