GCC’s gross takaful contribution is estimated to reach around $8.9 billion in 2014 from an estimated $7.9 billion last year, according to a new report.
Global Takaful Insights 2014, the latest report from EY, a multinational professional services firm headquartered in London, has forecasted a continued double-digit growth momentum of the global takaful market of approximately 14 per cent from 2013 to 2016 and expects the industry to reach $20 billion by 2017.
This is against a backdrop of continued buoyancy in the estimated $2 trillion global Islamic finance markets. The GCC countries and Association of Southeast Asian Nations (ASEAN) markets are likely to maintain their current growth path in the next five years, subject to their economic growth.
The global takaful industry continues to gain market share across several high value rapid-growth markets, which still show significant untapped potential, the report said.
Within the Gulf region, Saudi Arabia accounts for the majority of the total gross takaful contribution at 77 per cent, followed by UAE, which accounts for 15 per cent. The rest of the Gulf countries account for just 8 per cent of gross takaful contributions.
Saudi Arabia will likely remain the core market of Islamic insurance business, commanding approximately half (48 per cent) of the global contributions while UAE, Qatar and more recently, Oman, continue to set the pace for the development of takaful products in the Middle East and West Asian markets.
Turkey and Oman are new entrants to the takaful industry, offering strong first mover advantage to takaful operators, whereas established takaful markets in Africa like Sudan, offer great prospects for efficient replication across new African markets endorsing Islamic finance.
Abid Shakeel, senior director of EY’s Global Islamic Banking Center, said: “The continued strong growth of the much larger Islamic banking sector will help sustain the progress of the takaful industry.
“The rapid-growth markets, particularly UAE, Malaysia and Indonesia, are key markets to watch as they improve on market practices, widen distribution channels and strengthen the regulatory front. The low insurance penetration rates, on average just 2 per cent, across key Muslim rapid-growth markets signify a huge opportunity and growth potential for takaful products, particularly in the areas of family takaful and medical insurance.”