The takaful industry in Malaysia is looking forward to added incentives in 2014 budget to be tabled by the prime minister on October 25. Takaful Ikhlas Sdn Bhd (Takaful Ikhalas) president and chief executive officer Ab Latiff Abu Bakar said the Malaysia Takaful Association (MTA) had discussed several issues with the relevant authorities on their expectation for next year’s budget.
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Islamic bond sales in the Arabian Gulf are on course for the slowest third quarter since 2010 as borrowers delay issuing sukuk after costs rose. The 1bn-riyal ($267mn) sale of Jeddah-based construction company Saudi Binladin Group is the only issue in the Gulf Cooperation Council this quarter, compared with five sales totalling $5.27bn in the same period last year, according to data compiled by Bloomberg. The average yield on Shariah-compliant debt from the GCC has risen 95 basis points in 2013 to 3.87% on August 16. Takaful operators like Syarikat Takaful Malaysia Bhd and Takaful Ikhlas Sdn Bhd, a unit ofMNRB Holdings Bhd, are aggressively strategising their operations to ensure profitable growth and taking advantage of the five-year time frame given to composite takaful players to fully comply with the new Islamic Financial Services Act (IFSA). Under the Financial Services Act (FSA) and IFSA, which came into force on July 1, composite insurers and takaful players would be, among others, required to split their life and general insurance businesses under separate licences. The UAE Takaful sector is not "performing effectively" for its policy holders in generating fund surpluses nor its shareholders in the generation of profits, said Standard & Poor's (S&P) in a recently published report. Despite a 15% growth in contributions in 2012, takaful fund deficits have increased – rising by 70% in the first quarter of this year from the end of 2012 and thereby weakening the sector’s financial strength. The Islamic capital markets and Shariah-compliant insurance have so far developed somewhat separately. Linking the two markets by using Islamic insurance for sukuk could breathe fresh vigour into both markets. One of the biggest constraints on sukuk market growth has been the product's lack of secondary liquidity. The market's mainstay investors – specialist sukuk funds and private wealth managers – tend to buy and hold, and are too small to trade in and out much. A more liquid market – which would in turn entice further investors – can only happen when bigger institutions become involved. Despite centuries of tradition and an estimated worldwide value in the billions, Takaful insurance, grounded in sharia‑compliant practices, has struggled to find traction in the UK. This year has seen several sharia‑compliant products launch in the UK. In February, Hiscox announced its backing for a niche Islamic school insurance scheme provided by insurance broker Faithsure and in May, XL Group began providing sharia-compliant products for large corporates on a global basis, underwritten by Cobalt Underwriting with financial backing provided by Capita Insurance Services. The number of takaful operators worldwide has increased to 200, with four additional companies entering the segment compared to 196 the previous year, latest figures in 7th World Islamic Insurance Directory (WIID) have shown. The four new takaful companies originated from North Africa, with the recent socio-political changes in the region proving positive for the nascent development of Islamic finance. Overall, the GCC continues to lead the way with 77 operators followed the Far East with 40. Few years after the introduction of Takaful Insurance to boost insurance penetration in Nigeria, performance of the policy has been above average. Speaking on the new Insurance option, Vice-Chairman Chartered Insurance Institute of Nigeria (CIIN) Oyo State Chapter, Babatunde Omosola, stated at the 2013 media retreat in Ibadan, Oyo State that Takaful Insurance has attained about 70 per cent penetration in the country. The second day of the 7th International Takaful Summit, which is being hosted by Egypt for the first time, kicked off today. The first session discussed takaful prospects for the African market, which panel members said had huge potential but also posed challenges which must be faced and met by the takaful industry if it is to get a foothold on the continent. |