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that financial inclusion is on the top agenda of all policies. The Chief Executive Officer of Lloyd’s,
Dame Inga Beale once emphasised: “ It is incredibly important that we in the London Market
continually review the products and services we offer our customers around the world and the way
we offer them. Having the appetite and capability to provide Shari'ah-compliant risk products will
ensure London remains relevant to all communities and will reinforce our position as a centre of
innovation. ” (Matcham, 2018). One other key aspect that is trending is the InsurTech sector,
where financial technology (FinTech) is applied to scale up insurance offerings. There has not
been much development in the application of FinTech to the Takaful sector. FinTech provides a
great opportunity for micro-Takaful penetration in underserved financial communities and new
frontiers beyond the Muslim world (Oseni & Ali, 2019).
The penetration of conventional insurance is quite low in rich Muslim regions like the GCC,
whereas Takaful is rapidly gaining momentum, particularly in the Asia Pacific and the GCC
region, owing to a sizeable Muslim population (Alhumoudi, 2013). The OIC Member countries
account for about a quarter of the world population. The majority of the world's Muslim
population is young, with 60%of this entire population being less than 25 years of age. Catalysed
by rising levels of affluence, this large young Muslim population has the potential to represent a
customer base for a reasonably long duration if it is captured early.
The Takaful industry has gone through three strategic phases of development, as shown i
elow:
TABLE 6: S TRATEGIC PHASES OF T AKAFUL DEVELOPMENT
Phase Development
Phase 1
Slow, then a stormy wave of new companies in Takaful, followed by Re-Takaful but
already retreating (Malaysian Re-Takaful, partly Munich Re, General Re-Takaful
business).
Phase 2
Development of Regulations and fatawa for Takaful and Re-Takaful. Introduction of
Risk-Based Capital (RBC) framework for Takaful and Re-Takaful in Malaysia and RBC
in the United Arab Emirates. Further development on the 1985 fatwa for Takaful by
The Council of the IIFA in 2013.
Phase 3
The slowdown in the establishment of new TOs while existing operators and investors
adjust their market strategies towards individual lines in a reaction to excessive
volatility in financial results.
Source: Adopted from IFSB-WBG-2017 report
While Takaful has continued its steady growth in OIC countries, a focus on the four jurisdictions
identified in this study reveals the latest position of things with reference to regulatory and
supervisory authorities and market players
elow presents the current statistics of the Takaful industry in the four countries:
Malaysia, Saudi Arabia, Turkey and the UK.