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Pakistan's Pak Qatar Family Takaful Limited (PQFTL) has signed a BancaTakaful agreement with JS Bank Limited. This agreement marks the first direct arrangement between Pak-Qatar Family Takaful and any Bank for Banca Takaful. The signing ceremony was held at JS Bank’s head office in the presence of senior officials from both partners, including Muhammad Menhas, Deputy CEO and Country Sales Head, Kamran Rashid, Head of BancaTakaful and ADC and S Adnan Hasan, Head of Marketing and Corporate Communication from Pak-Qatar Family Takaful Ltd. JS Bank was represented at the session by Khalid Imran, President and CEO, Kamran Jafar, Group Head - Corporate and Retail Banking Group, and Babbar Wajid, Head of Product Development & Business Management.

Malaysia, which is the second largest takaful market in terms of gross takaful contribution, is forecasted to hit US$3.024 billion (RM10.1 billion) in 2014 from US$2.436 billion in 2013. Bank Negara's target is to achieve a penetration rate of takaful of 75% by 2020, from currently 15%. Meanwhile, the local takaful industry is expected to see increased merger and acquisition activities between now and the end of next year, with the introduction of the Islamic Financial Services Act (IFSA). Malaysia's takaful industry achieved compounded annual growth rate of 24% over the last five years. Industry estimates indicate that given a conducive economic climate and its young demographics, Malaysia's takaful industry may be able to continue its double-digit growth path.

Indonesia's Islamic insurance market will be reshaped over the next decade by a new law that requires conventional firms to spin off their syariah-compliant units, while encouraging more foreign investors to enter the market. The new law, which came in force last month, requires insurers to spin off their windows within 10 years. Moreover, the law maintains an 80 per cent limit to foreign ownership, which will keep the market open to new players, while closing some loopholes that allowed foreign firms to have full control of their operations. The rules will also require larger and better trained sales forces since the spin-offs will require separate agents for conventional and takaful products.

Indonesia’s Islamic insurance market will be reshaped over the next decade by a new law that requires conventional firms to spin off their sharia-compliant units, while encouraging more foreign investors to enter the market. The takaful market in Indonesia is dominated by so-called “windows”. The new law, which came in force last month, requires insurers to spin off their windows within 10 years. Most firms are likely to meet the spin-off requirement as late as possible and they will first expand their sharia units to ensure they are big enough to be spun off easily. The rules are expected to spur consolidation among conventional firms.

Adamjee Life is going to enter the Islamic insurance market by March next year, company CEO Fredrik de Beer announced in a recent interview. “We will complete the business plan to seek the board’s approval by the end of October. We are hoping to launch Takaful products by the end of the first quarter of 2015,” Beer said.
Adamjee Life follows Jubilee Life Insurance and EFU Life Assurance that have already announced their plans to enter the Shariah-compliant segment of life insurance. Pakistan’s insurance industry has seen quite some activity lately, as both life and non-life entities have shown interest in setting up Islamic window operation

Jubilee General Insurance Co will seek shareholder approval to offer Islamic insurance Takaful to enter the sector after conventional firms were allowed to offer sharia-compliant products earlier this year. Other firms entering the market include United Insurance Company of Pakistan and EFU Group, Pakistan's largest insurer, which plans Takaful windows for both its life and general businesses.

The insurance regulator of the United Arab Emirates has said that the number of takaful insurers in the region has increased to 10. The combined premium volume totaled about 2.8 billion U.A.E. dirhams ($762.3 million). The regulator said that it will hold meetings to discuss strategies for the development of Islamic insurance industry in the U.A.E. market.

There are basically two models of Islamic insurance that is, al-Mudarabah model and the wakalah model though most jurists prefer the first one. This element enables members to fulfill their obligations of mutual help and guaranteeing one another. It should, however, be noted that the element of profit sharing among participants from the proceeds of the Islamic insurance operations is only made after fulfilling the mutual obligation of assisting one another and this calls for proper asset keeping and sufficient protection of funds against over exposure to loss. Where the insured is still alive on the maturing of the policy he/she is entitled to the whole amount of the premiums, a share of the profit made over the premiums, a bonus and dividends according to the company policy.

The fast growing Islamic insurance package, Takaful, is not exclusively meant for Muslims, as it has been designed to cater for the needs of non-Muslims as well. This clarification was made by the founder of Takaful Insurance of Africa, Mr Hassan Bashir, who disclosed that the Kenya-based company’s products could bring fruitful possibilities to the doorsteps of non-Muslims as well as, not just for people of the Muslim faith. Bashir made this known at a recent chat with the media where he also revealed that non-Muslims currently constituted about 15 per cent of the company’s customer base, adding that the figure was expected to increase as time passed.

AIG Re-Takaful (L) has brought in additional capacity to spur growth of the Malaysia general takaful industry which is currently constricted by limited capacity. In addition, the fully Shariah-compliant unit of insurance giant American International Group Inc (AIG) is differentiating itself from competitors consisting of retakaful operators backed by global reinsurance companies. AIG Re- Takaful CEO Idzuddin Zakaria said the company has treaty and facultative capacity to take on larger risks and offer more sophisticated products and services. AIG Re-Takaful, in operation since April 2014, has undertaken a few facultative risks which frees takaful companies to undertake more risks and thus growing the general takaful sindustry. AIG Re-Takaful will also explore and expand on opportunities to grow in the Malaysian market.

