Total contributions in the takaful sector in the MENA region (ex-GCC) grew on average by 8.2% to $10.2bn in 2017, accounting for 31% of the global takaful contributions, according to the Islamic Financial Services Industry Stability Report 2019 released by the Islamic Financial Services Board (IFSB).
The report outlines takaful developments in MENA (ex-GCC), a region which includes Algeria, Egypt, Iran, Jordan, Palestine, Sudan, Tunisia and Turkey.
Iran, the largest market in the region, grew 2.5% to $7.9bn, accounting for more than two thirds of the total contributions.
In Egypt, contributions from the general takaful segment showed an impressive growth of 34% (albeit from a very low level), whereas family takaful contributions shrank to 5.5% in 2017. On aggregate, both segments pooled $58.8m, which represented almost 9% of the insurance market GWP in 2017.
In Jordan, contributions are estimated to have grown 3.4% to reach $88.86m in 2017, accounting for 10.6% of the market aggregates ($838m) in 2017. The two takaful operators in Jordan (Islamic Insurance Co and Solidarity First Insurance) were among the top five insurers controlling around 46% of the market premiums in 2017.
In Sudan, the takaful industry registered an average growth rate of 18%, estimated at almost $450m, with general takaful accounting for at least 90% of the total contribution. The low volume of family takaful business is attributed to a lack of awareness and inadequate coordination between the relevant authorities responsible for insurance market developments.
The stability report said that in aggregate, the slow growth trajectory recorded in these countries is evident from the high levels of inflation, mostly driven by political instability on the one hand, and currency depreciation on the other, thus limiting consumption and business activities.
Takaful in Turkey received a boost following the implementation of the participatory insurance regulatory framework.
Takaful in Tunisia, Algeria and some other countries in the region remains in its nascent stage, but is growing steadily. For instance, three takaful operators are currently operating in Tunisia. The new takaful rules introduced in these countries are expected to strengthen the sector.
However, takaful operators in these markets will have to compete with well-established conventional players. How well the takaful operators are able to deploy their marketing strategies in line with the value propositions offered by takaful will determine their success, said IFSB. Notwithstanding, slow economic activity in these countries presents an additional challenge. M