| DUBAI, Sept 2
DUBAI, Sept 2 The growth of Bahrain's takaful
(Islamic insurance) sector dipped to single digits in 2011 for
the first time in a decade, while still outpacing growth in
conventional insurance, according to data released on Sunday by
the country's central bank.
Takaful gross contributions grew by 4.25 percent to 40.2
million dinars ($107 million) in 2011, the central bank said in
a statement. This compares to 18 percent growth in 2010, with
double-digit growth registered in all of the previous 10 years,
central bank data shows.
Growth still outpaced that observed in the overall insurance
market, with gross premiums for both Islamic and conventional
insurance combined increasing by 2.12 percent to 214.9 million
dinars in 2011, down from 4.95 percent a year earlier.
Combined assets for the insurance sector grew by 7.65
percent to 1.46 billion dinars during 2011. No breakdown was
available for the growth of takaful assets alone.
The takaful sector, which has its core markets in the Gulf
and southeast Asia, is a bellwether of consumer appetite for
Islamic finance products. But slower growth in core takaful
markets is raising pressure on the sector to boost efficiency,
roll out new products and explore new markets.
Bahrain has been a major hub for Islamic finance in the Gulf
region, but in recent years that role has been challenged by
other financial centres such as Dubai and Doha.
The country's takaful sector was hit hard by the 2008 global
financial crisis, with assets decreasing 35 percent that year,
prompting the reorganisation of one of its flagship operators,
An alternative to conventional insurance, takaful is based
on the concept of mutuality; the takaful company oversees a pool
of funds contributed by all policy holders, but does not
necessarily bear risk itself.
In their investments, takaful firms must follow religious
guidelines, including bans on interest and pure monetary
speculation, and a prohibition on investing in industries such
as alcohol and gambling.
(Editing by Andrew Torchia)