Global Takaful market to reach US$25 Bn in 2015: EY
• EY was recently named Best Advisory Firm at the International Takaful Summit 2011 in London
• Global Takaful contributions are expected to touch US$12 billion at the end of this year
• Takaful is 1% of total global insurance market but Muslims are 20% of the world’s population
Dubai, 12 July, 2015: According to EY’s experts at the recent International Takaful Summit 2011 in London, the global Takaful market could reach US$25 billion at the end of 2015. Global Takaful contributions are expected to touch US$12 billion at the end of this year while they were at US$9.15 billion in 2010.
Terming Takaful “the default choice for Islamic countries” and acknowledging its rapid growth, Ashar Nazim, MENA Head of Islamic Financial Services, EY, said: “If we continue with the 2009 growth rate of 31% or higher, we will clearly touch the US$25 billion mark in 2015. We expect that growth will be maintained, as the foundations of the Takaful market in Muslim countries and in emerging markets have already been laid.”
The Takaful market is only 1% of the global insurance market at present, even though Muslims make up 20% of the global population. “In addition to emerging markets, Muslim countries are expected to increase the adoption of Takaful and related instruments in the coming years. We expect Takaful to be the default choice for Islamic countries in the future,” added Ashar.
Emerging markets to lead Takaful growth
The Takaful industry today is concentrated mainly in the Middle East and North Africa region and in Malaysia, but its future growth markets are the most populous countries of Indonesia and the Indian subcontinent, followed by the African sub-continent and the CIS countries. Saudi Arabia, Malaysia and the UAE are the top three Takaful markets while Egypt, Sudan, Bangladesh and Pakistan are growing at a rapid pace.
Abid Shakeel, Islamic Financial Services, EY who spoke on ‘Takaful – the default option for Muslim countries’ at the summit said : “Legislation in the Islamic countries to make Takaful products the preferred choice among insurance products can place the industry on a completely different level. As we have seen, growth in the GCC is primarily driven by compulsory insurance rather than only voluntary policies.”
Family Takaful will lead growth
The Malaysian model, which is widely regarded as more mature and where family Takaful dominates, is expected to be increasingly followed by the rest of the world. The family Takaful market remains underpenetrated as it is estimated to currently contribute only 5% in the MENA region compared to 77% in Malaysia. “If we look at contributions per Takaful operator, Malaysia leads the world at US$115.8 million. It is followed by GCC at US$63.5 million, the Indian subcontinent at US$16 million, Africa at US$11.8 million and the Levant at US$4.3 million. There is a tremendous amount of catching up to Malaysia that we could see happen in the future,” added Ashar.
EY was recently awarded the ‘Best Advisory Firm’ at the International Takaful Summit 2011. The organization’s Islamic finance team is credited with several path-breaking initiatives that have helped shape the industry over the years – including the annual global Takaful and Islamic Funds reports. Its authoritative research on global Waqf and Zakat industry is expected to provide further impetus to the growth of Islamic finance sector.