Swiss Re

For Takaful, Financial Constraints Make for a Rough Growth Path

Takaful, or Islam-compliant insurance, operators will have to center the attention on underwriting quality, cost management and investment discipline as financial performance is still a challenge for many markets in the current fluctuating investment environment.
Marcel Omar Papp, head of retakaful at Swiss Re, stated that investment is one challenge for takaful operators, who tend to count on equities or real estate.
Takaful operators generally raise capital through debt, equity or decreasing risk. Papp added that most operators "seem to be well capitalized" as many companies have only been set up in the past few years and their business volumes are not yet important.

Islamic insurance: tackling global hurdles

Ernst and Young state that the market for Takaful will extend to $12 billion this year.
The quest for security
It was hard for Takaful operators such as Takaful EM to acquire a Shariah-compliant re-insurance. Because it had a large potential, leading reinsurers such as Munich Re, Swiss Re or Hannover Re created Re-Takaful. It appears that Malaysian Takaful operators are world leaders.
Swiss Re, the second largest conventional re-reinsurer worldwide, thinks that the breakthrough of Takaful has only began.
Takaful expansion challenges
Ghassan Marrouche underlines the fact that the challenges for Takaful are in human resources. As demands raise, new distribution channels become inevitable.

Syndicate content