CBUAE issues report on Takaful insurance sector

The Central Bank of the UAE (CBUAE) has released a comprehensive report on the Takaful insurance sector in the UAE, with the aim of developing this critical industry and enhancing the country’s position as a leading Takaful insurance market globally.

The report highlights the growing importance of the Takaful insurance sector in the local market, as well as the expansion of its various financial indicators from 2018 to 2021.

In 2021, the gross subscriptions written by all Takaful insurance companies operating in the UAE totalled Dhs4.35 billion, representing a growth rate of 0.51% compared to Dhs4.32 billion in 2020. These subscriptions accounted for 9.82% of the gross premiums written in the insurance sector in 2021.

The health Takaful insurance activity represented the largest share, accounting for 43.6% of the gross subscriptions written in the Takaful insurance sector in the UAE in 2021. This was followed by Takaful insurance activity on assets and liabilities at 38.3%, and family Takaful insurance activity and fund accumulation operations at 18.1%.

At the end of 2021, 12 Takaful insurance companies were operating in the UAE, all of which are national companies. However, there is a possibility that this number could decrease over the coming period due to merger and acquisition activities.

The report also revealed that there are 62 national and foreign insurance companies operating in the UAE’s insurance sector. In 2021, the number of written Takaful insurance policies increased significantly to 992,106, compared to 820,517 policies in 2020.

Furthermore, the report covered several other aspects related to the business of the Takaful insurance sector, including sustainability operations, Emiratisation, and the prospects of digital transformation. The report highlighted that all Takaful insurance companies have specific strategies for digital transformation.

The report outlined the current practices of Takaful insurance companies and their initiatives to enhance their financial and technical performance, adopt the best sustainability practices, and attract and encourage UAE Nationals to work in this vital sector.

Additionally, the report emphasised the key advantages of the Takaful insurance sector in the UAE and the significant qualitative and quantitative developments witnessed, particularly in terms of regulatory and supervisory aspects.

The report highlighted the establishment of the Higher Shari’ah Authority (the Authority) and the Central Bank’s supervision and control of the insurance sector under Decretal Federal Law No. (25) of 2020. It also discussed the Authority’s various initiatives to develop the regulatory framework of the Takaful insurance market and its operational practices by creating Shari’ah governance mechanisms for Takaful insurance companies. Moreover, the Authority is developing Shari’ah standards to enhance confidence and flexibility in this sector, ensuring legal and Shari’ah certainty. The UAE has been a leader in this field since 1979.