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Friday, 28 March 2008

Challenges holding back takaful's global growth

Leading industry figures from Islamic insurance (takaful) firms and service providers will meet in Bahrain at the end of the month for Takaful 2008, a conference to discuss issues and challenges facing the $1.1bn industry.

The growing Muslim middle class worldwide and relatively low insurance penetration rate will help drive international acceptance of takaful, according to experts in the industry, but challenges remain. Bradley Brandon Cross, CEO of British Islamic Insurance Holdings (BIIH) UK, said:
'The world takaful market is growing at a phenomenal rate and, we believe, will continue to do so. We are thrilled to be involved in this new and exciting sector. BIIH is the first independent takaful insurance company to launch in the UK and aims to be the insurance of choice for Muslims living in the UK as well as for those who are interested in ethical financial products'.Carlos Wong-Fupuy, managing senior financial analyst at ratings agency A.M. Best said that the emergence of new takaful companies could help address the low insurance penetration and reduced retention levels in the Middle East to date. He added: 'Having said this, from a credit ratings standpoint, in A.M. Best's opinion, takaful companies also face a number of challenges arising from their start-up nature, constraints in investment policy and product design, combined with the risks inherent to an untested business model whose details are yet far from consensual'. A spokesman for law firm DLA Piper said: 'The takaful market is at a critical stage in its evolution. Interest in takaful has never been greater, but there remain challenges ahead if the impetus is to be sustained, including the establishment of viable, commercial structures that genuinely reflect Shariah principles.' Takaful 2008 will look at various vital issues on Takaful & Re-Takaful such as, the scope and opportunities for Takaful product development, need for an international regulatory framework for Takaful, global insurance trends, challenges of Re-Takaful Industry and pre-requisities for Bancatakaful success. Ashraf Bseisu, deputy CEO - Solidarity group, said: 'Solidarity Group's participation in world class conferences and forums represents the management direction to further support the development of this industry. Believing in our role as an active member in the global village and the responsibility towards providing financial solutions, Solidarity committed itself to continually interact and share in providing opportunities and facing challenges for better global takaful infrastructure'. The Bahrain Institute of Banking and Finance (BIBF) will lead a workshop for delegates, focusing on challenges specific to the takaful industry. Takaful 2008 will be held at the Gulf Hotel and Convention Centre in Bahrain on March 30 and 31, in association with Arabian Banking & Finance magazine. It will feature leading industry speakers including Zainudin Ishak ,CEO, CIMB Aviva Takaful Berhad; Dr.Daud Bakar, President & CEO, International Institute of Islamic Finance, Malaysia; and Ahmad Feizal Sulaiman Khan, International Currency Business Unit, Etiqa Takaful Berhad.

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