Being the second-largest takaful market in the world, Malaysia has a largely underinsured population with a low insurance penetration rate of 4.8% and strong government support for the Islamic finance sector that drives positively the prospects for takaful, it said.
“Its (Malaysia) takaful industry grew strongly by 21% in 2012, which is more than double the growth of the broader insurance industry at 9%.
“With a proven model and regulatory clarity, the country is set to further build on this leadership position,” it said in a report released on Monday.
Malaysia has 12 takaful operators and four retakaful operators. Among the key takaful operators are Etiqa Takaful Bhd which is a subsidiary of Malayan Banking Bhd, Prudential BSN Takaful Bhd and Sun Life (M) Takaful Bhd.
Global Islamic finance leader Ashar Nazim said for Malaysia, a relatively developed Islamic finance industry including the development of sukuk market, has supported the growth of its takaful sector.
At present, Malaysia’s takaful sector derives nearly 78% of its net contributions from the family takaful business. However, globally the recent trends suggest an alarming deceleration of the industry from 22% annual growth rate since 2007 to 16% in 2012.
Hence, expansion of the takaful industry is relatively slowing as firms struggle for scale and face growing competition, but the sector is still poised to sustain double-digit growth, said the report in its overall findings.
Globally, the industry has attracted US$10.9 billion (RM34.88 billion) in gross contributions worldwide last year, and has its core markets in the Gulf region and South-East Asia and serves as a bellwether of consumer appetite for Islamic finance products.
Source: The Malaysian Reserve