Takaful performance not up to par, say DIEDC executives

Islamic insurance, known as takaful, is witnessing increased acceptance year-on-year worldwide as more countries offer takaful but performance of the sector has not been up to the par, industry executive said in Dubai on Monday.
"Global acceptance or adoption of takaful sector has been quite positive and we have seen foreign jurisdictions offering takaful; several regulatory authorities also developed guidelines which will provide confidence and reliability to the sector. For example, London recently issued principal guidelines for takaful. It shows that there is an interest towards takaful from conventional industry. New markets are also tapping it. Nigeria introduced first takaful company in 2017 and now it has five companies," said Abdulla Mohammed Al Awar, chief executive officer of Dubai Islamic Economy Development Centre (DIEDC).
While addressing the two-day World Takaful & Insurtech Conference in Dubai on Monday, he noted that global takaful sector is witnessing year-on-year growth, reaching $46 billion in 2017, but it is still very small when compared to other segments.
"Although takaful sector has 324 global operators but the size is very small compared to Islamic finance which is very small when compared to conventional finance; hence, there is a lot of room for growth," he said during the conference.
Salmaan Jaffery, chief business development officer, Dubai International Financial Services Authority, said performance of takaful sector has not been up to the par. "We have seen GCC dominating takaful but there are adjacent markets we should look at. The growth of private pension sector will also benefit takaful and insurance sectors," he added.
Dr. Alberto Brugnoni, founding and managing partner of the Islamic finance industry consultancy Assaif, said there is a lack of Islamic money going into lifestyle sectors such as health, trade, modest fashion, food and beverages, cosmetics and recreation.
He pointed out that global halal F&B market is estimated at $1.4 trillion while Islamic finance contributes just $667 million. Similarly modest fashion market size is $270 billion but Islamic finance just adds $23 million to its growth. Similarly, imports of Organisation of Islamic Countries are estimated at $1.8 trillion while Islamic trade finance is valued at $186 billion, reflecting very small or negligible funds flowing from Islamic finance to these Shariah-compliant sectors.
- waheedabbas@khaleejtimes.com