Thursday June 14, 2012
Higher M’sian contribution to global takaful industry
KUALA LUMPUR: Malaysia’s contribution to the global takaful industry is expected to increase to US$2.4bil (RM7.68bil) this year from US$1.4bil (RM4.48bil) 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% to touch US$1.4bil contribution last year at an average of US$141mil per operator,” he told Bernama on the sidelines of the World Takaful Conference: Asia Leaders’ Summit 2012 here yesterday.
For the South-East Asian region, Sta Maria expected the contribution to the industry to increase to US$3.4bil from the US$2.2bil 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$12bil by this year,” he said.
He said that by contrast, the Gulf Cooperation Council (GCC) takaful market, predominantly comprises the general takaful business with family takaful accounting for as little as 5% in certain markets.
He said strong competition, evolving regulations and a shortage of takaful expertises were identified as key risks in both the GCC and South-East Asia.
“Young takaful operators are relying on aggressive pricing strategies to compete against the established, older, conventional players. Such pricing is not sustainable and causes significant pressure on the industry’s profitability,” Sta Maria added.
Takaful Ikhlas Sdn Bhd senior vice-president and chief financial officer Zainurin Julaihi said that with a track record of sustained double-digit growth, the potential for the takaful industry in Asia was unquestionable.
“The low insurance penetration, demographic factors and the rise in syariah 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 said. — Bernama