gif Takaful


in the world, accounting for approximately 22% of the world’s population, the potential for Shariah-compliant insurance products is enormous. However, only genuine efforts to develop a business which operates in keep- ing with Shariah principles will bring suc- cess.


Any attempt to enter the market for the sake of soaking up business without genuine ef- fort to provide a fair system will be of limited value. Effective promotional and awareness programmes, outlining participants’ good ex- periences with Takaful , are needed, in order to attract both Muslim and non-Muslim cus- tomers alike to support the Takaful industry.


The unique features of Takaful products, such as its promotion of transparency, fair- ness and profit sharing, should appeal to all. Contributions grew by 29 per cent in 2008 to reach US $5.3 billion.


Takaful is a term which can be used to refer to any Shariah-compliant cooperative insur- ance, according to Ernst & Young’s World Takaful Report 2010, which was unveiled at the 5th Annual World Takaful Conference taking place in Dubai. The UAE is the fast- est growing Takaful market in the world, with a compound annual growth rate of 135 per cent between 2005 and 2008, while Indo- nesia experienced the most rapid growth in


Wakalah/Mudharabah Combination This would usually centre upon having a Wakalah structure for the insurance services and a Mudharabah model for the investment services.


Participants Wakalah Fee (eg 30%) Contribution Claims


Shariah Compliant Investments


Takaful Fund


Investment Profiles


100X - X% of Investment Profits


Underwriting Profit


Surplus/ (Deficit)


100% of Surplus


Charitable Donation


Reinsurance/ Retakaful


Reserves X% of Investment Profits Qard Hassan


South East Asia, at 35 per cent. Abdi argued that high priority should be given to control- ling operational costs.


“For example, outsourcing arrangements for back-office operations can make a sizeable difference in creating leaner and more effi- cient operations.” Distressed asset values and challenging capital markets are some of the other challenges that the industry faces, given the impact of the global financial cri- ses. “The road ahead offers strong business growth, but the real challenge is growth with profitability”, said Abdi.


Management Expenses


Shareholders’ Fund


“This is in the backdrop of the basic under- writing capacity at many of the takaful operators, the impact of which has been exacerbated due to heavy losses on the investment portfolio.” After another positive year in 2009, Standard & Poor believes that the Takaful and Re- takaful sector is likely to continue to grow in 2010.


In a new report entitled “Takaful Insurance Has Long-Term Viabil- ity And Benefits From Expected Growth, But Stiff Competition Per- sists,” we note that the long-term viability of these sectors remains supported by high expected levels of growth, broadly positive techni- cal results, and an increase in prof- itability, particularly in the GCC re- gion and Malaysia.


Waqf Under this model the shakeholder would make a donation to an established fund e.g. Pakistan


Participants Wakalah Fee (eg 30%) Contribution


Shariah Compliant Investments


Initial Donation by shareholders


Takaful Fund


Investment Profiles


Underwriting Profit


Surplus/ (Deficit)


100% of Surplus


Charitable Donation


18 Global Islamic Finance February 2011 Claims


Reinsurance/ Retakaful


Reserves X% of Investment Profits


Shareholders’ Fund


Qard


Hassan ( Less


likely due to initial donation by share- holders)


Management Expenses


“Nevertheless, while these posi- tive factors should support the growth of the sector, we believe that the highly competitive and, in some cases, developing, nature of the local marketplace, as well as the impact of global invest- ment markets on returns, contin- ue to place an ongoing strain on sustainable development,” said Standard & Poor’s credit analyst Neil Gosrani. At the same time, we believe that competitive pres- sures from within the sector, and from conventional insurers, mean that success within this market is dependent on careful navigation.


Since our first Takaful rating in 1997, we have monitored the rap- id development of an industry that we believe has benefited from the ongoing economic development in its core regions. Having expanded from a niche product servicing limited demand, we believe that Takaful has reached its critical mass in the past five years and is now firmly established within the


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88