Hassan Bashir, Founder of Takaful Insurance of Africa, says the Kenya-based company's products can bring possibilities to many and are not exclusively for people of the Muslim faith. Takaful Insurance of Africa started in Kenya, but opened an office in Somalia 6 months ago, as well as expressed interest in Uganda, Djibouti and Tanzania. Hassan Bashir believes that Islamic finance can bring possibilities to many people by helping them get employment and access to finance. With the company's index-based livestock takaful, pastoralists are continuously educated so that they understand that the cover is in line with their religious sensitivities and this is to sustain their livelihoods despite droughts. In the long run, this will solve the negative perceptions about Islamic finance.

Egypt's Wethaq Takaful Insurance has purchased EGP 17 million worth of investment certificates to fund the new waterway along the Suez Canal, said General Manager of Financial and Administration Affairs Abd El Aziz Labib. Labib referred to the Suez Canal investment certificate as a guaranteed saving pool, at an interest rate of 12%, which is higher than those invested in the Treasury bill and bonds. Furthermore, the Egyptian official said Wethaq Takaful's portfolio of total investments reached EGP 230 million by end of last fiscal year 2013/2014. The company plans to boost its investment portfolio to EGP 250 million by end of the current fiscal year.

In its 'Standpoint Commentary' Malaysian Insurance and Takaful: Stable Fundamentals Amid Evolving Dynamics, RAM Ratings highlights the high growth prospects for Takaful in Malaysia. Under the new Acts, i.e. the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA), composite insurers and Takaful operators (TOs) are required to legally separate their general and life/family businesses by 2018. While RAM Ratings believes this would strengthen regulatory oversight of the sector, the additional capital and resource requirements could be significant for smaller players. RAM Ratings believes that the consensus medium-term forecast of 7-10 per cent growth for general and life insurance and double-digit growth for Takaful is largely achievable.

GCC’s gross takaful contribution is estimated to reach around $8.9 billion (Dh32.6 billion) in 2014 from an estimated $7.9 billion in 2013, according to the Ernst &Young report, Global Takaful Insights 2014. The report forecasts 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. Saudi Arabia will likely remain the core market of Islamic insurance business. According to EY, among the GCC countries, competition, operational issues and the lack of qualified talent continue to be impediments. The industry needs to re-examine its strategies, operations and regulations in order to gear itself up for further growth and a sustainable ecosystem.

EY’s latest report, Global Takaful Insights 2014, forecasts a continued double-digit growth momentum of the global takaful market of approximately 14 percent from 2013 to 2016 and expects the industry to reach $20 billion by 2017. The Gulf Cooperation 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. Saudi Arabia will likely remain the core market of Islamic insurance business, commanding approximately half (48 percent) of the global contributions. With strong competition from conventional incumbents, takaful operators are likely to continue their struggle in the medium term, although some will look at alternative customer segments and explore merger options.

Growth of takaful business is rebounding, fuelled by improved economic conditions across its core markets and increased underwriting needs from the broader Islamic banking sector, a study by Ernst & Young showed. In previous years, inefficiency and intense competition have limited the sector's expansion, and growth rates slowed around the turn of the decade. But driven largely by Saudi Arabia and Malaysia, the sector is expected to grow 14.4 percent this year. Key drivers of the recent upward trend include improving economic conditions and a revitalised Islamic banking industry generating assets for takaful operators to underwrite. The sector will also benefit from an upswing in banking penetration rates across its core markets.

XL Group has extended its support for Shariah compliant managing general agency, Cobalt Underwriting, by adding fine art & specie coverage to its suite of products. The insurer already provides cover for property, construction and financial lines. The coverage, which spans precious metals, cash, fine art and rare collectibles, particularly complements XL Group’s Shariah compliant Financial Lines offering. In practice this means financial institutions and collectors can now buy cover with significant limits for a range of assets and their exposures, including gold and other valuable assets both in situ and transit. XL sees growth in the arts market in the Middle East and Asia with the opening of new galleries.

XL Group's global and professional unit formed the cyber and technology risk business unit named North America Cyber & Technology Risk business unit, to capitalize on the rising demand for cyber insurance in the U.S. and Canada. Moreover, XL Group has extended its Shariah compliant cover to Financial Lines and entered into a collaboration with Citation Jet Pilots (CJP) in August. The tie-up will provide competitive insurance policies to Citation owners and pilots who finish the safety education seminars. These expansion initiatives are expected to help it in many ways such as strengthening of operational capacity, increasing competitiveness, and increasing the scope for revenue generation.

Pakistan’s insurance sector is set for a boost in competition after the industry regulator allowed conventional firms to offer takaful earlier this year. The regulator, the Securities and Exchange Commission of Pakistan (SECP), has now granted two takaful licenses and has up to 10 applications currently being finalised. 20 to 25 new takaful window operators are expected in the market within one year. The regulator sees greater opportunity in life insurance although commercial lines of business could also find appeal in rural markets where the demand for products like crop, agricultural, livestock insurance is increasing. Such an increase in activity could face challenges, in particular a lack of experienced staff as well as the need for Islamic re-insurance products to help manage excess risk.

Malaysia is ready and has the potential to become a mega takaful operator in the region given its strong track record, right capitalisation, capable expertise and broad knowledge of the industry, said Ernst & Young. Its global Islamic finance leader, Ashar Nazim, said the local takaful operators had the right ‘ingredients’ to build upon and grow beyond Malaysian borders into Asean region as well as into various parts of the world. Country managing partner and Islamic finance leader of Ernst & Young Malaysia, Datuk Rauf Rashid, said there was huge untapped market in the region that would translate into tremendous demand for takaful businesses.