Press Release - MAY 14, 2018
Best’s Special Report: Takaful in the MENA Region: Finding the Right Ingredients for Success
FOR IMMEDIATE RELEASE
LONDON - MAY 14, 2018
In a new Best’s Special Report, titled, “Takaful in the MENA Region: Finding the Right Ingredients for Success”, A.M. Best states due to a lack of sufficient differentiation, takaful providers remain subject to fierce price competition with larger, more established insurers that already benefit from greater brand awareness and established distribution networks. Furthermore, additional support from shari’a scholars in promoting Islamic financial products is essential for the growth of the takaful sector.
Salman Siddiqui, associate director, said: “Given the proportion of Muslims in the MENA region, A.M. Best considers the take-up of shari’a-compliant insurance to be disappointing, especially in contrast with the Malaysian experience, which exhibits higher takaful penetration – despite the country having a lower proportion of Muslims. With the exception of Saudi Arabia, where all insurers operate under the unified co-operative insurance model, which is distinctly different from the traditional takaful model, most of the remaining Middle Eastern takaful operators have struggled to establish competitive positions in their respective markets.”
The report examines market trends including merger and acquisition activity and notes despite some market consolidation, the business profiles of the majority of takaful companies remain limited. A.M. Best considers the Middle East insurance markets to be concentrated and generally a few large players dominate their respective markets, with the other market participants competing for the remaining premium.
Mahesh Mistry, senior director, analytics, said: “Operators with strong business profiles and track records of good operating performance are able to attain higher credit ratings from A.M. Best. Conversely, those who struggle in establishing their franchises, and suffer from poor performance find it harder to attain strong credit ratings. Additionally, a number of takaful companies have had difficulties in meeting minimum solvency rules, which has also led to lower credit ratings.”
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=273547 .
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.