gif Takaful


global risk management markets. “We con- sider the potential for sustained growth in this market is significant, buoyed by the still- low insurance penetration and the growing recognition and acceptance of the concept of insurance and its benefits,” added Mr. Gosrani (Zawya).


Between a fifth and a quarter of the world’s population is Muslim, and while the Takaful system is already popular in Indonesia and Malaysia, the majority of untapped Muslim countries - particularly in the Middle East - are youthful and in transitional stages, with very low insurance penetration rates and in- creasing insurance awareness.


According to Swiss Re, Muslim countries accounted for 22% of the emerging market GDP in 2007, but only 11% of insurance pre- miums.


Indeed, Oliver Wyman estimated in 2007 that Takaful’s total potential global premium was a lofty US $20bn. This year, Swiss Re put that figure at a whopping US $45bn, or US $35bn taking into account only Muslim potential insurance buyers.


Swiss Re’s pro- jections estimate that in light of the increasing appe- tite for insurance products, the global Takaful market is expected to expand to US $7bn in pre- mium by 2015, at an average growth rate of 17 per cent annually. This would raise Takaful’s slice


Contracts Utilised


Company Responsibility


Participants’ Responsibility


Capital Utilised


Investment Considerations


References and Further Reading:


• A Nazim, J Balcombe & M Stanley, World Takaful Report 2010, Managing Performance in Recovery, (2010), retrieved from: http://www.ey.com/Publication/vwLUAssets/ EY_WTR_2010/$FILE/EY_WTR_2010.pdf • CPI Financial, Takaful Taking Off, (2010) Retrieved from: • http://www.cpifinancial.net/V2/Magazine.aspx?v=1&aid=2332&cat=IBF&in=52 • P Hodgkins, C Jaffer, Retakaful revisited (2009) Clyde & Co Retrieved from • http://www.clydeco.com/knowledge/articles/retakaful-revisited.cfm Global Takaful Market Source Graph (2009) Celent Retrieved from http://reports.celent.com/PressReleases/20061129/Takaful.htm-


• (source 1


• A Nazim, The Future of Takaful Business (2009) Retrieved from • http://arzim.blogspot.com/2010/01/future-of-takaful-business-its.html • Zawya, Takaful Insurance Markets Maintain Positive Momentum in 2010, (2010) Retrieved from: http://www.zawya.com/story.cfm/sidZAWYA20100714124913/Taka- ful%20Insurance%20Markets%20Maintain%20Positive%20Momentum%20In%202010,%20Report%20Says • Property Wire, New Foundations for the Global Takaful Industry (2009) Retrieved from • http://www.propertywire.com/news/company-news/foundations-takaful-industry-200904142919.html • M. Parker, Malaysia Issues New Takaful Licences (2010) Zawya Retrieved from: • http://www.zawya.com/Story.cfm/sidZAWYA20100906034806/Malaysia%20issues%20new%20Takaful%20licenses • A Ireland, Takaful: The future is now (2009), Gulf Insurance Review, Retrieved from: • http://www.girmagazine.com/lines-focus/247840/takaful_the_future_is_now.html


20 Global Islamic Finance February 2011


of the world insurance market share to a figure between eight and ten per cent. The huge potential of the Takaful market has caught the eye of the Western insurance market, which has thrust it into the global spotlight with a host of international firms - from Takaful veteran HSBC to newcomer Zurich - joining numerous regional play- ers (such as latest formation Noor Takaful, owned by Noor Investment Group) in a grow- ing pool of competition.


Duncan Garland is the managing director of London-based broker Guy Carpenter, which began operating in Takaful in South East Asia in the mid-eighties. He estimates that there are now around 130 takaful operators worldwide.


“The number of operators offering products under the Takaful system has grown from a handful that existed in the 1980s, largely of- fering single risk general and family products for the community who wouldn’t buy conven- tional insurance, to today’s takaful operators who offer not only these simple products but also a spectrum of coverage required by the


Takaful Takaful


Donation and mutual contract


Pay claims with underwriting fund and an interest free loan in case of shortfall


Pay contributions


Participants’ funds Sharia’a-compliant


Cooperative Insurance


Cooperative Insurance


Mutual contract


Pay claims with underwriting fund


Pay contributions


industrial and commercial sectors,” he says. Demand for reinsurance of these products has subsequently evolved, with many West- ern players already in the market. Swiss Re launched its first Re/Takaful offering in 2006, focusing on family business.


“We see significant growth on a global scale,” says Chris Singleton, a director in the firm’s client markets (Europe) division. “We are seeing very high growth off a very low base, which is clearly not sustainable indefi- nitely.” (GIR Magazine)


But the potential of Takaful and Retakaful is not limited to Muslim markets. Indeed, a 2007 Oliver Wyman report on Takaful as an emerging growth opportunity focuses strongly on the potential of Takaful beyond Muslim countries and clients.


Proprietary Insurance


Proprietary Insurance


The report states that while Western Eu- rope is home to only 15m (less than 1 per cent) of the world’s Muslim population, it ac- counts for 40 per cent of Muslim insurance demand, due to the higher GDP per capita. Combined with the US, this figure increases to 60 per cent (GIR Magazine).


Exchange contract


Pay claims from underwriting fund and shareholders’ equity


Pay premiums Participating capital Share capital


No restrictions except prudential


No restrictions except prudential


In conclusion: the Takaful and Retaka- ful sectors are a part of the lucrative Islamic financial in- dustry, which is set to thrive, and to further enhance the US $2 trillion dollar indus- try into a flourishing mainstream financial sector.


gif


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