Arab Monetary Fund: $30 billion global Takaful insurance market size in 2023
Abu Dhabi, April 22 / WAM / The Arab Monetary Fund revealed that the Takaful sector still represents the smallest percentage among all sectors of the Islamic financial industry, at a rate not exceeding 2%, but the size of the global Takaful market exceeded $30 billion in 2023.
In a report on the occasion of the opening of His Excellency Dr. Fahd bin Mohammed Al Turki, Director General and Chairman of the Board of Directors of the Arab Monetary Fund, the Fund expected a training course on “Takaful Insurance” organized by the Institute for Training and Capacity Building at the Arab Monetary Fund remotely, during the period from April 22 to 25, 2024, to continue. In achieving growth rates ranging between 5 and 8% annually during the coming years, a growth rate that is considered strong given the nature of insurance markets in general.
The Fund attributed its growth expectations to increased awareness of Islamic finance among consumers, the adoption of supportive government policies by many countries, and continued technological progress.
He pointed out that the Takaful industry faces many challenges, some of which are internal challenges such as the difficulty of pricing risks, the risks of adverse selection as a result of information asymmetry, and the need for a general framework for governance and risk management, and some of which are external challenges such as conditions of declining economic growth as a result of monetary tightening policies, and the resulting consequences. Pressure on the insurance sector in general, and Takaful insurance in particular, in light of the increasing claims resulting from the large losses suffered by the business sector, the low return on investment, and the limited investment tools available that must be compatible with Sharia.
He stated that these challenges require that the regulatory and supervisory authorities in the Arab countries work to support the Takaful insurance sector at all levels and work to provide the appropriate environment for it through effective oversight, and identifying the most important legal and technical challenges facing the sector to provide a suitable work environment.
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