Nov 24 Demand for Islamic insurance (takaful)
products is strong yet accessibility and capacity are among the
most pressing issues facing the sector, an industry-wide survey
released on Thursday showed.
Takaful serves as a bellwether of consumer appetite for
Islamic financial products, a sector which has its core markets
in the Middle East and Southeast Asia and is expected to reach
$20 billion in gross written contributions by 2017.
Takaful providers are scattered across young insurance
markets, where low penetration rates are attracting foreign
players such as Lloyd's of London and Zurich
While pricing has been a perennial concern for most Islamic
financial products, the survey identified other factors
affecting takaful demand.
The survey, conducted between September and October by the
Islamic Insurance Association of London, drew input from 500
respondents mainly risk managers, brokers and insurers across
the major markets for takaful.
Over a third of respondents said they have purchased some
form of Islamic insurance, but accessibility is a key barrier:
48 percent of respondents said brokers are not offering the
option of buying sharia-compliant covers.
This contrasts with the 70 percent of respondents that said
they were willing to buy Islamic insurance if offered as an
option alongside conventional covers.
Demand was strongest for commercial and healthcare covers,
as well as for Islamic reinsurance, the survey found.
The lack of available capacity was another reason preventing
39 percent of respondents from purchasing takaful cover.
The survey covered some of the industry's major markets,
with the bulk of responses from Malaysia, Pakistan, the United
Arab Emirates and Indonesia.
Last month, Lloyd's of London gave in-principle approval for
the specialist insurance market's first sharia-compliant
In July, Zurich Insurance completed the acquisition of
Malaysia's MAA Takaful, giving the European insurer a foothold
in the world's second largest takaful market.
Allianz Malaysia Berhad is also in discussions to acquire
HSBC Amanah Takaful (Malaysia) Berhad.
Takaful is based on the concept of mutuality and follows
religious guidelines that can prove challenging in the financial
sector because they ban the likes of interest and pure monetary
(Reporting by Bernardo Vizcaino; Editing by Gopakumar Warrier)