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November 27, 2016 | 14:30 | Dubai
The ‘Potential of Takaful’ is a much talked-about topic in the global Islamic finance industry. With greater outreach, extensive product lines and improved regulation, growth prospects for the Takaful industry have been nothing less than optimistic.
The future of the global Takaful industry looks very bright too. A report released at the 2015 Global Economic Summit estimated the total volume of global Takaful business to touch USD 52.5 billion by 2020, growing by a massive 80 percent over the five-year period. But the big questions remain – Is the UAE Takaful industry equipped to keep up with these growth estimates? Can potential in fact, be turned into realization?
Overview of the global Takaful market and where the UAE stands
The global Takaful industry is witnessing fast paced growth, registering a double-digit CAGR of 14 percent, as per the Ernst & Young Global Takaful Insights 2014 report. Saudi Arabia, UAE and Malaysia are home to the top three Takaful markets in the world, and the UAE alone accounts for 15 percent of gross Takaful contributions in the GCC.
This was further supported by a 2014 report on the global Takaful market by Deloitte, which pointed out that the UAE’s range of Takaful products is the most extensive in the whole of GCC.
Over the last five years, UAE’s regulatory framework has undergone many changes to align the insurance industry with global standards. Comprehensive laws were introduced in 2010 by the Insurance Authority (IA) to regulate the local Takaful industry. Furthermore, IA also introduced new financial regulations in 2014, to regulate and standardize financial reporting and investment activities of Takaful insurance companies.
But from a consumer perspective, UAE still has a long way to go. With around 85 percent of its population made up of expats, there is an obvious need to create more awareness about what Takaful means and the products available in the market, in order to fully explore all untapped customer segments.
Educating consumers about Takaful products
Takaful can be rightly referred to as the Islamic alternative to conventional insurance providing customers a cover against potential risks. For the UAE Takaful industry to realize its full potential, it’s important to start from the very basics. Therefore more awareness needs to be created about the Takaful industry among Muslims and non-Muslims alike.
Another area which needs work is busting the misconceptions that surround this concept. Many people often incorrectly assume that Takaful is reserved for Muslim consumers or there’s something lacking in the product, owing to its religious nature.
Souqalmal.com is making Takaful accessible for UAE residents
Based on the numbers released by the Insurance Authority in 2014, there were 60 insurance companies operating in the UAE, of which 11 of were Takaful operators. There are plenty of Takaful options available in the UAE market covering both life, and non-life plans such as auto, travel, health and other commercial lines.
The UAE’s biggest car insurance aggregator, Souqalmal.com, offers UAE residents three Takaful options: SALAMA – Islamic Arab Insurance Company, Noor Takaful and Dubai Islamic Insurance & Reinsurance Company (Aman) with more providers in the pipeline. The aim is to provide users with a comprehensive range of products to choose from.
Having been in the market for over four years now, Souqalmal.com has established itself as a trusted personal finance and insurance distribution channel, and the go-to source for independent advice and unbiased insights.
Apart from offering car insurance and car Takaful products from the largest number of providers in the UAE, Souqalmal.com has also built an all-inclusive financial literacy platform. Financial education has been central to Souqalmal’s growth strategy, and through this platform it aims to provide readily accessible content in the form of guides, expert insights, terms & definitions, rules & regulations, and frequently asked questions, all in one place.