Global takaful industry needs uniform standards

A concrete legal framework and global takaful reference body are needed to address some of the challenges facing the global takaful industry today, experts at the 11th annual World Takaful Conference (WTC) discussed on Monday.

Abdulla Mohammed Al Awar, chief executive officer of the Dubai Islamic Economy Development Centre (DIEDC) in his opening keynote, spoke on how there was a clear growth trajectory in the takaful sector over the years. The sector, however, remains underdeveloped compared to the thriving Islamic finance industry.

"Takaful is a key pillar within the Islamic ecosystem. Although a quantum leap cannot be expected in the takaful industry within a year, there have been a lot of strategic developments which will pave way for the growth of takaful within the Islamic finance landscape."

Al Awar offered various suggestions on how the global takaful industry could come forward to address the challenges facing the industry. "We need to harmonise standards in the takaful industry. In addition, we need to focus on showcasing a concrete legal framework, so that there is no ambiguity in terms of jurisdiction."

Another suggestion that he offered was clarification on the ethical nature of the takaful system, as Muslim consumers are still wary of takaful products.

Another suggestion was the establishment of a global takaful reference body that can organise the industry and deal with emerging disputes. This, he said, will provide a less costly and more effective solution for consumers. He also suggested creating an innovative platform for takaful products that will help with creating niche products. Other suggestions included filling the re-takaful gap and encouraging the presence of different players.

The event also saw the launch of Finance Forward's 2016 World Takaful Report, which offered various insights on the global and regional takaful sectors. Gross takaful contributions in the GCC were estimated at $8.9 billion, showing a year-on-year growth of 12 per cent. The report also revealed that the takaful market is highly concentrated in the GCC and Southeast Asia, with Saudi Arabia and Malaysia predominating these markets.

Finance Forward also pointed out in a previous report that the strong growth of the takaful industry in Saudi Arabia is primarily driven by strong regulatory support.

While many argue that the mandatory requirement by the Saudi Arabian monetary agency - that all insurance companies in the kingdom have to be established based on the cooperative business model - departs from the existing takaful model, it has been revealed that the model actually does more to support the introduction of a Shariah-compliant insurance model in the country.

Sahar Kazranian, acting CEO of Middle East Global Advisors, noted that the UAE is the second largest takaful market in the GCC region, whose gross takaful contribution weighs in at 15 per cent of the total takaful contribution in the region.

Ebrahim Obaid Al Zaabi, director-general of the UAE Insurance Authority, who spoke on the UAE regulatory space, said: "The Insurance Authority of UAE has played a pivotal role in setting out key rules to ensure stability of the insurance industry. Adhering to the regulatory requirements - ranging from adjusting the internal systems to appointing internal auditors and actuaries by 2018 - will be challenging for the insurance and takaful industry but will lead to its growth and stability."

Salmaan Jaffrey, chief business development officer at the Dubai International Financial Centre, spoke on the critical role of the DIFC as a global platform for the re-takaful industry to service the economies of the Middle East, Africa and South Asian regions. "Today, the Islamic insurance industry has gained wider acceptance and appreciation transcending the boundaries of Muslim-based economies. This growing momentum is expected to continue and expand its reach into emerging markets in the MEASA region. Our goal is to create a dynamic Islamic financial system that will support this growth and contribute to the overall development of our economy.

(Khaleej Times / 11 April 2016)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.co
 Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Takaful industry records growth in general and family sectors

KUALA LUMPUR: The Takaful industry recorded positive growth in both general and family takaful businesses in 2015, said the Malaysian Takaful Association (MTA).

Its chairman Ahmad Rizlan Azman said the general takaful business registered gross written contributions of RM2.3billion, an increase of 6.3 per cent over the same period in 2014.

Meanwhile, he said the family takaful business registered RM3.64 billion new business contributions in 2015, an increase of 3.9 per cent compared to 2014.

"The takaful industry is currently focused on the removal of Motor and Fire tariffs that is set to change the landscape of the general takaful industry seeing that these two classes combined make up the biggest component of the business," he said in his speech at the Takaful StarNite 2016 held at the Royale Chulan Hotel here today.

