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6.2. Case Study: Saudi Arabia
6.2.1. Background
The Islamic financial services industry in Saudi Arabia has rapidly grown over the years to the
extent that the Kingdom is now considered among the front-runners of Islamic finance. Saudi
Arabia is one of the leading countries in the Islamic finance industry globally and has a deep-
rooted history in the industry compared to other Muslim countries. Currently, the position of
the country is stable in all the three segments of Islamic finance, namely Islamic banking, capital
market and Takaful. Saudi Arabia is the largest Takaful market (with 38% of global Takaful
contributions), followed by Iran (34%), Malaysia (7%) and the UAE (6%). However, as a result
of the economic slowdown due to low oil prices in 2018, the growth in Saudi Arabia dropped to
2.1% (IFSB, 2018).
In Saudi Arabia, the Takaful industry, which is called cooperative insurance, is based on a
cooperative model enforced by the Cooperative Insurance Companies law issued in 2005. The
cooperative insurance industry consists of 33 cooperative insurance and reinsurance, 38
Brokers, 68 Agents, 3 Consulting firms, 13 Loss Assessors and Loss Adjusters, 10 Third Party
Administrators, and 3 Actuarial Services (SAMA, 2019a).
The cooperative insurance in Saudi Arabia consists of General cooperative insurance, health
cooperative insurance and life cooperative insurance. General cooperative insurance consists of
Motor 67%, followed by Property/ Fire 12%, Accidents, Liability and Others 5%, Engineering
5%, Energy 4%, Marine 4%, and lastly Aviation 1% as of 2018 as presented i elow:
FIGURE 14: G ENERAL TAKAFUL COMPONENTS IN SAUDI ARABIA (2018)
Source: SAMA Yearly Statistics 201812
12
7%
67%
12%
4%
1%
4%
5%
Accidents, Liability and Others
Motor
Property / Fire
Marine
Aviation
Energy
Engineering