Takaful is fast becoming one of the most recognized forms of alternative insurance, beginning to rival conventional insurance brands in many markets. Takaful’s success lies in its inner workings: behaving in a similar way to a mutual insurance fund, Takaful appeals to a global audience who are beginning to prefer this form of ethical finance. It is especially attractive due to its mandatory principles of mutuality and transparency.
The industry is estimated at over US$12 billion for both life and non-life business cover, growing sustainably at over 20% annually, but with careful management the industry’s growth could be exponential. Estimates indicate that premiums are set to exceed US$20 billion by 2015.
The Takaful industry has experienced increasing prominence in the past ten years, and the figures are astounding. This niche market is now building roots strong enough to rival conventional finance in years to come.
Part of this building process lies within education and human capital. Market leaders have identified a dearth of qualified personnel required to meet the exponential growth of the industry. As such, ever greater numbers of Takaful firms are looking at talent as the greatest factor in establishing themselves through more than just organic growth. As a result, many are committing to career development programs.
Takaful International, having captured some BD210 million (US$557 million) of the insurance market in Bahrain, representing 11% of the total market and 52% of the Shariah compliant market, is one such company.
Younis Al Sayed, Takaful International’s chief executive officer, says that the company “aims at enhancing and developing staff professional skills and the company’s human capital. We seek to develop professional qualifications of our young leaders which support their practical experience”. The commitment to develop human resources also extends beyond the institution and can provide for the betterment the industry as a whole.
Medical tourism boom
Health travel is to become a potential growth source for the Malaysian tourism and health sectors. Its natural fit with the insurance industry means that the Malaysian government is actively encouraging a partnership between tourism and health industry players, especially medical tourism, to exploit this as a potential source of growth.
Rosnah Abdul Rashid Shirlin, Malaysia’s deputy minister of health, has said that the ministry has been given a mandate to turn health travel into a revenue generating economic activity. “We believe this collaborative program between the tourism and healthcare sectors can be a huge success to the economy,” she said, adding that the health travel industry’s growth has been encouraging in recording a 20% growth annually.
Meanwhile, Suresh Ponnudurai, Malaysia Healthcare’s chief executive officer, said between January and March this year, the number of tourists seeking medical care generated an income of RM105 million (US$34.51 million). Last year, health tourism raked in about RM379 million (US$124.56 million) and is set to generate an income of about RM431 million (US$141.56 million) this year.
A successful roll-out of the Islamic banking system could easily see the industry in Oman gaining up to US$6 billion in Islamic assets over next few years, according to estimates by Ernst & Young’s Islamic Financial Services Group. Latest estimates put the total banking assets in Oman for 2010 at US$42 billion.
According to Ahmed Al Esry, the senior director of tax at Ernst & Young Oman: ”Given the size of the local market, early movers are set to create a strong advantage in both Islamic banking and Takaful”. The report makes it clear that the next 18 months could materially change the competitive landscape in favor of banks and Takaful operators that provide Islamic products.