Dubai: Despite the challenges, the Islamic insurance sector in the UAE, as well as Kuwait, is likely to attract more following in the next few years.
Standard & Poor estimated that the two markets could deliver “relatively strong growth” in premiums in the coming years, as the economies of both countries continue to grow.
“The challenge for takaful insurers, as for any new insurer, is to attract and sustain a well-priced volume of stable business at a scale sufficient to cover their cost bases,” the report said.
According to Ernst & Young, there is still immense unrealised potential that the takaful sector can achieve. For one, the takaful market share can be expanded as the industry matures and establishes stronger distribution capabilities.
“The share of Islamic finance in the GCC and Malaysia is 25 per cent and 22 per cent, whereas takaful market share is 15 per cent and 10 per cent respectively. Takaful market has at least 10 per cent of the known Sharia inclined market that they have not yet tapped,” an Ernst & Young report said.
By focusing on underwriting capabilities, service standards and product offerings, coupled with establishing stronger market relationships, the takaful industry, which is still predominantly retail-driven, can also tap the corporate segment.