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Tuesday April 12, 2011
PETALING JAYA: Malaysia has successfully propelled the takaful industry to the next level, says RAM Rating Services Bhd.
Driven by increasing demand, the takaful industry has evolved from one that only contained a single player with limited basic products to a viable sector that has been integrated into the mainstream financial system, the rating agency said in a statement yesterday.
“While not as prominent as the overall Islamic banking industry, takaful is marching ahead at its own pace with a 20% to 26% year-on-year growth in terms of total assets and contributions between 2004 and 2009,” it said.
According to the agency’s head of Islamic ratings Zakariya Othman, the Government has been the major force behind the domestic growth of takaful and its success.
He said Malaysia’s established regulatory and legal frameworks have given the country an edge over other jurisdictions.
“The industry’s strong syariah framework helps nurture consumer confidence and also provides greater flexibility to takaful operators, encouraging them to be innovative within the boundaries of syariah,” he explained.
Despite the clear domestic and global growth of the takaful industry, however, Zakariya noted that there were still concerns and challenges that could hinder industry operators’ efforts to become prominent players in the financial realm.
One of the lingering concerns, he pointed out, involved liquidity, and the other was the lack of long-term instruments.
“Takaful operators need to match their long-term liabilities with long-term assets, to be able to expand their array of products and business propositions,” he said.
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