Takaful
Takaful - Global gross contributions rose 5% to US$23.2 bln in 2015
Source: Middle East Insurance Review | Jun 2016
Gross contributions in the global takaful industry are estimated to have hit US$23.2 billion last year, 5% higher than the $22.1 billion chalked up for 2014, according to the Islamic Financial Services Industry Stability Report 2016. In contrast, 10 years ago in 2006, gross takaful contributions stood at only $5 billion.
The GCC, with $10.4 billion in takaful contributions, accounted for the biggest share of 45% of the total gross contributions last year, followed by non-GCC MENA ($7.1 billion) at 31%; Asia ($5.2 billion) at 22% and sub-Saharan Africa ($0.5 billion) at 2%.
The report, released last month by the Kuala Lumpur-headquartered Islamic Financial Services Board (IFSB), an international standard-setting organisation, also said that three jurisdictions accounted for 84% of the global takaful contributions in 2014: Saudi Arabia (37%), Iran (34%) and Malaysia (14%).
While the size of gross contributions in Bahrain, Kuwait, Qatar and the UAE are quite small compared to Saudi Arabia, growth rates in these countries are quite robust and promising, said the report. These countries have enacted important regulatory changes over the last year, such as enhanced liquid asset requirements in Kuwait and a new solvency regime in Bahrain. These policy measures are expected to improve the health of the takaful industry.
On the other hand, the strict regulations may incur extra costs in the industry, which are already high both in the conventional and takaful segments, due mostly to the small scale of the operators in the region, averaging only $134 million in gross contributions per operator. Many operators are working below their efficient scale.