DEVELOPMENTS IN THE ISLAMIC INSURANCE MARKET
RC: How would you describe the growth and global expansion of the Islamic insurance (Takaful) market in recent years?
Jaffer: Phenomenal growth in Takaful business on a global scale has been experienced over the past few years, with gross Takaful contributions between 2007 and 2011 growing year-on-year by a compound annual growth rate (CAGR) of 22.3 percent, according to EY’s 2013 report ‘Global Takaful Insights’. While Family (life) Takaful and General Takaful gross contributions have both flourished, growth of the Family Takaful sector has been particularly buoyant, with 2007-11 CAGR of 32.1 percent according to Milliman’s ‘World Takaful Report’ (2013), and estimated gross Family Takaful contributions of US$2.1bn in 2011. In addition, Family Takaful’s share of gross written premiums has increased from 16 to 22 percent, between 2007 and 2011.
RC: To what extent have Takaful models and products evolved to meet market demands?
Jaffer: It is becoming increasingly clear that the success of Takaful is dependent on Takaful’s ability to compete on a par with conventional insurance. Takaful operators are, therefore, increasingly evolving product features and design to offer product solutions that meet customer needs. Products have started evolving away from simple products that cover a single risk towards products that cover multiple risks, with bundled benefits. For example, within the Family Takaful market, some market leading providers are offering unit-linked savings products that allow customers the flexibility to choose from a range of Takaful (life) cover as well as other bundled benefits, such as: cancer cover, death and disability cover, travel cover and children protection cover.
Jan-Mar 2014 Issue
FWU Global Takaful Solutions