Focus on customer service will enable further growth of Takaful Market, say Experts

Figures revealed at the Forum show that Shariah-compliant insurance is growing at a far faster rate than conventional insurance in the Middle East region, with the Takaful sector expanding by more than 20% year-on-year, compared to standard annual premium growth of around 2.5% a year.

Globally, Takaful - insurance that is based on the concept of collective insurance - is currently estimated to be a $2.3bn market, with the Middle East region accounting for 46% of total sales, according to the Bahrain Insurance Association. International growth of the Takaful market currently stands at between15- 20% per annum.

However, increasing levels of consumer demand will need to be supported by higher levels of consumer support and more tailored products, if the market is to achieve its full potential, according to experts from the region's largest financial advisor.

"What we're seeing in the market is that more consumers are being drawn to Islamic financial products because of ethical reasons, and also because they sometimes offer better protection than standard policies," said Bashar Khatib, sales director at Nexus.

"For the consumer to benefit fully from the increase in the market size, such growth will need to be accompanied by an increasingly sophisticated product range, as well as the provision of the level of customer support that is provided with conventional insurance packages," he added.

Nexus is increasingly engaged in helping to introduce more sophisticated Shariah-compliant products onto the market. At the end of 2007, the financial advisor signed a key agreement with the Munich-based FWU Group and the Dubai Islamic Insurance and Reinsurance Company (AMAN).

Based on the agreement, Nexus is a distributor of AMAN's Unit Linked Takaful and saving plans, both for regular and lump sum contributions.

It is the first time that FWU Group has elected to work with a financial adviser rather than a bank, reflecting the depth of Nexus' understanding of the market.

Mahmoud Nodjoumi, owner and CEO of Nexus said: "A major part of Nexus' approach is to combine our strong understanding of the needs of the local market with international standards of service and support. Takaful insurance is an area where this approach is particularly important".