
There’s been no shortage of the printed word in insurance circles lately dedicated to effectively marketing to—and serving—their customer base during these tough economic times. Discussions on how to market to Gen Y, Boomers and the other generational groups are in vogue, but very little press is focused on insurers reaching out to new or different ethnic or racial groups.
But a new day has dawned, and a handful of insurers are rapidly reaching out to the Islamic market by launching Takaful products, as they can no longer ignore such a vast number of people with significant buying power.
The subject of a recent
Today, significant economic growth in developing Muslim countries (outpacing world growth as a whole by a factor of three), has spurred demand for such products. In fact, Takaful is currently growing at a rate between 15% and 25% each year.
The primary barriers for growth of Takaful are the shortage of employees and distributors with a combination of insurance expertise and knowledge of Shariah principles and a lack of regulatory guidance and standards. But some insurers have taken steps to rectify this problem.
This increased demand for primary Takaful products, Pauli writes, is also creating markets for Takaful reinsurance, bancassurance, and microinsurance, further expanding the opportunities available to carriers.
One insurer,
Malaysian authorities granted a license allowing the reinsurer to offer family and general retakaful coverage worldwide from its Kuala Lumpur operations. Swiss Re previously only offered family Retakaful to clients in the region.
But with of the scarcity of experienced insurance resources even in Muslim nations, Takaful still has a plenty of room for growth, especially in non-Muslim countries. Pauli notes that significant opportunities exist in the United States and Europe, in particular.
“Much opportunity remains for visionary insurance companies to enter the Takaful market and provide capacity and insurance experience to meet an increasing demand for products and services for Islamic consumers,” she says.
Additionally, Pauli believes that because this scarcity of insurance resources, insurers looking at becoming Takaful operators will need to partner with experienced technology organizations for automation initiatives, and should consider outsourcing and Software-as-a-Service. Takaful operators, she adds, will need to adopt infrastructure and back-office technology for processing efficiency, data collection for product innovation and models for catastrophe management.