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Global Takaful market to hit $20bn

Manama, June 17, 2013

The global Takaful business will reach $20 billion by 2017, said a report, adding that the GCC market contributes more than 62 per cent of the gross premiums and, led by Saudi Arabia, grew 17 per cent to $5.7 billion during 2010.

Key figureheads from the Islamic finance industry from across the world gathered for the second year at an executive roundtable in Bahrain following the release of the new Takaful report by Deloitte titled: ‘The global Takaful insurance market: charting the road to mass markets’.

The event was hosted by Deloitte Middle East’s Islamic Finance Knowledge Center and supported by the Bahrain Economic Development Board.

The report studies the emerging regulatory and practice challenges that will impact the Takaful industry, as well as assesses the business structures and strategies, market developments and growth trends globally.

During the event, Deloitte experts were joined by national regulators, and executive Islamic bankers to discuss the report and focus on the regulatory and industry challenges specifically facing the Middle East Takaful market as well as identifying potential business strategies in the region.

Ten key challenges were identified that would significantly impact the future of the Takaful industry. These are grouped into five industry disciplines which are:
•    Governance and regulatory compliance: the report finds that more consistency of regulatory frameworks is needed, and optimizing capital adequacy through consolidation will achieve growth and sound corporate structures.

•    Risk management and internal controls: Making risk-based business a priority, unified with Takaful operators’ strategic planning, and improving risk and sharia’ disclosures and governance.

•    Operational and Business Excellence: There is a need for new business models to accommodate wider niche markets and improved technology capabilities to achieve cost efficiency and productivity.

•    Product governance and strategy: Improving product governance and product development processes, and placing emphasis on target markets, sales and distribution.

•    Capacity building: talent and leadership development: Switching emphasis to internal development to build specialized knowledge and refocusing on competency-based training and leadership programmes.

Deloitte’s report shows that the key to maximizing industry potential lies in addressing challenges and issues that will better position the industry to reach mass markets and achieve organic growth and development.

It highlights that it is not sufficient for these challenges to be addressed or implemented without the commitment and support of boards and executives of Takaful firms who should enhance their risk management governance and controls processes. The report proposes that the impetus of an enterprise-wide risk strategy should not be overlooked, and support and oversight from boards is a key driver for the implementation of an effective risk-based business in the Takaful sector.

Dr Hatim El Tahir, director of the Islamic Finance Knowledge Center of Deloitte Middle East, said: “Heightened focus on governance, fiduciary responsibility, risk management and accountability are direct consequences of the global financial crisis and will likely present Takaful with challenging practice and regulatory issues during the next five years.”

In the Deloitte Middle East event, and under a specialized session on  generating growth in the Takaful sector in the Mena and South East Asia (SEA) regions, presentations and discussions focused on the need for new business models to accommodate for wider niche markets, as well as regulatory, risk and sharia’ compliance issues.

A second session put forth a ‘Forward Plan’ where the main issues discussed were impediments to growth, as well as an analysis on the target market, and sales and distribution channels needed to achieve growth and profitability.

More than 40 participants from Bahrain, GCC countries, and Malaysia attended Deloitte Middle East’s Islamic Finance Knowledge Center event in Bahrain, during which 10 guest Islamic Finance speakers shared their expertise and thoughts on the future of the Takaful market.

“The deliberations and discussions emphasized the imperative need for a continuous ‘knowledge-sharing’ and intellectual dialogues between industry stakeholders, to strengthen best practices in the Takaful landscape,” concluded Dr El-Tahir. – TradeArabia News Service




Tags: Bahrain | GCC | Islamic Finance | Deloitte | Takaful market | Knowledge Center |

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