Mubasher: The earnings of the Islamic insurance industry in the Gulf Corporate Council (GCC) region remain relatively weak and unevenly distributed, according to a recent report by S&P Ratings.
The Islamic insurance sector (takaful and Islamic cooperative tawuni) in the GCC region saw gross premiums increase by around 20% year-on-year in 2014 and 2015, the report showed.
But for a number of companies operating in these overcrowded markets, precipitous growth, combined with net losses, is eroding their capital strength and damaging their credit profiles, according to S&P Global Ratings.
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, the report added.
More than 85% 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.
In 2015, the combined gross premium income of Islamic insurers in the region exceeded $10 billion, which compares to roughly $9 billion of premium income generated by conventional insurers for the year in the GCC.
