Dubai: The global Takaful industry is expected to experience strong growth driven by demand from Islamic countries according to speakers at World Takaful Conference.
While GCC countries including the UAE has been major growth markets for Takaful industry, countries in South East Asia, Middle East and North Africa are fast emerging as new growth markets.
“Data and indicators confirm the growing role of Takaful insurance in the insurance industry in the UAE. Takaful insurance contributions accounted for about 10 per cent of the gross written premiums in the market in 2017, compared to 9.4 per cent with a value of 3.7 billion dirhams in 2016,” said Ebrahim Obaid Al Zaabi, Director General, Insurance Authority.
The Takaful sector contributed about 6 per cent of the total investments of the UAE insurance sector in 2017, compared to 5.8 per cent with a value of Dh3 billion in 2016,
The Gulf is one of the most important areas to influence the growth, trends and prospects of global Islamic insurance. The premiums of the Islamic insurance companies in the region amounted to about Dh11 billion with almost 50 per cent of the global premiums in 2016, according to statements from global institutions.
“The development of the legislative and legal basis of the organisation of the insurance sector has certainly contributed to strengthening the region’s leadership role in creating integration. It is also a key factor in pushing the global Takaful sector into growth and development,” said Al-Zaabi.
Islamic insurance industry in the GCC is expected to gain in terms of strong underwriting profitability, thanks to regulatory changes in some countries that have pushed up insurance prices, improving their profitability in 2018, according to analysts.
The improved pricing, particularly in motor and medical cover has given the much needed push to the underwriting profitability of the region’s insurers who have been facing underwriting losses despite double-digit premium growth.
At an estimated $11.5 billion (Dh42.24 billion), the region’s takaful market has grown at a compounded annual growth rate of 18 per cent from 2012 and accounts for nearly 44 per cent of the GCC insurance sector. Preference towards Sharia-compliant financial solutions and an expanding non-life market are the factors aiding growth.
“Takaful, in its essence, conveys the sense of a collaborative, caring and supportive society. It reflects a culture of positive social relations, translated into rules and regulations to maximise the benefits for all members of the community. The opportunities made available by the takaful sector pave the way for a new phase of socio-economic prosperity,” said Abdullah Mohammad Al Awar, chief executive officer, Dubai Islamic Economy Development Centre (DIEDC).
While Takaful sector presents strong growth opportunities across key Islamic countries, experts said the industry should embrace innovation and technology to leverage growth opportunities.
“Innovation in the sector will be driven by InsurTech and Islamic FinTech. With this in mind, we are pleased to help shape the future of the industry by ensuring they are key areas of focus for the FinTech Hive at DIFC programmes in 2018,” said Salmaan Jaffery, Chief Business Development Officer, Dubai International Financial Centre Authority.