CAIRO: Takaful, Ernst & Young’s Sharia-compliant cooperative insurance program is expected to grow globally reaching $25 billion by 2015, the company said on Thursday.
The company’s experts said at the recent International Takaful Summit 2011, which took place in London, that Takaful’s contributions are expected to reach $12 billion by the end of this year.
By the end of 2010, the company’s contributions had reached $9.15 billion, according to a released statement.
“If we continue with the 2009 growth rate of 31 percent or higher, we will clearly touch the $25 billion mark in 2015,” said Ashar Nazim, Head of Islamic Financial Services at Ernst & Young of the Middle East and North Africa Region.
According to Ernst & Young, emerging markets will be the key actors leading Takaful’s growth.
While Saudi Arabia, the UAE and Malaysia are currently the top three Takaful markets, Egypt, Bangladesh, Sudan, and Pakistan’s markets are rising at a rapid pace.
“Legislation in the Islamic countries to make Takaful products the preferred choice among insurance products can place the industry on a completely different level,” said Abid Shakeel, Islamic Financial Services advisory lead, Ernst & Young. “As we have seen, growth in the GCC is primarily driven by compulsory insurance rather than only voluntary policies.”
Labeling Takaful as the “default option for Muslim countries,” Ernst & Young’s officials pointed out that Takaful is expected to continue growing by catering to the insurance needs of Muslims, who are currently 20 percent of the world’s populations and growing.
“We expect that growth will be maintained, as the foundations of the Takaful market in Muslim countries and in emerging markets have already been laid,” Nazim said in a statement.
Currently, Takaful makes up for 1 percent of the world’s insurance market.
“In addition to emerging markets, Muslim countries are expected to increase the adoption of Takaful and related instruments in the coming years,” said Nazim. “We expect Takaful to be the default choice for Islamic countries in the future.”
Takaful today is focused mainly in the MENA region and is expected to grow in Indonesia as well as the Indian subcontinent, followed by the African sub-continent along with the Commonwealth of Independent States countries, according to Ernst & Young.
The Sharia-compliant insurance program is also dominating and growing in the Malaysian market.
“If we look at contributions per Takaful operator, Malaysia leads the world at $115.8 million,” said Ashar. “It is followed by GCC at $63.5 million, the Indian subcontinent at $16 million, Africa at $11.8 million and the Levant at $4.3 million.”
The company’s experts pointed out that the more “mature” Malaysian model, where the family Takaful program is prevalent, will be leading the growth of Takaful as the world will follow its practices.
The family Takaful market is underpenetrated because currently it contributes to only 5 percent in the MENA region, and 77 percent in Malaysia, according to Ernst & Young experts.
“There is a tremendous amount of catching up to Malaysia that we could see happen in the future,” Ashar added.
Enrst & Young’s Islamic Financial Services Group (IFSG) has been working to bring Sharia-compliant knowledge to capital planning, business transformation, or strategy implementation for the advantage of clients.
IFSG’s office is headquartered in Bahrain and has been working with clients for 12 years now.
Moreover, Ernst & Young has been operating in Egypt since 1984 with an office in Cairo and Alexandria. The firm has been working with private and public sector clients from several fields including the oil and gas industries, telecommunications, and financial services.
Today, Sharia-compliant financial services are currently on the rise in the Middle East and North Africa region, specifically Egypt and the Gulf Cooperation Council countries.
Just last month, Mubasher Trade, the Middle East’s first e-trading company, launched Mubasher Islami, a new division that specializes in Sharia-compatible services in Egypt, as the idea of Sharia-compliance is on the minds of Muslim investors these days, the country’s managing director of Mubasher told Daily News Egypt.
