Mubasher: Islamic insurance, Takaful, premiums are expected to grow moderately over the coming two to three years as more GCC, Southeast Asian, and African countries introduce compulsory health cover, according to Moody's Investors Service.
Growth prospects for Takaful will likely remain healthy across the Gulf region, Africa, and Southeast Asia, driven by “their large Muslim populations, relatively low insurance penetration, and rising demand for medical cover,” according to Moody’s report.
Takaful premiums have increased at a compound annual rate of 6.8% between 2017 and 2020.
Besides implementing mandatory motor insurance in Saudi Arabia, introducing medical insurance over the past four years in Oman, Qatar, Saudi Arabia, and Kuwait will help sustain Takaful premium growth at or close to current levels.
Vice President-Senior Analyst at Moody's, Mohammed Londe, said the recent adoption of risk-based capital regulation in major Takaful markets as well as Takaful insurers' continued embrace of digitalisation are further positive factors. Thus, the Takaful operators' capitalisation will remain strong.
Moody’s said “Egypt is phasing in compulsory health cover.”
The report added, given the predicted endorsed capitalisation, “in the short term this poses some implementation and operational hurdles, including added costs, which will drive the need for Takaful operators to achieve the scale required to absorb these costs or grow through mergers and acquisitions.”