An Overview of the Takaful Industry
By Dato' Mohd Fadzli Yusof
Chief Executive Officer, Sharikat Takaful, Malaysia
Currently, it is understood that there are around 40 takaful operators worldwide, mostly providing general
business. It is at the same time estimated that the combined total assets and contributions (premium) of
these operators stand at around USD1 billion and USD500 million respectively. Obviously, this amount is
negligible and very insignificant compared with the total number of Muslim population of Islamic countries,
estimated at around 800 million people.
According to data compiled by Carpenter Bowring London, a company under the Marsh Mc Lennon
Group, the world largest reinsurance broker, insurance penetration particularly for the life sector in
premium terms in Muslims countries is less than 1% of GDP. It is therefore clear that takaful has immense
potential to be developed with its sheer market size hitherto remained untapped.
For this reason, existing as well as would-be operators must intelligently position themselves in terms of
product design that can satisfy the needs of the market. In this regard, products that would help to
improve savings among the masses, such as family takaful plans which are essential components for
ensuring economic growth should be actively promoted. As for the penetration of life insurance, perhaps
Malaysia is relatively ahead among most Islamic and developing countries. At present, Malaysia has
attained penetration rate of 28% as against less than 5% for most Muslim countries, compared to the
established markets of Singapore, Japan and most European countries with rates ranging from 65% to
150%. The co-relation to the relatively high market penetration is further reflected from the savings rate of
Malaysia, considered comparatively high at 39% of GDP.
Countries with high savings rate would generally be able to sustain economic growth and would not have
to depend upon assistance or aid from outside. Thus from the economic standpoint, takaful would be
useful not only as a means to inculcate good savings habit and cultivate thrift at the individual level, but
also help to accelerate investment potential for the ummah as whole. This in turn would be beneficial for
the economic development and well being of Muslim countries themselves.
As demonstrated from the small activities undertaken by Takaful Malaysia, Malaysia has taken the lead in
bringing takaful to the international playing field. Asides the advancement within the Asean region,
Malaysia has helped other parties outside the region to introduce and promote takaful in their respective
countries. For this purpose Takaful Malaysia has established joint-venture programmes in Sri Lanka,
Saudi Arabia and has also provided technical assistance for takaful operators in Australia. Request for
similar assistance has been sought from Lebanon, Bangladesh and Algeria.
In another interesting development, the `Developing-8 (D-8)', at its Second Heads of State Summit in