The global takaful industry has witnessed tremendous growth in the last decade, rapidly becoming an integral part of the mainstream financial system, with Saudi Arabia at the forefront, Ernst & Young executive said Wednesday at the opening of "The World takaful Conference: Asia Leaders Summit (WTC: ALS 2012)" at Hotel Istana, Kuala Lumpur.
South East Asia, particularly Malaysia, has been the nerve center of this dynamic and vibrant industry, added David McLean, Chief Executive of the World takaful Conference. Citing a recent report by Bank Negara Malaysia, he said the takaful industry "experienced a compounded average growth rate of 27 percent in terms of net contributions between 2005 and 2010."
Given the large untapped market that still exists, the takaful industry in Malaysia is poised to benefit in the years ahead on the back of steady demand.
Similarly other key markets in South East Asia such as Indonesia and Brunei are also rapidly emerging as important takaful markets, he added.
Brandon Bruce Sta Maria, Partner, Assurance – Insurance Leader, Ernst & Young Malaysia, noted that "global takaful contributions grew by 19 percent to $8.3 billion in 2010. Of these, the GCC contributed $5.68 billion and South East Asia contributions were $2 billion. In 2010, growth in the GCC slowed to 16 percent, from a compounded annual growth rate (CAGR) of 41 percent in 2005-2009, as the implementation of compulsory medical takaful in Abu Dhabi and Saudi Arabia was completed earlier. Saudi Arabia remains by far the largest takaful market, contributing $4.3 billion or 51.8 percent of the industry at an average contribution per operator of $141 million."
He also said "Malaysia grew 24 percent to reach contributions of $1.4 billion at an average contribution per operator of $141 million. With current growth trends, and the addition of new frontier markets such as Indonesia and Bangladesh, it is expected that gross contributions will reach $12 billion by 2012.
By contrast, the GCC takaful market predominantly comprises of general takaful business with family takaful accounting for as little as 5 percent in certain markets."
"Strong competition, evolving regulations and shortage of takaful expertise are identified as key risks in both the GCC and South East Asia. Young takaful operators are relying upon aggressive pricing strategies to compete against the established, older, conventional players. Such pricing is not sustainable and causing significant pressure on the industry’s profitability. There are increasingly stringent regulatory requirements on capital and solvency, indicating the regulators’ desired future direction", he added.
Zainurin Julaihi, Senior Vice President and Chief Financial Officer of takaful Ikhlas Sdn Bhd, said "with a track record of sustained double-digit growth rates, the potential for the takaful industry in Asia is unquestionable. The low insurance penetration, demographic factors and the rise in Shariah compliance awareness have made the region an attractive destination for both domestic providers as well as global conventional insurers entering the takaful market space."
He added that "though the focus has shifted toward identifying strategies to translate the market potential to real growth, industry leaders must also keep a constant check on the increasing competitive pressures and the challenges that come along with it." – SG/QJM
0 Comments:
Post a Comment