Currently in its sixth year running, the annual dinner and awards night was jointly-organised by MTA and Takaful practitioners in Malaysia to celebrate the achievements of the industry as well as the achievers who had performed outstandingly well last year.

The event was graced by the Sultan of Perak, Sultan Nazrin Muizzuddin Shah, the royal patron for Malaysia's Islamic Finance Initiative.

Ahmad Rizlan called on members to get acquainted with the new life Insurance and family takaful framework guideline, citing that it would become the new mantra for the industry as it requires improvement on efficiency and effectiveness of distribution channels and promote product innovation.

"Technology and innovation have fundamentally changed the way the businesses operate for many industries nowadays. I believe that the Takaful sector is no exception."

Ahmad Rizlan said the emergence of so-called online intermediaries or cyber agents in Malaysia, such as iMoney, Loanstreet, Ringgitplus and Insurance finder have set the scene in comparing and promoting financial products online.

"They are capable of explaining the complexity of Takaful in layman terms with greater ease using infographics and catchy articles.

"They provide facts and figures on how insurance and Takaful should be looked from customers' perspectives," he added

A total of 20 award categories were presented, including the Best Takaful Operator - Bancatakaful Business (HSBC Amanah Takaful (M) Bhd bagged the award), Best Takaful Operator - Agency Family Takaful Business (won by Prudential BSN Takaful Bhd), Best Bancatakaful Partners - Financial Institution (HSBC Amanah Takaful (M) Bhd), Best Takaful Operator General Takaful Business (Etiqa Takaful Bhd), Best Takaful Agency - Inter MTA member companies, Young Takaful Manager (Prudential BSN Takaful Bhd), and Corporate Social Responsibility (Etiqa Takaful Bhd).

(News Straits Times Online / 24 March 2016)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

TAKAFUL INDUSTRY TAKES STOCK IN LONDON

London—The tenth International Takaful Summit was held in London from 22nd to 24th February 2016. The theme of this year’s Summit was Pathways for Matching Islamic Finance Assets to Takaful. The disconnect between the fast-growing pool of Islamic finance assets and their relatively sparse use of Takaful, formed the background to the discussions over the three days. This leading thought forum for the global Takaful industry had over 400 participants from all over the world for its tenth annual gathering. The Summit started with the Norton Rose Fulbright Masterclass on 22nd February. In the Masterclass, discussions centred on the re-emerging opportunities in Pakistan and Iran where the requirement for Islamic insurance is strong and the potential for growth of Takaful was judged to be immense.

The first day of the main Summit on 23rd February brought together a number of renowned experts to discuss various areas of interest for Takaful providers. The success story of Shyarikat Takaful Malaysia was appreciated by all delegates. The presentation of a survey done by Norton Rose Fulbright on attitudes of potential users of Takaful was also eye-opening. The morning also saw a number of informative presentations on the development of Takaful in Africa, with discussions centred on the potential for growth of Takaful using the pure mutual model. Some interesting opportunities were highlighted using discretionary mutuals and the new potential deferred share capital raising possibilities for mutuals in the UK.

In the afternoon, key stakeholders made presentations on leveraging the expertise in the London market to enhance global Takaful provision. They highlighted the fact London would be receptive to working with Takaful Operators to create a win-win strategy. This was further reinforced in the closing keynote address by Inga Beale, CEO, of Lloyd’s of London who reiterated the commitment of the leading insurance market to welcome Takaful providers. The first day came to a close with the International Takaful Awards where 200 industry leaders celebrated the achievements of the global Takaful operators and service providers in the only standalone ceremony to recognise the significant achievements of this market.

There were 22 awards presented on the night with notable mentions for Al Ahli Takaful who walked away with 2 awards and Shyarikat Takaful Malaysia that were awarded the best Takaful Company in Malaysia for the 4th successive year. Pak-Qatar Family & General Takaful received the Best Takaful operator in Pakistan due to their extensive branch network and innovative use of technology to increase their reach and improve accessibility to their clients. One of the top awards for CEO of the year was presented to Ali Ibrahim Abdulghani for steering Qatar Islamic Insurance Company to incredible results in 2015. The lifetime achievement award was presented to Hannover Retakaful’s Mahomed Akoob who has contributed so much to the industry including the formation of the first Takaful Company in South Africa as well as overseeing the formation of Hannover Retakaful into the premier Retakaful institution in the world. Mahomed accepted the award with great humility giving credit to his colleagues that he had worked with in a 4 decade career as well as the clients that he has served so diligently.

