Takaful market market to reach $12 billion in 2011
A recent report by Ernst & Young predicted that the takaful insurance market will grow to approximately $12 billion in 2011.
However, the report, called Transforming Operating Performance - The World Takaful Report 2011, also notes that, despite this expected growth, the takaful industry and its core markets have experienced another challenging year. It says that positive signs of economic recovery and improved business sentiment have been shaken by the socio-political uncertainty witnessed across the Middle East and North Africa region during the first quarter of this year.
Others agree that this sector faces a number of challenges.
“The retakaful market will continue to see challenges going forward as we continue to see a soft market cycle and oversupply of capacity,” says Nav Garayal, director of the advisory unit at Aon Benfield. “We will also need to see a sustained recovery for Islamic economies, which, for example, have been impacted by recent unrest in North Africa and the Middle East. Family takaful continues to be the only class of business that is displaying good prospects.”
Those within the takaful industry recognise that there is still much work to be done. Parvaiz Siddiq, chief executive officer of Noor Takaful, acknowledges that takaful is still ‘significantly less developed than the broader Islamic finance industry’.
He said: “If we are to take advantage of the opportunities that are emerging on a global scale, we must perfect an industry-wide shariahcompliant corporate governance mechanism that people can put their trust in.”
However, despite the challenges that the takaful industry faces, the Ernst & Young report acknowledges that while “the industry is not without risks...its potential remains an important feature of Muslim emerging markets for many indigenous and global insurance players”.
