(BUSINESS WIRE/AETOSWire)-- A.M. Best believes there are significant opportunities for takaful operators in most Middle East and North Africa (MENA) markets to provide sound financial protection that is in line with consumers’ religious sensibilities, taking into account the huge global Muslim population. However, these opportunities continue to remain disappointingly unrealised, with takaful companies struggling to establish strong business profiles.
In a new Best’s Special Report, titled, “Takaful in the MENA Region: Finding the Right Ingredients for Success”, A.M. Best states due to a lack of sufficient differentiation, takaful providers remain subject to fierce price competition with larger, more established insurers that already benefit from greater brand awareness and established distribution networks. Furthermore, additional support from shari’a scholars in promoting Islamic financial products is essential for the growth of the takaful sector.
Salman Siddiqui, associate director, said: “Given the proportion of Muslims in the MENA region, A.M. Best considers the take-up of shari’a-compliant insurance to be disappointing, especially in contrast with the Malaysian experience, which exhibits higher takaful penetration – despite the country having a lower proportion of Muslims. With the exception of Saudi Arabia, where all insurers operate under the unified co-operative insurance model, which is distinctly different from the traditional takaful model, most of the remaining Middle Eastern takaful operators have struggled to establish competitive positions in their respective markets.”
The report examines market trends including merger and acquisition activity and notes despite some market consolidation, the business profiles of the majority of takaful companies remain limited. A.M. Best considers the Middle East insurance markets to be concentrated and generally a few large players dominate their respective markets, with the other market participants competing for the remaining premium.
Mahesh Mistry, senior director, analytics, said: “Operators with strong business profiles and track records of good operating performance are able to attain higher credit ratings from A.M. Best. Conversely, those who struggle in establishing their franchises, and suffer from poor performance find it harder to attain strong credit ratings. Additionally, a number of takaful companies have had difficulties in meeting minimum solvency rules, which has also led to lower credit ratings.”
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=273547.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates.
ALL RIGHTS RESERVED.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180512005014/en/
*Source: AETOSWire
Contacts
A.M. Best
Salman Siddiqui, +44 20 7397 0331
Associate Director
salman.siddiqui@ambest.com
or
Yvette Essen, +44 20 7397 0322
Director, Research, Communications &
Media – Europe, Middle East & Africa
yvette.essen@ambest.com
or
Mahesh Mistry, +44 20 7397 0325
Senior Director, Analytics
mahesh.mistry@ambest.com
or
Edem Kuenyehia, +44 20 7397 0280
Director, Market Development &
Communications
edem.kuenyehia@ambest.com
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