Global: Solvency of Islamic insurers remains adequate, but pressures evident in weaker markets
Source: Middle East Insurance Review | Jul 2025
The global Islamic insurance sector generally maintained solvency positions above regulatory thresholds in 2024, although resilience varied across regions, says the Islamic Financial Services Board (IFSB).
In its report, titled “Islamic Financial Services Industry Stability Report 2025”, the IFSB says that the trend was broadly aligned with the conventional insurance sector, with most Islamic insurers remaining adequately capitalised. However, capital positions differed considerably across jurisdictions, shaped by differences in regulatory frameworks and market development stages.
Some markets, such as East Asia and Pacific (EAP), recorded robust solvency levels, while others—particularly in parts of South Asia (SA) and Sub-Saharan Africa (SSA)—remained near minimum compliance thresholds.
In MENA (excluding GCC), capital strength was supported by an increasing proportion of shareholders’ equity and improved governance frameworks. In the GCC, market segmentation based on operator size became more pronounced. Larger insurers maintained strong capital buffers while smaller entities struggled with compliance due to weaker technical performance.
Europe and Central Asia (ECA) demonstrated substantial improvement in solvency positions, evidenced by rating upgrades, while MENA (excluding GCC) maintained strength aided by conservative regulatory requirements despite emerging pressures on technical provisions. East Asia and Pacific’s (EAP) resilience stemmed from effective adaptation strategies and claims control measures that preserve public trust despite weakened consumer purchasing power. Conversely, in markets with delayed regulatory reforms (parts of SA and SSA) asset quality weaknesses contributed to downward pressure on solvency ratios.
The effectiveness of capital frameworks varied significantly, with heightened vulnerability in regions where regulatory and supervisory frameworks for Islamic insurance had not evolved in tandem with market developments. M