IslamicFinance.de

A significant growth in the global takaful industry has bben observed over the last few years. According to the Ernst & Young World Takaful Report 2012, global takaful contributions show an increase of 19% to $8.3 billion in 2010. $5.68bn of these contributions belong to GCC. Nevertheless, it is a key challenge for takaful players in the Middle East to maintain the growth momentum while boosting profitability.

According to a GCC survey, insurance profitability has deteriorated significantly in the past four years across top 30 conventional insurers. While 28% in 2007, it sropped down to 9% in 2011. A solution to prevent further decline is to revamp operating models with profitability pillars. There is a huge difference between e.g. motor premiums and medical insurance, which causes controversial reactions by insurers. While motor premiums in the UAe show a decrease of 23% over the last three years, healthcare provider costs have grown up to 50% in the same period.

Amana Takaful showed a significant growth of 32% for the first half of 2012. According to the figures of the period the total Gross Written Premium(GWP) is as high as Rs 770.8 million. Compared to this, the same period last year had a GWP of Rs.584.7 million. The company's development is in accordance with the 11% growth in overall industry.

Zurich Financial Group Ltd shows strong interest in involving in the takaful business in Malaysia. Strategically, a takaful arm contributes to the bench strength and access to the increasingly appealing market. Unfortunately, it is very unlikely for Bank Negara Malaysia to issue new takaful licence since they issued new licences to four new players in 2009. The hopes lie in 2014 when the adoption of the Risk Based Capital framework by the takaful industry is expected.

Abu Dhabi National Insurance Company’s financial strength rating and credit rating were reaffirmed by A.M. Best’s rating agency and Standard & Poor’s rating agency as A and A-, respectively. Thus, ADNIC is placed among an elite group of financial services institutions to have their financial rating maintained in the A category across the Middle East and North Africa region.

Emirates Money intends to launch Banca Takaful in conjunction with Dubai Islamic Insurance and Reinsurance Company and Global Takaful Solutions (FWU). A key feature of the new Shari'ah-compliant financial plan is to protect invested capital in a bear market situation that we are experiencing nowadays. Banca Takaful shall offer two different investment strategies - equity and cash - allowing customers to choose their investment strategy.

Microtakaful shall help people at the base of the economic pyramid to find a way out of poverty and gives them a real hope of being financially independent. It is known that of the 41 lowest human development countries, 20 have a majority Muslim population. In other words, 54 % of the one billion people living in the low depending countries are Muslims. There are actually just a few takaful operators that have entered into the low-income microtakaful market, especially in the countries where almost all population is Muslim, poverty is extended and the takaful sector is already established.

The court in Sindh provice registered a petition of five Pakistan's takaful operators as a sign of protest againts the new rules for insurance sector that was launced last month. Accordint to them, conventional insurance firms would become right to offer takaful services. It would make Pakistan the second Islamic country after Indonesia where takaful windows are officially allowed. The court has been adjourned to an unknown date.

ONIC Holding negotiates with Royal and Sun Alliance to mutually promote takaful insurance company in Oman. ONIC Holding has already obtained an approval from the Oman's Capital Market Authority, after the government decision to allow Islamic banks. However, ONIC has to wait for announcing of a separate set of rules for Sharia-compliant insurance firms, as these are still waiting to be defined by the Capital Market Authority.

New takaful rules have been introduced by Pakistan's regulator. They were designed to boost competition and to lift the sector's market share by allowing the entry of conventional players. Consequently, Pakistan became the second country after Indonesia to officially allow takaful windows. Since the introduction of the first rules in 2005, Takaful has operated without conventional competitors in Pakistan. However, those rules allowed windows after a five-year period. As the securities commission said last month, conventional insurance firms could serve a vaster share of the takaful market.

