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Jonathan Rawling

Uptick seen in takaful-based vehicle insurance

DUBAI, February 2, 2021

Sixty-five per cent of vehicle insurance sales in 2020 were based on takaful products, while takaful sales made up just 25% of overall transactions during 2018, said Yallacompare, a leading finance site in the Middle East.

Takaful is derived from the Arabic word ‘kafalah,’ meaning guaranteeing other, or joint guarantee. Members of a takaful scheme all pay into a pool, jointly insuring each other against loss or damage. Takaful insurance encompasses shared responsibility, joint indemnity, common interest and solidarity, and Arabic tribal culture.

The data pool garnered across the site’s customer sales activity helps unveil the patterns revealed by over 200,000 car insurance sales transactions and shows a clear shift towards takaful-based vehicle insurance.

Jonathan Rawling, CFO, Yallacompare, said: “Our data dig into trends since 2017, allowing us a deep dive into consumer behaviour, and enough data to be able to model potential future consumer behaviour with a greater degree of confidence. One aspect of the data we didn’t necessarily predict is the large uptake in takaful-based vehicle insurance, compared to conventional insurance.”

The meteoric rise in takaful sales does not seem to be driven by changes in customer demographics, he noted.

“While we might expect customers from Muslim nations to favour takaful and customers from Europe and the subcontinent to favour conventional insurance, this is not what the underlying data shows us: 70% of Indians favoured takaful over conventional products, compared to 56% of Emiratis and 57% of Saudi nationals,” he added.

“We believe the large uptick in takaful sales in the last two years is down to several factors. Firstly, there has been a ‘standardization’ in the rules regarding cover and benefits under the Insurance Authority’s unified motor policy. This means that all car insurance policies, be they takaful or conventional, offer the same levels of mandatory cover,” Rawling explained.

“Secondly, and much more significantly, takaful providers are increasingly looking to acquire customers from outside their traditional base. Takaful providers are more interested in customer acquisition and now target customers from right across the spectrum of nationality and religion. This represents a win for consumers - more firms bidding for their business means more choice and better products and prices.” – TradeArabia News Service




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