The Islamic insurance market is projected to grow around 25% as people are showing higher inclination towards innovative, ethical and Shariah-compliant insurance solutions, particularly in the GCC region.
During a high-profile Islamic insurance conference, Chairman of Shoura Council revealed that the Islamic insurance (or Takaful) market is expected to register a five-fold growth in the next ten years whereas the Shariah-compliant insurance market will reach $14 Billion by the year 2015, as reported by MENAFN.
Takaful refers to an Islamic insurance concept, which has been under practice in several forms from past 1400 years. The establishment of Islamic insurance dates back to the initial years of the second century of Islamic age, when during the process of expanding their trade in Asia, Muslim Arabs agreed contributing to a fund.
The Islamic insurance market has been witnessing an annual growth of over 15% since 2000, but this market is in its infancy stage, particularly in the Southeast and Middle East Asia. The data suggests that as compared to developed markets where the insurance premium paid by the people equates to 10%-15% of GDP, in Muslim nations, it accounts for merely 0.5%-5% of GDP.
There has been a constant increase in demand for Takaful products since last few years, especially in the GCC region. It can be attributed to the increasing inclination of people towards more innovative, moral and Shariah-compliant financial instruments.
The Islamic insurance market has bright future prospects. Regarded as one of the rapidly growing areas of modern global finance, Islamic insurance and banking sector have immense growth opportunities in future, particularly in Muslim nations.
Following the footmarks of the Islamic banking, the Islamic insurance market will also grow to appreciable heights in the GCC region. It will also detain the market from its traditional counterparts. The fact has been justified earlier by the Islamic banking that grew commendably.
According to a Research Analyst at RNCOS, “The takaful market has outshined the growth shown by conventional insurance markets. Despite the slowdown, the market has remained largely unaffected. With higher number of people migrating from conventional insurance to Islamic insurance, the trend set by the Islamic banking is likely to get repeated. This strong growth in demand has influenced many insurance companies, including Asian and Western companies, to launch new Islamic products and services (for insurance).”
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