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GLOBAL: Although the
Takaful industry has demonstrated phenomenal double-digit growth in the
past few years, and is expected to maintain its momentum for the next
three years (projected 14% expansion in 2014 according to EY), the
Islamic insurance sector accounts for only a fragment of the entire
Islamic finance industry. EY valued the Takaful segment at US$12.3
billion in 2013, barely 1% of the entire Shariah compliant finance
industry which was reportedly valued at US$1.3 trillion. One of the main
challenges arresting the sector’s growth is the lack of an effective
distribution channel – an obstacle which an increasing number of market
players are overcoming by associating themselves with Islamic banks.
In the past two months alone, we have seen at least three bancaTakaful
partnerships struck including the most recent between UAE’s Noor Takaful
and Dubai Islamic Bank (DIB). Through the arrangement, DIB will initially
market two of the operator’s products (a simple term plan and a complete
life packages) with plans to offer more in the near future. Commenting on
the collaboration Andrew Greenwood, acting CEO of Noor Takaful, said: “We
are very happy to partner with DIB, to offer our range of products to the
bank’s growing customer base. Noor has worked closely with DIB to develop
niche products such as Heba and Osrati that offer a combination of
security and capital growth to a cross section of customers.”
Last month, Egyptian Life Takaful Insurance Company contracted two
agreements with Abu Dhabi Islamic Bank and Bank Audi-Egypt, while Sun
Life Malaysia Takaful expanded their existing bancaTakaful tie-up with
Malaysian Islamic cooperative bank, Bank Rakyat, to launch a new direct
and telemarketing channel. Sun Life Takaful and Bank Rakyat’s alliance
was initiated in March 2013 which first saw the offering of a reducing
term Takaful product, but it has since evolved to include various other
products including one designed for ladies which will be marketed under
the enhanced partnership.
While bancaTakaful arrangements are evidently beneficial for both Takaful
operators (in terms of distribution) and Islamic banks (in terms of
diversifying product offering), one veteran industry player intimated to
IFN his concern on the overreliance of operators (specifically those who
are subsidiaries of a banking group) on their parent bank’s extensive
network to distribute products, and reducing focus on growing their
agency network. “We still need individual agents to go out there to meet
people and educate the public on the importance and benefits of Takaful
insurance – such interactions are vital in furthering the industry.”
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