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Abdul Rahman Al Baker

Executive Director - Financial Institutions Supervision

5th May, 2009

Takaful Industry –

Challenges & the Way Forward

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OverviewOverview

Takaful Industry Globally & in Bahrain

The Main Factors for Growth of Takaful

The Current & Future Challenges

The Way Forward

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Year

Source: Ernst & Young

0

500

1000

1500

2000

2500

3000

3500

2004 2005 2006 2007

US$ millions

The Global Takaful ContributionsThe Global Takaful Contributions

Average Annual

Growth of 35%

per annum

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North Africa

Egypt 3

Algeria 1

Libya 1

Sudan 15

GCC countries

Bahrain 7UAE 6Kuwait 12KSA 37

Asian Countries

Malaysia 12

Indonesia 3

Pakistan 4

The Takaful Industry GloballyThe Takaful Industry Globally

124 Takaful Companies

Globally

Source:Ernst & Young

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Year

Source: Ernst & Young

0

500

1000

1500

2000

2500

2004 2005 2006 2007

US$ millions

The Gross Takaful Contributions in the GCCThe Gross Takaful Contributions in the GCC

Average Annual

Growth of 30%

per annum

GCC (CAGR)

Bahrain 98%Qatar 50%Kuwait 22%UAE 62%KSA 26%

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The Takaful Industry in BahrainThe Takaful Industry in Bahrain

CBBCBB

Solidarity General Takaful

Allianz Takaful

Legal & General Gulf Takaful

T’azur Company

AIG Takaful Enaya

Takaful International

Solidarity Family Takaful

Hannover Retakaful

ACR Retakaful

7 Takaful companies

& 2 Retakaful Co.

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0

5000

10000

15000

20000

25000

30000

BD

000'

s

2003 2004 2005 2006 2007 2008

Gross Contributions of Takaful Firms - Bahrain Business

Family

General

Total

The Takaful Industry in BahrainThe Takaful Industry in Bahrain

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The Takaful Industry in BahrainChange in Mix of Takaful Contributions

2007

12%

88%

2008

78%

22%

Family General

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The Main Factors Contribute to the Growth of Takaful Industry

The Significant Growth of the Islamic BankingThe Significant Growth of the Islamic Banking

The Major Infrastructure & Construction Projects in the regionThe Major Infrastructure & Construction Projects in the region

Low Insurance Penetration in the Mena regionLow Insurance Penetration in the Mena region

Muslim Population & Demography Muslim Population & Demography

Significant Economic Growth in the regionSignificant Economic Growth in the region

Regulatory Initiatives Regulatory Initiatives

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Challenges facing Takaful IndustryChallenges facing Takaful Industry

Corporate Governance issue regarding Corporate Governance issue regarding

PolicyholdersPolicyholders

Standardization of Takaful Accounting Standardization of Takaful Accounting

Standards & Disclosure.Standards & Disclosure.

Lack of Human ResourcesLack of Human Resources

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Challenges facing Takaful IndustryChallenges facing Takaful Industry

Development of Islamic Instruments MarketDevelopment of Islamic Instruments Market

Limited Retakaful CapacityLimited Retakaful Capacity

Banc-takafulassurance & Micro-takafulBanc-takafulassurance & Micro-takaful

MisconceptionMisconception

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The Way Forward…….The Way Forward…….

To Establish appropriate Corporate Governance for To Establish appropriate Corporate Governance for

Takaful CompaniesTakaful Companies

Enhance the Business Conduct of Takaful CompaniesEnhance the Business Conduct of Takaful Companies

Appropriate Distribution Channels Appropriate Distribution Channels

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The Way Forward…….The Way Forward…….

AAOIFI & IFSB need to update Takaful Standards and to AAOIFI & IFSB need to update Takaful Standards and to

Contribute to Development of Consistent StandardsContribute to Development of Consistent Standards

Proper Risk Management & Investment FrameworkProper Risk Management & Investment Framework

Enhance the Public awareness of TakafulEnhance the Public awareness of Takaful

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Thank You