The low penetration of insurance services in the rapidly developing economies of east Africa will be one of the drivers of the growth of Takaful in the region in 2012, a senior analyst at Swiss Re has said.
John Karanu, senior market underwriter EMEA for Swiss Re, told The Islamic Globe that growing economies in the region, averaging 5% per annum in the last few years, are creating a new middle class that needs and is able to afford, insurance. The burgeoning east Africa Takaful sector means that there is an opportunity to choose between Islamic and conventional insurance.
“There is a low penetration [of insurance in the region] and this creates room for strong growth potential,” said Karanu.
Kenya has the highest penetration of insurance services in the east African region, with the sector contributing 3.1% total GDP, according to the Association of Kenya Insurers’ 2010 report. The country also hosts Takaful Insurance of Africa, the first fully-fledged Takaful company in the region, which The Islamic Globe has reported is planning to expand into Uganda and Tanzania.
Karanu said the increase in Shari’ah compliant financing through the establishment of fully-fledged Islamic banking institutions in Kenya and Tanzania will also facilitate growth of Takaful in the region.
He added that to encourage the growth of Takaful, regional governments must ease licensing of companies undertaking Takaful business.
source: The Islamic Globe