Takaful contribution to hit over US$3b

KUALA LUMPUR: Malaysia, which is the second largest takaful market in terms of gross takaful contribution, is forecasted to hit US$3.024 billion (RM10.1 billion) in 2014 from US$2.436 billion in 2013 on the back of continual improvement in raising industry performance to be on par with the conventional insurance industry.
"We recognise that Malaysia's takaful industry is yet to reach its optimal market participation level and the Malaysian Takaful Association (MTA) as the industry body have embarked on various efforts to get Malaysian takaful to the top echelons of best practices," said MTA's chairman Zainudin Ishak.
"At the moment, the penetration rate of the takaful industry is 15%. Our target (imposed by Bank Negara Malaysia) is to achieve 75% by 2020. We take due cognisance that industry maturity is still a long way off. We are encouraged by Bank Negara Malaysia's support in creating a conducive environment for takaful to flourish with a resilient and ever-robust regulatory infrastructure," he told reporters after the opening of the Takaful Rendezvous 2014 yesterday.
Zainudin Ishak reiterated that the local takaful industry is expected to see increased merger and acquisition (M&A) activities between now and the end of next year, with the introduction of the Islamic Financial Services Act (IFSA). IFSA requires current players to segregate their family and general insurance licenses.
"When we split the license, each and every business will have to be capitalised separately. (So) existing players (will) need to review their position whether they want to stay in the business of both or to concentrate in any of each. There are people keen to do only general takaful or there are also people keen on only family takaful. The answer to that question will be clearer come June 2015," he added.
In the special 30th anniversary edition preview on Malaysian takaful dynamics by Ernst & Young (E&Y) and MTA, it highlighted that the prospects for the Malaysian takaful industry continue to ride on the growth of the Islamic banking and finance sector.
It said Malaysia's takaful industry achieved compounded annual growth rate of 24% over the last five years.
Industry estimates indicate that given a conducive economic climate and its young demographics, Malaysia's takaful industry may be able to continue its double-digit growth path.