Moody’s Ratings has said that it expects moderate growth in global Islamic insurance premiums over the next two to three years.
“Strong economic activity, population growth, and the expansion of compulsory insurance continue to support takaful growth across the GCC,” said Mohammed Ali Londe, VP and Senior Analyst at Moody’s Ratings.
He also said that demand for takaful is strongest in the Gulf Cooperation Council (GCC) countries, Southeast Asia and selected African markets, where insurance penetration is low and governments are promoting broad financial inclusion.
Takaful providers in Saudi Arabia, the world’s biggest Islamic insurance market, continue to benefit from the country’s Vision 2030 economic diversification plan. In Morocco, Egypt, Nigeria and parts of West Africa, growing demand and stronger regulation are supportive, although market development remains at an earlier stage.
Growth prospects remain positive
Governments in key takaful markets are also encouraging consumers to build up their savings and make greater use of protection insurance. This will underpin growth in family takaful, prompting providers to expand their capabilities in this area. Uptake of family takaful products is strong in Southeast Asia, and will increase more gradually in Africa and the GCC region.
Furthermore, longer-term growth drivers remain intact. Population growth, urbanisation, expanding middle-income populations and still low insurance penetration rates continue to provide significant opportunities. In the main takaful markets, the current insurance penetration rate for takaful and conventional insurance combined is in the low to mid single-digit range.
Consolidation to continue as cost pressures grow
Moody’s expects merger and acquisition activity to remain a defining feature of the global takaful sector. This is because rising costs linked to tighter regulation and investment in digital transformation are putting smaller takaful providers under increasing pressure to merge with larger rivals. M