Profitability in the Islamic general insurance branch varied across regions, with some markets facing rising claims pressures in 2024, says the Islamic Financial Services Board (IFSB).
In its report, titled “Islamic Financial Services Industry Stability Report 2025”, the IFSB says that in the GCC, underwriting results weakened due to rising motor and liability claims. These pressures were further compounded by intense market competition that limited the ability of operators to adjust pricing adequately as many prioritised retaining or expanding market share. Regulatory requirements for enhanced service quality further increased operational costs, placing additional strain on profitability.
In the MENA region (excluding the GCC), technical performance deteriorated due to rising claims and regulatory limits on pricing adjustments, which restricted operators’ ability to increase contributions in line with inflation; efforts to improve expense ratios were insufficient to restore underwriting profitability.
In the East Asia and Pacific (EAP) region, underwriting performance improved markedly, supported by increased vehicle sales, growing demand for natural catastrophe coverage, and prudent pricing strategies. Europe and Central Asia (ECA) markets similarly preserved profitability despite pressures from declining vehicle financing and rising credit costs, reflecting effective underwriting discipline and claims management.
Islamic family insurance
In the GCC, the profitability of family business lines remained relatively stable through effective risk selection strategies. In MENA (excluding GCC), payout ratios rose, with higher claims and policy surrenders outweighing operational efficiency improvements.
South Asia (SA) markets recorded an overall decline in payout ratios; however, performance varied across jurisdictions, with some facing strain from higher risk retention due to limited access to Islamic reinsurance.
ECA experienced a notable increase in payout ratios, driven by rising claims costs and market expansion. Sub-Saharan Africa (SSA) markets recorded the sharpest deterioration, with a substantial increase in payout ratios reflecting structural weaknesses and higher claims.
In contrast, EAP markets improved performance, supported by contribution rate adjustments and effective claims management. M