Takaful segment records a 12.4% CAGR over past 5 years
03 Nov 2015, 05:23 pm
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KUALA LUMPUR (Nov 3): Malaysia's takaful segment has seen a 12.4% compounded annual growth rate (CAGR) over the last five years, compared with the conventional insurance CAGR of 7.8% over the same period.

Malaysian Takaful Association chairman Ahmad Rizlan Azman said last year, takaful insurance products saw a net contribution of RM6.3 billion or 13% of market share, while the conventional insurance segment posted RM42.5 billion.

"With Malaysia's low insurance penetration rate of 5.2% of gross domestic product (GDP) in 2014 and its young demographics, significant market growth opportunities is yet to be tapped by its insurance and takaful sector," Ahmad Rizlan said at the launch of the Malaysian Takaful Dynamics on the sidelines of the 11th World Islamic Economic Forum (WIEF) today.

The jointly-developed report between Malaysian Takaful Association and Ernst & Young (EY) Malaysia is the country's first central compendium on Islamic insurance (takaful).

Ahmad Rizlan noted that the low penetration rate of takaful in the country is due to the lack of awareness about takaful-related products as well as the issue of affordability, especially among the lower segment of society.

"We will need to figure out innovative ways in penetrating the underserved market for takaful-related products.

"We believe that a growth rate of 12% to 13% for the takaful market this year is possible, despite a slowing economy," he added.

EY Malaysia partner Brandon Bruce Sta Maria said over the medium to long term, the growth potential for the takaful industry will be dependent on its ability to tap underserved market and enhance consumer awareness of takaful.

"The protection gap statistics provide a sobering view of the state of individual coverage in Malaysia, but therein lies significant upside potential for takaful operators to explore," Bruce Sta Maria added.

 

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