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THE TAKAFUL AND RE-TAKAFUL INDUSTRY

Although the Takaful industry has seen double digit growth since 2010 according to reports, it still suffers from a lack of penetration in supposedly vibrant markets, and is still performing at what is considered to be lackluster levels. Saudi Arabia remains by far the largest Takaful market, contributing US$4.3 billion or 51.8% of the industry at an average contribution per operator of US$141 million. Malaysia, considered one of the largest markets in the Islamic capital market space, grew 24% to reach contributions of US$1.4 billion at an average contribution per operator of US$141 million. The UAE, with contributions of US$818 million, has charted a growth rate of 28%; whilst Sudan, which is considered to be the most significant market outside of the GCC and Southeast Asia, has seen more than 7% growth since 2010, with contributions totalling US$363 million.

Many within the industry have admitted to a gamut of issues which need to be addressed urgently and effectively in order to allow the industry to perform at its best; particularly in the investment space, where Takaful companies are suffering from a dearth of long-term investment opportunities to suit their risk and investment profiles. Another issue stems from the lack of risk-based capital, where there is a mismatch between the companies’ assets and liabilities, and the universal issue of lack of talent and understanding of Shariah based insurance products.

And although the global credit crisis has contributed to the slow-down in the growth of the Takaful industry, with lower returns all round for shareholders and Takaful policyholders and slower business growth on the back of a contracting economy, there is still much untapped potential in the re-Takaful sector, which has on the contrary seen new players entering the market due to the lower entry cost for re-Takaful operators, and the ability to write business on a global scale.

In this issue of Islamic Finance news Supplements, we take a closer look at the fundamentals of the Takaful industry, its issues from a macro and micro perspective, and what needs to be done to mitigate these problems in order to prevent a stagnation of growth within a sector which is ultimately brimming with potential.

 

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CONTENTS
 
 
Latest Issue
Wednesday 17th December 2014
Volume 11 Issue 50
   
Cover Story
IFN Rapid
News Briefs
Asset Management
Takaful
Ratings
Moves
IFN Reports
  Global Trendswatch
  IFN Weekly Poll: Could Islamic banking assets outside of traditional core markets increase in 2015?
  New kid on the block: Charles Russell Speechly
  Malaysia: Sukuk still dominate debt market despite overall slowdown
  Enabling Islamic financial transactions in Kenya
  Pakistan to welcome maiden Islamic gold fund next year
  Islamic banking instrumental in driving up number of HNWIs in Malaysia
  Scandinavia: the next Shariah investment destination?
  Improving Pakistani macroeconomic fundamentals ideal for Islamic funds
  Malaysian Takaful sector remains stable despite tighter capitalization criteria
  Sovereign Sukuk: 2015 issuances
IFN Country Correspondents
  Three banks warned for lack of collaboration with MASAK
  Bangladesh plans to float Sukuk
  Regulatory efforts in strengthening the Islamic banking industry in Indonesia
  Sarajevo: A new hub for Islamic finance in Europe
IFN Sector Analysis
  Liquidity and secondary markets: Improving by the year
Features
  Islamic private equity: A new ‘core’ opportunity
  Indonesia: The sleeping giant begins to wake up for microTakaful
Case Study
Turkey’s longest-tenor US dollar Sukuk

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