Takaful, the Shariah-compliant form of insurance, holds tremendous potential but continues to be challenged by multiple factors such as a limited product range and non-competitive pricing, a report said.

The report, Opportunities and Challenges in the Middle East Takaful Industry, is released by Zawya and it summarizes and examines panelist commentaries made during the 2012 Takaful Roundtable discussion.

Organized by Zawya in partnership with Emirates NBD and FWU Group, the roundtable provided an opportunity for industry leaders and decision makers to convene and participate in an open dialogue on the Takaful industry.

"The Takaful industry has come a long way, paving the way for a distinctive bancassurance offering within the GCC,” said Shekhar Krishnamurthy, head of retail assets and liabilities, consumer banking and wealth management at Emirates NBD.

“Having said that, the success of the Takaful industry is dependent on the active participation of the providers in creating general awareness of the product value. It also requires engagement with distributors to deliver on innovative products matching client demand and market requirements,” he said.

In spite of a high growth rate in demand for such products in the UAE, for instance, takaful remains a small segment of the insurance pie. In 2011, the overall UAE insurance market grew by 10 per cent, whereas the takaful segment is expected to have grown by 30 per cent. Takaful remains a very small segment of the market, at about 7.5 per cent, the report said.

Sohail Jaffer, deputy CEO, FWU Global Takaful Solutions, said: "Key drivers for takaful include full transparency of product terms and conditions, surplus sharing and a sustainable customer value proposition. Increasingly major banks in the region have widened individual customer choice by offering suitable long term takaful savings plans and financial protection." – TradeArabia News Service