The Middle East Takaful Forum (METF) ushers in its second forum this year on the booming industry of takaful products. Though relatively new, the METF has established a valuable position as a highly focused platform for leaders in the regional Shariah-compliant insurance markets. The theme of this year's forum, "Adapting to Change: Fresh Thinking to Boost Efficiency, Profitability and Scale of Islamic Cooperative Insurance Players," will look critically at what factors are need for continued growth.
Aiming to provide industry players with a deeper insight into what the future holds for the Islamic insurance industry in the Middle East, last year's inaugural METF 2012 gathered 202 senior decision-makers representing over 80 market-leading organizations for discussions that focused on tackling the profitability challenge and providing fresh thinking for Islamic and cooperative insurance in the Middle East.
Adapting to change
"The GCC Takaful market remains at the forefront of the global Shariah-compliant insurance industry. The latest industry data reveals that the GCC contributes more than 62 percent of the gross takaful premiums globally[SO1] . Industry estimates project that the global Takaful market will hit the USUSD 20 bn mark by 2017. However, achieving these projected growth levels requires the industry to address some of the fundamental challenges including rising competition, a lack of suitable Shariah-compliant investments, the shortage of expertise, and evolving regulations," said Abdul Rahman Mohammed Al Baker, Executive Director at the Central Bank of Bahrain (CBB) and keynote speaker at this year's forum.
A key outcome of the discussions at METF 2012 was that the global Takaful industry has been experiencing double digit growth rates, with the GCC and Malaysia being the major drivers. Although the GCC market remains at the top in terms of overall contributions, the latest industry data reveals a slight deceleration in the overall growth rates. A critical factor that will determine success in taking the industry to the next level of development will be the readiness of industry players to formulate and execute successful strategies in response to new market conditions and opportunities that will reignite growth levels. A key challenge for Takaful operators will be to maintain the growth momentum while also boosting profitability - and this calls for taking proactive steps, fresh new thinking, and the ability to rapidly adapt to change.
Another major issue, highlighted in the World Takaful Report 2012, is that "due to the strong competition, new-entrant Takaful operators are relying upon aggressive pricing strategies to compete against the established, older, conventional players. Such pricing is not sustainable and causing significant pressure on the industry's profitability." Maintaining growth momentum while boosting profitability remains a key challenge for Takaful players in the Middle East and, with the growth rate in the GCC Takaful industry slowing to 16 percent in 2010 compared to a CAGR of 41 percent in 2005-2009, industry leaders are on the outlook for fresh thinking and innovative strategies for generating further growth momentum. It is also becoming increasingly imperative that Takaful players in the Middle East get to grips with managing the challenges of an increasingly competitive Takaful market, drive operational efficiencies and financial performance improvement in their business, and successfully shift to sound sustainable underwriting profitability - to build the capacity, capability and scale to profitably compete.
The theme for 2nd annual forum picks up on these challenges and opportunities and focuses on the adaptations needed to boost efficiency, profitability and scale of regional takaful. These key elements will determine which Takaful players will be best placed to take advantage of strongly increasing product demand based on exciting consumer demographics, rising income levels and an increasing appetite for Shariah-compliant products.
METF is an initiative of the Middle East Insurance Forum (MEIF), which has successfully been held in Bahrain each February for the past 9 years. The 2nd Annual Middle East Takaful Forum (METF 2013) will be held on the 7th and 8th of October 2013 in the Kingdom of Bahrain again under the patronage of the Central Bank of Bahrain. METF 2013 is set to gather over 250 high-level senior decision-makers from the regional insurance industry for discussions that will seek to overcome the profitability challenge for Middle East Takaful operators and achieve sound and sustainable underwriting profitability.
Fresh Thinking: Boosting Efficiency, Profitability and Scale
In particular, emerging high-growth business areas such as Life Insurance/Family Takaful, Medical/Health Insurance, and General Insurance are providing huge opportunities for Takaful operators in the region. Planning how to best capture this growth, industry executives are asking key questions:
"Efficiency, profitability and scale remains a key challenge for the industry and it is essential to find innovative solutions to manage the challenges of an increasingly competitive Takaful market, drive operational efficiencies and improve the financial performance in the industry," Amer Daya, CEO of Al Hilal Takaful, said. "The theme for this year's forum is important and timely as these challenges need to be addressed urgently for the regional Takaful industry to achieve long term sustainable growth. Al Hilal Takaful is delighted to be supporting this important gathering of key leaders in the Middle East Takaful industry."
© Business Islamica 2013
