The global takaful industry recorded a growth in contributions of 12% last year while conventional insurance premiums grew by 4%. Despite the high growth rate, takaful is by volume still a small industry with total contributions of US$25 billion and 305 takaful and retakaful operators and windows, according to the annual Islamic Financial Services Industry Stability Report 2017. The GCC accounted for 47% of the contributions and 31% of the takaful operators, followed by MENA (excluding GCC) with 33% of contributions and 22% of the operators, and Asia with 18% of contributions and 15% of the operators. The insurance/takaful penetration in most Organisation of Islamic Cooperation countries is relatively low. While this indicates untapped market potential, there is strong competition for market share, says the report. As many takaful undertakings lack scale for efficient operations, it is expected that the consolidation of the industry through mergers and acquisitions will continue in Southeast Asia and the GCC. The report, published by the Islamic Financial Services Board, is scheduled to be released today. It examines the implications of the recent economic developments and changes in the global regulatory and supervisory frameworks on the global Islamic financial services industry. It says that amidst a challenging external environment brought on by the changing policy directions and uncertainties in the global economic landscape, institutions offering Islamic financial services have continued to grow and gain market share, particularly in their home jurisdictions. However, the previously observed double-digit growth rate of the global IFSI has slowed down to single-digit growth. FinTech in Islamic insurance The report also provides an insight into FinTech in the Islamic finance space, the development of which poses a number of legal, regulatory and Shariah issues. Discussions on FinTech focus on two areas that have attracted much attention: the distributed ledger technology, which is at the core of cryptocurrencies (e.g. Bitcoin) and smart contracts, and multi-sided internet platforms, which are the basis of crowdfunding. The report highlights several issues that have to be addressed by regulators and Shariah authorities in this still-evolving regulatory environment. The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets and insurance sectors. The members of the IFSB comprise regulatory and supervisory authorities, international inter-governmental organisations and market players, professional firms and industry associations.
The global Islamic insurance , or takaful , market grew 12 % in 2012 , compared with 10 % for conventional premiums , with 47 % of the contributions coming from Gulf Cooperation Council countries , according to an annual report from the Islamic Financial Services Authority . Despite the expanding market , the report noted that the sector is still small , with total contributions of $ 25bn . The report also highlighted how mergers and acquisitions will change the industry and examines the legal , regulatory and shariah challenges thrown up by fintech innovations such as blockchain .