5.59 PM Friday, 29 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:56 06:10 12:26 15:53 18:37 19:52
29 March 2024

Conventional insurers vie for takaful share

Arab Orient, Adnic mull JV Islamic insurance outfits. Recession forced players to put plans on hold. (EB FILE)

Published
By CL Jose

More conventional insurance companies in the UAE are seriously eyeing the fast-growing takaful space by setting up separate entities, according to informed sources in the industry.

"Currently, less than 10 takaful insurance companies control a small portion of the Dh12 billion to Dh15bn insurance premium market in the UAE, which has about 50 players," said a market analyst.

Talking to Emirates Business, a top official of Abu Dhabi National Insurance Company (Adnic), the largest insurance company in the capital, said it is in the process of setting up a takaful company as a separate entity.

"We are forming a joint venture with three reputed business groups from the country and a formal announcement to the same, will be made once formalities are cleared and approvals are in place," Walid Sidani, CEO, Adnic, told this newspaper without giving further details.

Arab Orient Insurance Company, where the Al Futtaim Group holds a large stake, had plans to set up a takaful outfit as early as 2008 but the idea has been put on hold because of the recession that shook financial markets since mid-2008. Arab Orient has gone in for rebranding recently and has been renamed Orient. Omer Elamin, Senior Managing Director of Arab Orient said though the company planned to establish a takaful joint venture with Abu Dhabi-based Abu Dhabi Commercial Bank, the plan may be delayed due to the recession. "We have done a feasibility study on the venture. However, we will come back to the market with the project once things are okay," he added.

There were reports that the German reinsurance major, Munich Re Group, was planning to enter the UAE's Islamic insurance market. The takaful industry in the GCC is facing a dearth of re-insurance facilities as major re-insurance companies are yet to open re-insurance facilities in the Islamic regime.

One estimate puts the UAE's insurance premium market at Dh15bn with an annual growth rate of 15 per cent. The takaful, however, accounts for only about five per cent of this market, leaving big room for growth.

"Though the Islamic banking industry saw substantial growth in the last decade through conversion of conventional banks as well as the establishment of new Islamic banks, a comparable growth has not reflected in the takaful industry," analysts noted.

The global takaful market is likely to exceed $8.9bn in premium collection this year from $5.3bn in 2008, according to Ernst & Young's latest report. Saudi Arabia and Malaysia were the world's biggest takaful markets in 2008 with contributions of $2.9bn and $900m, respectively.