UK-based law consultancy company Clifford Chance has prepared and handed over the draft law for forming Sharia-compliant takaful insurance firms and sukuk debt instruments. While a new set of law will serve as the rules takaful insurance companies, amendments will be made in Capital Market Law to accommodate Islamic debt instruments like sukuks. The final draft is expexted to be finished in about a month's time.

In preparation to assume risks of firms offering Islamic Insurance cover known as ReTakaful, Kenya Reinsurance Corporation (Kenya Re) has decided upon a Sharia board. This way, the establishment of a dedicated ReTakaful window has been brought closer within the corporation. The board of Muslim scholars and people conversant with the Quran will contribute to the preservation of Kenya Re's responsiveness to requirements of its clients and to its development of solutions that satisfy the takaful industry demands for Sharia-Compliant reinsurance services.

Shortly after Securities and Exchange Commission of Pakistan (SECP) waived the previous conditions that forbade conventional insurance companies from launching Takaful operations, State Life Insurance Corporation came with news. The largest insurance company in the country plans to launch its own new range of Islamic insurance within a year. Currently, they are assessing target market for Takaful.

Takaful statistics reveal that the growth of the business is slowing, amplifying pressure on the sector to boost efficiency, roll out new products and try out new markets.
According to Shyam Sankar, regional head of insurance sales through bank channels at Bahrain-based Medgulf Allianz Takaful, the industry's big challenges contain building product awareness and making consumers realise the importance of saving over the long term.

The data from Capital Market and Financial Supervisory Agency shows that Indonesia’s Shariah-compliant insurance assets increased by 32 percent to 9.2 trillion rupiah ($1 billion) in 2011 comparing to the year before.
The agency stated that takaful has grown by 50 percent on average in the last five year.
Moreover, it seems that Mayban Ageas and Syarikat Takaful Malaysia Bhd. plan to develop in Indonesia to take advantage of the growth rate.

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Wa at Taufiq min Allah, all the best,

Michael Saleh Gassner

Dear Readers,

Islamic finance media are a tricky service. This is true for various reasons: The Internet eats up the revenues, because everything ought to be free. Islamic banks are still a niche phenomena, and international banks like UBS or Deutsche are almost as large as the entire global Islamic finance industry. Consequently the marketing budgets are much lower, too.

Last not least, who should advertise? The banks among themselves or to the clients? Advertising from bank to bank, does usually not make much sense, but real client oriented formats are hard to find, too. May be this is a niche. Others, who could finance Islamic finance media are basically the service providers to the banks, but due to the limited number of Islamic financial insitutions, direct marketing, e.g. face to face meetings will be preferred.

This in short is the background why Islamic finance media are not so well established in terms of journalism and research, but mostly reflecting the press release as criticised by the makers of the Islamic Globe. See: http://www.theislamicglobe.com/index.php?option=com_content&view=article...

Takaful Emarat will reveal the first investment fund conceived and developed in-house, which the company sees as a milestone in its fourth year of operations. All the necessary approvals have been gained, including the crucial one from the company's Sharia board.
The open-ended fund has a multi-year tenure and will be managed by Riyadh Capital.
This is a crucial year for the Islamic insurer, being a joint venture between Al Buhaira National Insurance Co and Austria's Uniqa Group.

Oman’s Capital Market Authority (CMA) has disclosed to The Times of Oman that it will favour standalone Takaful companies, which is against the window operations proposed for conventional banks.
Abdullah bin Salem al Salmi, Acting Executive President of Capital Market Authority, noted that the minimum capital for promoting a Takaful insurance company is anticipated at OMR 10 million.
Moreover, a conventional insurance company planning to enter a Takaful business must search a separate licence and form a separate company.

The Security Exchange Commission of Pakistan (SECP)’s move to push Sharia-compliant Takaful risk coverage in Pakistan is probable to benefit millions and to triple the percentage of citizens with insurance coverage, in which Pakistan ranks lowest in South Asia.
Islamic insurance can benefit those who do not subscribe to conventional insurance, which is forbidden by Sharia Law.