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Takaful premium rose 19 per cent to $8.3b led by GCC countries

17 April 2012
Muscat: The global Takaful contributions grew by 19 per cent to $8.3 billion in 2010 and of these, the Gulf Cooperation Council (GCC) contributed $5.68 billion and South East Asia contributions were $2 billion, according to the 5th edition of Ernst & Young's World Takaful Report 2012 report.

In 2010, growth in the GCC slowed to 16 per cent, from a compounded annual growth rate (CAGR) of 41 per cent in 2005-2009, as the implementation of compulsory medical Takaful in Abu Dhabi and Saudi Arabia was completed earlier.

"The Takaful industry continued to show double digit growth in 2010, albeit at a relatively slower rate of 19 per cent compared to previous years. Among key markets, Malaysia and the UAE again achieved growth rates of over 24 per cent, while Saudi Arabia saw its gross contributions increase by $0.5 billion," Ashar Nazim, Mena Head of Islamic Financial Services, Ernst & Young, said.

Saudi Arabia leads
Saudi Arabia remains by far the largest Takaful market, contributing $4.3 billion or 51.8 per cent of the industry at an average contribution per operator of $141 million. Malaysia grew 24 per cent to reach contributions of $1.4 billion at an average contribution per operator of $141 million.

The third rank is held by the UAE with contributions of $818 million, growing at 28 per cent. Sudan is the most significant market outside of the GCC and SE Asia, with contributions totalling $363 million, growing by 7.0 per cent in 2010.
"With current growth trends, and the addition of new fringe markets such as Indonesia and Bangladesh, we expect gross contributions of $12 billion by 2012," continued Ashar.

The Islamic finance share in the GCC and Malaysia is 25 per cent and 22 per cent respectively whereas the Takaful market share is 15 per cent and 10 per cent respectively.

In terms of consumer segmentation, the Shariah appeal of Takaful makes it predominantly retail driven in most markets.
The corporate business is attracted through a value proposition based on the operators' reputation, history, product suite, service standards, relationships and pricing and this segment has significant room for growth.

Gordon Bennie, Mena Financial Services Industry Leader, Ernst & Young said, "The GCC Takaful market predominantly comprises of general Takaful business with family Takaful accounting for as little as 5.0 per cent in certain markets. With high disposable income average and low market penetration, the GCC presents great potential for family Takaful. Focus on customer research to understand needs and expectations, in addition to focus on customer education and distribution capacity-building would allow this market to be tapped."

"Large Muslim markets such as Libya, Egypt, Bangladesh, Indonesia and Brunei are opening up to Takaful," added Gordon.

© Times of Oman 2012

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