AM Best, the credit rating agency, predicted that car insurance prices will continue to decline this year, noting that most companies in the region's markets are competing in this sector because it generates direct liquidity for companies.

On the sidelines of a Takaful insurance conference in Dubai, the company stressed the importance of companies taking profits from insurance business and sectors instead of investment profits.

Moody's reported that takaful insurance companies in the Gulf markets recorded a 7% growth in premiums last year.

Problem

"The premium collection continues to be a problem for insurance companies in the GCC markets, including the local market, especially in the insurance sectors," said Vasilis Katsibis, general manager for market development at AM Best, a MENA credit rating agency. "He pointed out that this is a problem for the market and affects the capital, and these premiums are included in the financial statements as installments written, but not yet collected.

"Most Takaful insurance companies in the region face a problem when it comes to competition with commercial insurance companies," said Katsibis, on the sidelines of the World Insurance and Takaful Insurance Conference in Dubai. "Takaful has the advantage of being Sharia compliant, but 90 % Of companies do not work in their field and within their unique competence, but focus on other business sectors common with commercial companies.

Price competition

"When a unique and innovative product is not marketed, it will be sold according to market indices and competition factors, especially in the automotive field, for example," he said.

He pointed out that most companies focus on car insurance and compete in that it generates direct liquidity used in the management of operating expenses of companies, and expected that car insurance prices will continue to decline during the current year.

"It is difficult to predict the investment performance of insurance companies, but it is likely that the performance will be stable this year and close to the levels recorded during the last year, stressing the importance of companies to profit from the business and insurance sectors rather than investment profits.

Islamic Finance

"The Takaful sector has the potential to expand its role in the Islamic finance industry," said Abdullah Al Awar, Executive Director of Dubai Islamic Economic Development Center.

Al-Awar said that the global Takaful industry reached $ 46 billion in 2017, but is still the smallest shareholder in the Islamic finance industry by assets of only 2%.

Takaful insurance

Moody's said that global Takaful premiums will grow at moderate rates over the next three years. In the Gulf region, the largest Islamic insurance market, the spread of compulsory insurance in the auto and health sectors will cover this demand. As well as the economic activity associated with planned events in the region, such as Expo 2020 Dubai.

The report also predicted that the profitability of the Takaful sector in the Gulf and South Asian markets will remain stable. Takaful companies in the GCC markets with strong capitalization rates recorded premium growth of 7% last year.

Family Takaful Products

AM Best stressed the importance of takaful insurance companies focusing on Sharia-compliant family and life products, as products that businesses can not enter. Takaful companies feel that they do not have the expertise to market and focus more on these products. .

7%

Growth in

Company premiums

Takaful insurance

In the Gulf markets

During 2018.