NH-2016-q2

NEWHORIZON July – December 2016
TAKAFUL NEWS
Takaful Growth Expected to
Remain Weak
Reports from Standard & Poor’s (S&P)
and Moody’s suggest that takaful
growth is likely to remain weak in
the short to medium term. The S&P
report focuses on the GCC, where
the relatively large number of takaful
operators, their small size and their
reliance on retail business mean that
they are struggling to achieve significant
growth. They are also hampered by
investor demands to generate returns
quickly. While Moody’s expect growth
to be in double digits (around 15%
or just below) in 2017, it has to be
remembered that the market is growing
from a very small base and so growth is
still modest.
National Bonds Corporation
Highlights Lack of
Awareness of Takaful in the
UAE
National Bonds Corporation, a Shari’ahcompliant
savings and investment
company in the UAE, in the results
of its financial health check for Q3
2016, has revealed that the majority
of the UAE’s residents, comprising
both nationals and expatriates, are yet
to sign up for takaful coverage while
only a minority is covered by traditional
insurance against illness and disability.
The financial health check for Q3 2016
that focused on the takaful coverage of
National Bonds’ customers included
all the customers that had signed up
for the Sanadi plan (a policy providing
employment protection, disability and
critical illness cover) since its launch
in April. 73% of UAE national
respondents who participated in the
financial health check survey pointed
out that they do not have takaful life
coverage, compared to 27% who are
covered by traditional policies. Within
the UAE national pool of respondents,
89% admitted to not being insured
against disabilities through takaful in
contrast to 11% that have traditional
coverage against disabilities.
The results among expat residents of the
UAE indicate that 83% of all nationalities
have no takaful life coverage, while 17%
have traditional life insurance cover. In
addition, 76% of expat participants in
the survey are not covered for disabilities
through takaful, compared to 24%
that are insured for disabilities through
traditional policies.
Mohammad Bitar, Chief Commercial
Officer of National Bonds, commenting
on the survey, said, ‘We are not surprised
with the Q3 results of the National
Bonds Financial Health Check - it
reiterates our understanding that the
awareness about the benefits of takaful
coverage is still minimal among UAE
residents. This explains the slow growth
of the takaful sector in general. Despite
the concerted efforts of many entities in
developing the legislative and regulatory
system of takaful, we are witnessing
hesitation by the public in signing up for
traditional insurance coverage, not just
takaful.
‘The majority of the social strata,
regardless of nationality, is unable to
grasp the significance of insurance and
its impact on an individual’s and family’s
stability and security. They also don’t
effectively understand the difference
between traditional insurance and takaful,
let alone comprehend the actual benefits
of takaful, which focuses on social
cohesion and involves the collective
sharing of any burdens. We must
intensify our efforts in raising awareness
about the significance of takaful, and
step-up overall understanding of how it
transcends traditional insurance in terms
of sustainability and adherence to Islamic
Shari’ah law.’
Shari’ah-Compliant Syndicate
for Lloyds
Cobalt Insurance Holdings Ltd (Cobalt)
and Capita Managing Agency Ltd (CMA)
have announced they have taken a
significant step in the launch of Lloyd’s
first fully Shari’ah-compliant syndicate
after receiving ‘in principle’ approval
from Lloyd’s Franchise Board. Cobalt
Founder Richard Bishop said the aim
now was to work closely with CMA
and Lloyd’s to secure full approval. He
commented, ‘We are delighted to be
working with Capita Managing Agency
on the launch and operation of the
syndicate. To create Lloyd’s first ever
fully Shari’ah-compliant syndicate is
a significant step for Cobalt and will
demonstrate Lloyd’s reputation for
innovating solutions for emerging
markets.’
Cobalt plan to begin underwriting in
the first quarter of 2017 and initially
the emphasis will be on developing a
property and specialty-focused book of
commercial business from the emerging
and developing markets throughout
the MENA and Asian regions, whilst
being less acquisitive of business from
the more established markets of North
America and Europe.
Once it achieves full approval the
syndicate will be named Cobalt Syndicate
1438, which is the Islamic calendar’s
number for the year 2017. Cobalt
expects to announce the name of the
syndicate’s active underwriter imminently,
as well as details of the syndicate’s
principal capital providers.
In Brief
Allianz Malaysia, a subsidiary of the
German-based Allianz SE, has opened
negations with HSBC Amanah Takaful
(M) Bhd with a view to acquiring a
100% stake in the takaful operator. It is
understood that Allianz Malaysia have
been seeking to buy a takaful operator
for a number of years, but so far have
considered potential targets to be
overpriced.
Reuters have reported that Abu Dhabi’s
National Union Bank and Orient
Insurance Company are to set up a joint
venture takaful company to be called
Orient UNB Takaful. UNB and Orient
will hold 70% of the shares with 30% to
be floated.
www.islamic-banking.com IIBI 15