(Pakistan Observer / 03 March 2016)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Malaysia: Takaful Industry To See More M&A Deals In Next Few Years

KUALA LUMPUR, Oct 21 (Bernama) -- The local takaful industry is expected to see more active merger and acquisition (M&A) activity in the next few years, driven by the current rapid growth in the sector domestically amid increasing global demand.

Senior Director (Banking & Takaful) of Ernst & Young's Islamic Finance Global Centre of Excellence in Bahrain Adib Shakeel said going forward, there is great potential for the industry to grow further against external factors.

"Some of the obvious factors include developments in the opportunity markets such as Egypt, Libya and Sudan.

"Actually we want to talk more about other markets where political stability is less of an issue," he told reporters after the Islamic Finance News Asia Forum 2013 here on Monday.

He said the Islamic finance industry as a whole is now being seen as a global industry and continuing its global credentials.

"Family takaful has always been something that is being focused by industry players here with a lot to be learned for the rest of the world by looking at how that has happened in Malaysia.

"Obviously, on the general takaful side, there is much more room for growth within Malaysia itself. In most other markets, you will see general takaful is leading the industry, but here in Malaysia, it is family takaful," he said.

Shakeel said Malaysia has a very well developed capital market industry due to the strategic direction support from Bank Negara Malaysia, which in turn has been supporting the growth of the takaful industry as a whole.

"I think you will start to see acceleration of the general takaful line, personal and commercial. Of course, there are lessons by the Malaysian operators here for the rest of the world," he added.

Malaysia has emerged as the world's largest family takaful market, securing close to three quarters of its domestic market share.

Its proven operating models, young Muslim population and regulatory framework such as the Takaful Operating Framework 2012 have enhanced operational efficiency, ensured healthy and sustainable funding and promoted uniformity across business practices for operators.

(National News Agency Of Malaysia / 21 Oct 2013)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Pakistan Takaful industry enters new era

Lahore—Takaful Industry is growing rapidly around the world with 230 Takaful Companies, 13 Re-Takaful companies with the total volume of $11 Billion. Takaful was started in 2005 in Pakistan when Securities and Exchange Commission of Pakistan (SECP) introduced Takaful Rules 2005 according to which only full fledge takaful companies had the permission to operate and in this regard, 5 Takaful companies came into being due to efforts of investors of Malaysia, Qatar, Kuwait, UAE, Saudi Arabia and Pakistan. 

Among these 5 companies, 3 takaful companies are general whereas 2 takaful companies are providing the services of Shari’ah compliant life insurance. But in accordance with the recently issued SECP takaful rules 2012, conventional insurance companies can open window operations of Takaful due to which takaful industry would get promotion rapidly at national level.

Muhammad Zubair Mughal, Chief Executive Officer of AlHuda Centre of Islamic Banking and Economics has declared these Takaful Rules 2012 a good step for Takaful industry which will promote takaful industry rapidly at national level and masses will have the opportunity to fulfill their insurance needs in Shari’ah compliant manner because in Pakistan, due to the elements of Interest, Gharar and gambling in insurance, people avoid insurance. 

While analyzing the insurance industry, he said that there are 37 general insurance companies, 7 life insurance companies, 5 takaful and Re-Takafulcompanies are operating in Pakistan and now, in accordance with the Takaful Rules 2012, more than 40 insurance companies can start window operation of takaful by fulfilling SECP laws and conventional insurance companies can be transformed into takaful companies. He said that there are 3 types of business opportunities for takaful industry: 1) people, who do not use insurance due to interest factor; 2) people who use insurance by compulsion but they can come to Islamic insurance when this alternate is introduced; and 3) people who do not fall under the category of insurance as in Pakistan, the penetration of insurance is less than 1 percent.

Experts have declared Takaful Rules 2012 a is a very good sign for Pakistan which has the status of milestone in Pakistan insurance industry.

(Pakistan Observer / 02 August 2012)

---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com