Growth of the takaful or Islamic insurance business is slowing, industry statistics show, increasing pressure on the sector to boost efficiency, roll out new products and explore new markets.
Takaful, which has its core markets in the Gulf and southeast Asia, is one bellwether of consumer appetite for Islamic finance. But profitability has been hit by fierce competition and rapid growth of workforces at takaful providers in past years. The industry's big challenges include building product awareness and making consumers realise the importance of saving over the long term.
The market opportunity is significant, according to a report last year by Swiss RE; conventional insurance accounts for 83.1 percent of all premiums written in Muslim countries, it estimated.
Meanwhile growth in Bahrain and Malaysia, regarded as the most well-developed takaful markets, is also showing signs of flagging, though it still outpaces conventional insurance.
Malaysia has proved more resilient but has followed a similar trend, according to data from that country's central bank. Takaful assets grew 18 percent in 2010 against 28 percent in 2007.
The deceleration could be hard to reverse because of shrinking sales force in the industry. The number of employees involved in general takaful sales in Malaysia peaked at 32,997 in 2009, when it soared 107 percent from the previous year; but it contracted 5 percent in 2010, while staffing for the conventional insurance industry fell just 2 percent.
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