MANAMA: The insurance industry across the region is continuing to grow at pace, with the Sharia-compliant takaful leading the expansion.
The GCC takaful market is expected to grow by about 10 per cent a year after very strong growth over the past four to five years, according to Solidarity's new chief executive officer Ashraf Bseisu.
In Bahrain and across the region, takaful is outstripping growth in conventional insurance which in itself, as a fairly nascent industry, is showing strong expansion.
"There is tremendous scope for growth both for takaful and traditional insurance because historically Muslims have been wary of insurance and the industry remains fairly small compared to elsewhere in the world," he said.
"Regionally insurance is still very much a developing industry and accounts for only about 1pc of gross domestic products. Elswhere in the world, insurance accounts for about 5pc to 7.5pc of people's spending.
"At present, in the region, insurance accounts for about $100 per capita, which is a very small figure compared with $3,000 to $5,000 spent elsewhere in the world.
"So there is tremendous scope for growth in both conventional insurance and takaful," he said.
"Takaful is still well behind conventional contract and in Bahrain it accounts for around 10pc of the market, but as takaful is growing faster that will change over time," Mr Bseisu added.
"Saudi Arabia remains very much a virgin market but it is a market that is set for major expansion, partly because the country is now making medical insurance compulsory," Mr Bseisu said.
"There has been a big change in attitude to insurance in recent years since the introduction of takaful.
"People have come to terms with the idea that takaful is Sharia-compliant because the companies have Sharia boards to vet their products," he said.
The industry is now growing just as Sharia-compliant banking and finance did over the past 10 to 15 years, ahead of the development in the insurance sector.
"I see particular growth in savings and life assurance products where people are more confident about this because as contracts have all been approved by Sharia boards," Mr Bseisu said.
"What the industry needs is to continue developing new Sharia-compliant products.
"There has been rapid expansion that has seen a lot of relatively small players in the market, so I would expect a period of consolidation and merger activity across the region."
Solidarity is one of the largest takaful companies in the world, with a presence in 70pc of the global takaful markets, and it is positioning itself to winning a larger share in what is already a growth market.
"We are likely to see a period of consolidation and product development and I am cautiously optimistic for the industry," he said.
"We are certainly looking at growth potential both through developing business and selective mergers and acquisition.
"Consolidation is necessary because there are too many small players who perhaps lack the sophistication to develop on their own," he added.