Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Kuwait's takaful firms struggle in crowded market  Join our daily free Newsletter

MENAFN - The Peninsula - 12/02/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - The Peninsula) Kuwait's first Islamic insurer was born 14 years ago, but its takaful firms are still struggling in a crowded market that faces cut-throat competition. This has led to stagnant growth and persistent losses for takaful firms operating in Kuwait, one of the world's richest countries on a per capita basis, raising doubts about the sector's long-term viability



In a market with 32 insurers, takaful firms say they are at a disadvantage to their conventional peers which have operated for decades, allowing them to build solid customer bases and amass large financial surpluses



While Islamic finance widens its global footprint, Kuwait's takaful sector could shrink in the next five to seven years, said Abdulrazaq M Al Wohaib, Managing Director and Chief Executive of T'azur Takaful Insurance Co. "We are moving opposite to the rest of the world - this has reduced the profit margins of these companies.



Gross takaful contributions in Kuwait grew an estimated 4.3 percent in 2012 after 4.5 percent in 2011, among the lowest growth rates for takaful anywhere in the world, a report by consultancy Ernst & Young estimated



Kuwaiti takaful firms posted a combined KD47.4m (167.7m) in premiums in 2012, an 18.7 percent share of the total, Commerce Department data showed. This was spread across 11 locally incorporated takaful firms; many companies in the sector have failed to post consistent profits



Unlike conventional insurance, takaful is based on the concept of mutuality, where a takaful operator sets up a fund to oversee and manage pools of money contributed by policy holders. Takaful firms are obliged to distribute excess profits to policy holders, unlike conventional firms which account for such surpluses as profits



But when deficits occur, these must be funded with interest-free loans extended by the firm, which can lead to losses for shareholders, said Hussain Ali Al Attal, Chairman and Managing Director of First Takaful Insurance Co



Takaful companies argue this puts them at a disadvantage amid intense competition from conventional firms; the country's six largest insurers command close to two-thirds of the market



Furthermore, the takaful sector lacks a dedicated supervisory body, leaving an opening for negative competitive practices, Al Attal added. Price under-cutting by conventional firms aims to drive takaful firms from the market, said Saad Ebrahim Makki, Vice-Chairman and chief executive of Takaful International Co


 


The Peninsula




  MENA News Headlines
 Nov 28 2014 - India says still searching for 39 workers seized in IraqArab News
(MENAFN - Arab News) NEW DELHI: India said Friday it was still searching for 39 construction workers abducted in Iraq in June denying a report claiming they had been executed by the Islamic State ...

 Nov 28 2014 - Gulf Asia approve steps to protect foreign workersArab News
(MENAFN - Arab News) KUWAIT CITY: Gulf and Asian labor ministers agreed Thursday on a series of initiatives aimed at boosting protection and improving conditions of employment for millions of foreign ...

 Nov 28 2014 - UAE hints at body to monitor forex pegThe Peninsula
(MENAFN - The Peninsula)   An advisory body to the UAE government has suggested that the central bank review the country's currency peg to the US dollar, but local bankers said any change to the peg ...

 Nov 28 2014 - Qatar bourse index down by 3.72pc last weekThe Peninsula
(MENAFN - The Peninsula)  Qatari bourse fell on heavy selloff on latest Opec pessimism on output cut. The benchmark index plunged by 1.39 percent to finish at 13,330 yesterday.The entire sector ...

 Nov 28 2014 - Qatar calls for creating Common Islamic MarketThe Peninsula
(MENAFN - The Peninsula)  Speaking on behalf of all Arab countries, Qatar's Minister of Economy and Commerce, H E Sheikh Ahmed bin Jassim bin Mohamed Al Thani, yesterday at the Ministerial Session of ...

 Nov 28 2014 - Saudis block Opec output cutThe Peninsula
(MENAFN - The Peninsula)  Saudi Arabia blocked calls yesterday from poorer members of the Opec oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude ...

 Nov 28 2014 - Don't bypass oil firm, Libya rival govt warnsThe Peninsula
(MENAFN - The Peninsula)  Libya's parallel government controlling the capital will take legal action against buyers of oil bypassing the Tripoli-based state oil firm National Oil Corporation (NOC), ...

 Nov 28 2014 - Qatar Airways partners with Coca Cola IPTLThe Peninsula
(MENAFN - The Peninsula)  Qatar Airways (QA) has teamed up with Coca-Cola International Premier Tennis League (IPTL) as the presenting sponsor for the inaugural edition of the event.The IPTL is the ...

 Nov 28 2014 - Aljazeera to hold global hackathonThe Peninsula
(MENAFN - The Peninsula)   Aljazeera is organising its first hackathon where some of the most innovative minds in media and technology from around the globe will work together and collaborate on the ...

 Nov 28 2014 - GCC 'Summit key to boosting unity'The Peninsula
(MENAFN - The Peninsula)  H M King Hamad bin Isa Al Khalifa of Bahrain yesterday met GCC Secretary-General Dr Abdullatif bin Rashid Al Zayani, who is on a GCC tour.King Hamad stressed the importance ...

more...


 






Google

Click to Apply

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help