Although the first modern Takaful operation in the world was established in Sudan in 1979, the Gulf and Malaysia soon became the major markets while Takaful in Africa developed only slowly. This reflected the region’s economic underperformance, limited local knowledge of Takaful and lack of government support. During the last five years Takaful has spread remarkably in Africa, albeit from a low base. South Africa and Kenya have Takaful operators, and the overall market is growing at 18% per year. The establishment of African Re Takaful under Egypt’s free zone law should help expansion by providing underwriting for larger risks. The future seems promising, as the growing African Muslim middle class are interested in cars, housing and family Takaful and trading businesses using Islamic banks for financing are also becoming Takaful participants.
PROFESSOR RODNEY WILSON
Within the insurance industry, the requirement to be able to hedge excessive concentrations of risk is deemed to be prudent. One of the main outlets for this type of risk mitigation is to make use of re-insurance offerings. Re-insurance is typically offered by very few, very large companies that have the capability to diversify their risk due to their sheer size. As a result, Takaful companies have historically been permitted to use conventional re-insurance. The fact that re-Takaful companies are now being established globally is a sign of the fact that Takaful is reaching critical mass. DR NATALIE SCHOON Head of product research, Bank of London and The Middle East
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