Less industry risk in Malaysia’s takaful market
Aug 3rd, 2007 by Takaful
Source: Bernama, 3rd August 2007
Industry risk in the more established Malaysian takaful market is comparatively lower than in the Gulf Cooperation Council (GCC), according to a Standard & Poor’s Ratings Services report.
This is due to Malaysia’s more developed regulatory and legal environment, it said in the report titled ‘Established Regulatory & Legal Environment Gives Malaysian Takaful Market The Edge Over Gulf Cooperation Council, But Competition Will Hit Earlier.’
The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
The report also said that growth potential for Islamic finance in Malaysia overall is still strong, particularly if it is to reach the level outlined in the Financial Sector Masterplan by Bank Negara Malaysia.
“The historical stability and profitability of the takaful market is attracting more and more takaful operators to Malaysia, and the market expectations of growth in gross contributions of about 15 percent – 20 percent per year are broadly in line with our expectations,” English daily Khaleej Times quoted Standard & Poor’s credit analyst Jelena Bjelanovic as saying.
At the same time, however, competitive pressures will likely affect the Malaysian market earlier than the GCC takaful market, particularly in the general takaful segment.
This may place pressure on pricing as companies begin to more aggressively compete for policy holders through a broader range of distribution channels, Standard & Poor’s said.