Global spread of takaful could open billion-dollar markets

Takaful, a form of Islamic insurance is spreading outside the middle east and could open multi-billion dollar markets globally, with disproportionate benefits for the poor unable to access traditional insurance.

The Strategic Foresight Group writes,

"The non-GCC countries are also experiencing a rise in the takaful sector. In 2002, it was introduced in Egypt and since then the takaful contributions have gone up from EP 1 million in 2002 to EP 15 million in 2005. In Yemen, the takaful industry has been growing at 40-45%. The industry is yet to pick up in Jordan and Syria but industry experts are suggesting that the sector is likely to grow in these countries in the coming years. The takaful industry in the Middle East, which collected close to $1 billion contributions in 2005, is likely to cross $4 billion by 2015."

Implications

The Strategic Foresight Group writes,

"Takaful provides an opportunity to Muslims to invest money according to Islamic
principles. In addition, it is a systematic and a profitable way of saving money. It also
provides financial assistance to low-income groups and poor families. The profit sharing aspect of takaful makes it extremely beneficial for the poor people."

IFTF adds that takaful markets could attract investment from non-Islamic parties, helping nudge takaful to mainstream practice. If so, it has implications for how Islam is perceived globally and it offers a strategy for financial investment that has social-development principles written in.