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CHAPTER 4: THE TAKAFUL GLOBAL LANDSCAPE
This chapter examines the global landscape of Takaful. It analyses the present status of the
global Takaful landscape by taking into account the average growth rate, assets sizes,
profitability and total contributions. It presents figures on Takaful and Re-Takaful sectors on
global and OIC level bases. The chapter concludes with an analysis of some core legal issues
relating to Takaful legal entity, conflict of laws and interpretation of clauses in relevant
contracts.
4.1. Overview of the Global Takaful Industry
With the growing dominance of Shari'ah-compliant products in Muslim-majority countries,
there is a natural preference for products and services that fulfil the needs of Muslims across the
world (Khan, 2014). The increasing yearning for Shari'ah-compliant products has now gone
beyond the original frontiers of Islamic finance (Oseni, 2012). Globally, there are more than
1,389 full-fledged IFIs and windows (Thomson Reuters, 2018). The Islamic finance industry has
recorded a compound annual growth rate (CAGR) of 6% from 2012 until 2017. Iran, Saudi
Arabia, and Malaysia remained the most significant market contributors to top global Islamic
banking markets in 2017. Malaysia is contributing a total of US$ 201 billion in Islamic banking
assets compared to Iran and Saudi Arabia. Meanwhile, Iran and Saudi Arabia contribute US$ 486
billion and US$ 376 billion to the global Islamic banking markets, respectively. However,
Malaysia has become the second-highest country to have the highest number of Islamic banks
around the world with 38 Islamic banks, including Islamic banking windows. Iran has the
highest number of Islamic banks with 42 Islamic banks, together with Islamic banking windows.
Other than that, Saudi Arabia, UAE, and Qatar also contribute to global markets with 16, 26, and
6 Islamic banks, respectively. The substantial growth was due to increasing demand from those
who are religious and more prone to engage with IFIs. Thomson Reuters (2018) projected the
Islamic finance industry to grow more than US$ 3.8 trillion in assets by 2023 considering the
performance of each market of the Islamic finance industry and the development of its
surrounding ecosystem.
Insurance coverage through the Shari'ah -based model – Takaful – has been one of such
innovative products in modern times (Alhabshi & Razak, 2011). Nevertheless, despite the
importance of insurance coverage in every aspect of life, the Takaful sector is deemed to be
lagging when compared to the banking and capital market sectors in the Islamic financial
services industry (Mcewan & Connell, 2013). Undoubtedly, the Takaful market has gained a high
momentum, although Takaful contribution is small compared to other markets in the Islamic
finance industry. The total Takaful assets grew up to US$ 46 billion in 2017 with 324 Takaful
companies operating around the world in 2017 (se .