Business Islamica conducted an interview with Hussein Mohammad Al Meeza, Chief Executive Officer and Managing Director, of Dubai Islamic Insurance and Reinsurance company AMAN, to expand on the Takaful training the company conducted earlier this year, entitled "Takaful: Fundamentals and Practices."
The Dubai Islamic Insurance and Reinsurance Company (AMAN), the largest Islamic Insurance provider in the UAE, in partnership with the Malaysian Insurance Institute (MII), a leading insurance education and training institution, and in conjunction with Takaful Re UAE and MNRB Malaysia, hosted a three-day training course in Takaful from January 9, 2012 to January 11, 2012. The event was aimed at increasing the level of understanding of the Takaful products and services, following a recent report from Ernst and Young, a leading international professional services organization, showing that contributions made by the GCC region's Takaful segment reached over $63.5 million in 2010. Global Takaful contributions, which reached $9.15 billion in 2010, are forecasted to touch $12 billion by the end of this year.
AMAN Insurance was established in the second quarter of 2002 as a promising national public shareholders company, announcing the beginning of a new era in Islamic insurance in the UAE. AMAN's founding members consist of key investors. The company aims to offer a comprehensive system of outstanding Islamic Insurance Services that support the stability and security of the UAE community. As a national Islamic company, AMAN investment and insurance activities are conducted in accordance with Shari'ah guidelines under the supervision of the Fatwa and Shari'ah Supervisory Board whose members are specialists in Islamic economic and Shari'ah transactions. It has been named as 'Best Takaful Operator' for the fourth consecutive year during the 6th Annual Middle East Insurance Awards (INSUREX 2011)
The man on the helm is not only a founding member, but also the winner of the Financial Personality of the year for 2006 at the 13th annual convention of Islamic banks in Bahrain. He is a UAE national and at one point joined Dubai Bank, the first bank of its kind to offer fully Shari'ah- compliant banking services. He occupies several executive positions and sits on the boards of many Islamic banks and insurance companies in the UAE, Sudan, and Algeria.
"We are involved with the development of the Islamic sector in the UAE, particularly the Takaful industry, where it used to be only Salama covering the UAE. But one company was not enough so we opened with a capital of 60 million dirhams and 9 years later our paid up capital is 250 million dirhams," Al Meeza told Business Islamica.
Today, there are 8-9 companies offering Takaful services in the UAE with AMAN and Salama vying for market leadership. Incorporated in 1979, Salama Islamic Arab Insurance Company is today a leading provider of Shari'ah-compliant insurance solutions Takaful around the world. SALAMA has a paid-up capital of AED 1 billion ($274 million) and is listed in the Dubai Financial Market.
But is the Takaful sector growing and how does one measure this growth? "Growth is measured by the number of policies and Assets under management. We don't have accurate numbers on AUMs but because of our strong presence in the market, we know that the number of AUMs is growing, also an indication that Takaful policies are also in an upward motion," commented Al Meeza.
The international financial crisis that also hit the UAE, negatively impacted AUMs which suffered and declined, "but we believe that the number of AUMs will recover as markets recover, and Takaful companies, having learned from this experience, now deal with only diversified and conservative investment strategies." "Takaful companies are considered long-term investors which enjoy solid financials and robust liquidity based on new policy subscriptions, and as such companies can be patient and restructure investment portfolios without having the need to immediately cover losses," opined Al Meeza.
The UAE currently ranks third in the Global Takaful market, which was reportedly worth over $640 million in 2009. Takaful is concentrated mainly in Saudi Arabia (making up $3.86 billion of the industry in 2009), Malaysia ($1.15 billion), the UAE and 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. "We are eyeing to play a major part in the UAE Takaful segment's growth by offering a comprehensive system of outstanding Islamic insurance services that support the stability and security of the local community. This move consolidates our position as market leaders in 'Banc assurance,' which reveals the strong partnership between banks and insurance companies," Al Meeza was recently quoted as saying.
Parallel to its move towards releasing more products for the Takaful segment, AMAN has also launched two new medical products, 'Rishtey" and 'Health on Return,' which have been developed in partnership with ICICI Lombard of India, the largest private sector general insurance company in India. Also, AMAN has been appointed as a 'Trusted Partner' by the Dubai Road and Transport Authority (RTA), under its 'Easy Licensing and Registration' initiative.
Although licensed for it, AMAN has not yet acted on the Reinsurance or Retakaful market yet, relying on third party providers. "We had ambitions on that, but one can't take on the risk on his own regardless of the size of capital in the company. For Retakaful we work with an international panel of providers, such as Lloyds, Swiss RE, and other reputable companies," Al Meeza said.
As for the training AMAN conducted, AL Meeza said that his company's role is not only to insure and make profits but also to educate. "People don't know Takaful. People have a small car and insure it but they often leave a $1million investment uninsured. The interest in Takaful products is coming from Muslims and non-Muslims alike."
Her Excellency (HE) Fatima Mohammed Ishaq Al Awadi, Deputy Director General, UAE Insurance Authority, led the inaugural ceremony for the Takaful training course. "The Authority is devoted to develop solid foundations for Takaful practices. Launching the first-ever Takaful program in the Arab World is surely a critical step forward towards finalizing the legal and jurisprudential Takaful-based directives in the country," Al Awadi said.
© Business Islamica 2012
