GCC gross takaful contribution estimated to reach US$8.9 billion in 2014
GCC gross takaful contribution is estimated to reach around US$8.9 billion in 2014 from an estimated US$7.9 billion in 2013, according to EY’s latest report, Global Takaful Insights 2014. The report forecasts a continued double-digit growth momentum of the global takaful market of approximately 14% from 2013 to 2016 and expects the industry to reach US$20 billion by 2017. This is against a backdrop of continued buoyancy in the estimated US$2 trillion global Islamic finance markets. The Gulf Co-operation Council (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.
EY says the global takaful industry continues to gain market share across several high value rapid-growth markets, which still show significant untapped potential. Within the Gulf region, Saudi Arabia accounts for the majority of the total gross takaful contribution at 77%, followed by UAE, which accounts for 15%. The rest of the Gulf countries account for just 8% of gross takaful contributions.
According to the report, Saudi Arabia will likely remain the core market of Islamic insurance business, commanding approximately half (48%) of the global contributions while U.A.E., 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 U.A.E., 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%, 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." EY's report says the industry needs to re-examine its strategies, operations and regulations in order to gear itself up for further growth and a sustainable ecosystem. Success needs to be measured in profit, not market share and those who continue to do what they’ve been doing in the past will struggle with profitability.
"With the high potential of the internationalisation of takaful, the urgency to grow and push for regional champions within high-growth and stable regions is greater than ever. This will allow the industry to leap into the next level to realise its global market potential and position it as a strong ethical-based alternative to conventional insurance," said Mr. Shakeel.
