Malaysia's Contribution To Global Takaful Industry To Increase To US$2.4 Billion

By Zarul Effendi Razali KUALA LUMPUR, June 13 (Bernama) -- Malaysia's contribution to the global Takaful industry is expected to increase to US$2.4 billion this year from US$1.4 billion in 2011. Ernst and Young Partner (Assurance) Brandon Bruce Sta Maria said the estimation was based on expectations that the industry's growth trend would be sustained for the next two years. "Malaysia's market grew 24 per cent to touch a US$1.4 billion contribution last year at an average of US$141 million per operator," he told Bernama on the sidelines of the World Takaful Conference: Asia Leaders' Summit 2012 here Wednesday. For the South East Asian region, Sta Maria expected the contribution to the industry to increase to US$3.4 billion from the US$2.2 billion achieved last year. "With the current growth trend, and the addition of new frontier markets such as Indonesia and Bangladesh, it is expected that the global Takaful contributions will reach US$12 billion by 2012," he said. He also said by contrast, the Gulf Cooperation Council (GCC) Takaful market, predominantly comprises the general takaful business with family Takaful accounting for as little as five per cent in certain markets. He said strong competition, evolving regulations and a shortage of Takaful expertises, 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," Sta Maria added. Senior Vice President and Chief Financial Officer of Takaful Ikhlas Sdn Bhd Zainurin Julaihi said with a track record of sustained double-digit growth, 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 and global conventional insurers to enter the Takaful market space. "Though the focus has shifted towards identifying strategies to translate the market potential to real growth, industry leaders must also keep a constant check on the increasing competitive pressures and challenges that come along with it," he added. -- BERNAMA