GCC’s #takaful players face pressure on profitability

According to Standard & Poor’s, profitability of the GCC takaful industry is expected to remain relatively weak during the current year and the year ahead despite an impressive 20% year-on-year growth gross premiums in 2014 and 2015. Most takaful players are still relatively small compared with their conventional peers. Their shorter track records and less-diverse books of business put them at a disadvantage now that the falling oil price and stricter regulation are hitting GCC insurance markets. Including Saudi Arabia, the GCC’s Islamic insurance market generated an estimated pretax surplus of more than $260 million in 2015. But the takaful sector in the remaining GCC states generated a combined net loss of about $5 million in 2015 and net losses surged to about $11 million during the first six months in 2016.