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Takaful is a Sharia-compliant Islamic insurance product, where members of the community contribute money or a part of their earnings to a pooling system that guarantees against any loss or damage. The underlying principle of takaful portrays the responsibility of each to cooperate and protect each other. Technavio’s market research analysts predict the global takaful market to grow at a CAGR of around 19% during the forecast period. The robust macroeconomic environment factors and promising demographics in countries with a Muslim population are driving the growth of the market.
The market has ample opportunities in most of the Muslim countries as they have Islamic banks that provide a financially viable and competitive alternative insurance to its policyholders. Islamic banking cannot be fully Sharia-based unless there is takaful to take their insurance business. Consequently, these products are gaining acceptance in emerging markets such as Indonesia and Malaysia as the majority of their population are Muslims, who are more inclined to purchase Sharia-compliant products.
The life/family takaful segment accounted for nearly 60% of the market share during 2014 and is expected to reach USD 20 billion by the end of 2019. Life, medical and health, accident, and education plans comprise a significant portion of life/family Takaful product segment. The increasing awareness among Muslims about the benefits of life insurance is encouraging the use of financial products that follow Sharia principles. This in turn is providing opportunities for foreign vendors to partner with insurance companies providing takaful products and increase their market reach.
The GCC is the largest market and is expected to reach USD 20 billion by the end of 2019. Countries like Saudi Arabia, United Arab Emirates (UAE) and Malaysia are predicted to be the high growth markets in this region. The changing regulation, growing affluence, and growth in organized savings amongst the local customers are the key drivers for the growth of the takaful market in this region.
Most of the Takaful operators are concentrated in the Gulf region. The takaful market is witnessing intense competition due to the low differentiation in the product offerings. The industry also has a dearth of technical expertise to develop and innovate new products.
Other vendors in the market include Bank Mandiri, HSBC Amanah Takaful, and PT. Asuransi Jiwa BRINGIN JIWA SEJAHTERA.
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