Islamic insurance grows by 20 per cent in GCC

Muscat: Islamic insurers in the Gulf Corporate Council (GCC) region saw gross contributions (gross premiums) increase by an impressive 20 per cent or so year-on-year in 2014 and 2015.
In a report published on Monday, S&P Global Ratings said that it considers that earnings in the GCC Islamic insurance industry (takaful and Islamic cooperative tawuni) remain relatively weak and are unevenly distributed.
For a number of companies operating in these overcrowded markets, S&P finds that precipitous growth, combined with net losses, is eroding their capital strength and damaging their credit profiles. Most takaful players are still relatively small compared with their conventional peers. Their shorter track records and less-diverse books of business put them at a disadvantage now that the falling oil price and stricter regulation are hitting GCC insurance markets.
In 2015, the combined gross premium income of Islamic insurers in the region exceeded $10 billion (based on available data from listed companies), which compares to roughly $9 billion of premium income generated by conventional insurers for the year in the GCC.
More than 85 per cent of the region's Islamic insurance premiums were written in Saudi Arabia, which has the largest Sharia-compliant market in the region. There are half a dozen explicitly takaful insurers and 28 Islamic cooperative companies operating in Saudi Arabia.