Strong growth for Takaful seen in GCC
Manama, September 26, 2013
The Takaful insurance sector is expected to grow at strong levels, particularly within the GCC region, and premiums will reach $20 billion by 2017, a report said.
The rising popularity of Takaful insurance globally is primarily supported by the countries in the GCC, Levant, Africa and South-East Asia, said the a Moody's Investor Service report.
Supported by the higher Muslim population in these regions, Takaful has experienced a five-year combined annual growth Rate (CAGR) of 33.2 per cent compared to 19.9 per cent achieved by the conventional insurance industry in the same markets, it said.
Takaful premiums contributed roughly 43 per cent to the GCC region’s composite premiums in 2010 compared to 31 per cent in 2005. However, these figures hide considerable country variations, with Takaful usage at very high levels in Saudi Arabia, but still showing modest overall Takaful penetration in the UAE, Kuwait and other GCC markets.
This high usage level in the Saudi market is driven primarily by compulsory medical insurance, via Takaful providers, the report said.
In general, the use of life and pensions products amongst local GCC populations remains low, with national residents often relying on family or state resources for life cover and old-age care. Although the significant expat population may be expected to consider life and pensions insurance products, these individuals often prefer to have long-term savings and pension plans with their home-based insurers, and so their use of local Takaful products remains limited, it said. - TradeArabia News Service