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HOME LOCAL MIDEAST ASIA WORLD BUSINESS SPORT OPINION WRITERS
New products planned such as microtakaful
April 20, 2012
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DUBAI: Takaful or Islamic insurance companies are exploring new markets such as Egypt and Jordan; Islamic finance is expected to receive a boost in North Africa from last year’s Arab Spring uprisings, which removed authoritarian governments that discouraged or neglected sharia-compliant business for political reasons. 

Ghassan Marrouche, chief executive of Takaful Emarat in the United Arab Emirates, said his company was expecting double-digit growth rates in coming years, supported by the launch of several new products including a capital-protected instrument and a “microtakaful” product focused on low-income earners. 

“We want to be positioned well in the UAE market before we move outside,” he said. “It is a very dynamic market.” 

Bahrain’s Solidarity has moved into Egypt and Jordan. A consortium of Doha-based institutions tapped the Pakistani market by launching Pak-Qatar Takaful in 2006. 

Other firms have seen opportunities in markets such as Lebanon, which posted 102 per cent growth in takaful contributions during 2010, and Indonesia. A report by actuarial consultants Milliman forecasts strong growth for takaful in southeast Asia, suggesting it could become three times as large as the Middle East by 2015.  

Ernst & Young forecasts Saudi Arabia’s share of the global takaful market will drop to 44 per cent this year as newer markets grow faster, and the trend of new markets outpacing traditional ones could continue in coming years. 

Other companies are focusing on building size in their domestic markets, which could give them economies of scale. 

Meanwhile, growth of the takaful business is slowing, industry statistics show, increasing pressure on the sector to boost efficiency, roll out new products and explore new markets. 

Takaful, which has its core markets in the Gulf and southeast Asia, is one bellwether of consumer appetite for Islamic finance. But profitability has been hit by fierce competition and rapid growth of workforces at takaful providers in past years.
 

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