Takaful in MENA - Ingredients for Success
Wednesday, 05 16 2018, Category: Islamic Insurance, Country: Middle East
A.M. Best believes there are significant opportunities for takaful operators in most Middle East and North Africa (MENA) markets to provide sound financial protection that is in line with consumers’ religious sensibilities, taking into account the huge global Muslim population. However, these opportunities continue to remain disappointingly unrealised, with takaful companies struggling to establish strong business profiles.
In a new Best’s Special Report, titled, “Takaful in the MENA Region: Finding the Right Ingredients for Success”, A.M. Best states due to a lack of sufficient differentiation, takaful providers remain subject to fierce price competition with larger, more established insurers that already benefit from greater brand awareness and established distribution networks. Furthermore, additional support from shari’a scholars in promoting Islamic financial products is essential for the growth of the takaful sector.
Salman Siddiqui, associate director, said: “Given the proportion of Muslims in the MENA region, A.M. Best considers the take-up of shari’a-compliant insurance to be disappointing, especially in contrast with the Malaysian experience, which exhibits higher takaful penetration – despite the country having a lower proportion of Muslims. With the exception of Saudi Arabia, where all insurers operate under the unified co-operative insurance model, which is distinctly different from the traditional takaful model, most of the remaining Middle Eastern takaful operators have struggled to establish competitive positions in their