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Daily Insurance Industry News
Wednesday 25th of April 2018
July 25, 2008

Takaful market continues rapid growth

by David Masters

Story link: Takaful market continues rapid growth

A report by Standard & Poor’s Rating Service says that the Takaful sector is likely to continue its rapid growth and become a significant contributor in the global risk transfer market.

Takaful is an insurance alternative used in many Islamic communities because Western models of insurance are forbidden under Islam’s Sharia law.

Muslim markets – which comprise around one quarter of the world’s population – have yet to be well-penetrated by the insurance sector because of the prohibition on Western insurance.

This has led to growing interest in Takaful from Western insurers attempting to penetrate Islamic markets, and increased competition in the Takaful sector.

In Islamic communities such as the United Arab Emirates, Takaful contributions are growing twice as fast as traditional premiums.

However, despite its rapid growth, Takaful currently accounts for just 10% of the risk transfer market in the UAE.

Because of takaful’s small market share, Standard & Poor’s report warns that if Takaful providers are to survive, they must continue to prove that Takaful is a credible alterative to traditional insurance models.

Financial market intelligence provider Standard & Poor was this week voted the Best Takaful ratings agency at the International Takaful Awards 2008.

 

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