Sep 28 2011
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ReTakaful firms struggling to meet original plans
The agency argued that the Takaful market has not grown as quickly as anticipated and although the demand for Takaful - especially in the GCC - has grown rapidly in the past few years, Takaful operators have found themselves having to compete with the large conventional insurers on price, which has put them at a disadvantage.
Most Takaful firms hoped to appeal to customers' religious sensitivities, but found that this was not enough. The knock-on effect, said A.M. Best, was that the Takaful firms were using conventional reinsurers, as opposed to specialist reTakaful firms to keep their costs low, as the conventional reinsurers offered the cheapest protection.
"Often the Takaful firms find this difficult. The story is similar with reTakaful, and the companies that are growing have a mixed bag of conventional and reTakaful business. However, the reTakaful providers have been handicapped compared to the conventional reinsurers with the mechanics of providing Shari'ah compliant protection for Takaful firms - which adds costs to their offerings."
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