Global takaful or Shari'a compliant cooperative insurance contributions are well on course to touch US$12 billion this year, after hitting US$9.15 billion in 2010.
According to Ernst & Young's latest World Takaful Report, contributions grew globally by 31 percent in 2009 to reach $6.9 billion US dollars.
The takaful industry is concentrated mainly in the Middle East, North Africa and South East Asia regions.
The report found that Saudi Arabia was the biggest market with US$3.86 billion in contributions in 2009.
Malaysia was second with US$1.15 billion while the United Arab Emirates ranked third with US$640 million.
In terms of regions, takaful contributions in the Indian Subcontinent grew by 85 per cent, making it the world's fastest growing takaful market.
In terms of countries, Indonesia topped the takaful market with a growth rate of 67 per cent, followed by Bangladesh and Saudi Arabia.
Going forward, the report found that competition, shortage of expertise and socio-political uncertainty are key business risks for takaful this year.
Other challenges include evolving regulations, misaligned cost base and achieving an underwriting profit.
Alfalah Consulting: http://alfalahconsulting.com