The growing influence of Takaful

Question: With the World Takaful Conference having taken place in Dubai, I have been considering looking at Sharia-compliant insurance for my business. I currently have very little cover for the company and my 18 staff. What options are available in the UAE market?

Answer: The rapid growth of Islamic finance is one of the most important trends reshaping the financial world. Most people will be drawn to Takaful products due to its ethical dimension. However, there are also many financial reasons why people consider Islamic policies, particularly if they see a better opportunity of a return on their investment.

Last week's World Takaful Conference in Dubai was a great success, and highlighted the many hundreds of Takaful insurance products that are now available in the UAE and the rest of the GCC. The global Takaful market is expected to be worth in the region of $11 billion by 2015 and despite current economic concerns, is growing at a faster rate than conventional insurance.

Takaful is an insurance product, which observes the rules of Islamic law and allows Muslims a full spectrum of options. Takaful is available throughout the UAE in many different forms. It is now possible to get this Sharia-compliant insurance cover for just about every area of risk within your business.

Despite this, the Middle East remains a relatively underdeveloped market - especially in the life insurance sector. This is due in part to the confusion between Takaful and conventional insurance.

A great deal of time at the World Takaful Conference was spent discussing the different ways in which insurance companies can develop Takaful products that are easy to understand, and clearly explain the methods by which the product is provided.

There is a new product launched on the market which offers a total cover package for small and medium-sized businesses. The concept is designed to simplify the application process, and provide a one-stop-shop for the insurance needs of SMBs to allow peace of mind cover for the risks of the business and throughout all of its employees.

The economic growth of the Middle East in recent years has provided a strong driver in the demand for insurance products from businesses and individuals. With many companies throughout the region now experiencing a realigning of assets which have reduced in value during the past six months or so, it is proving an opportune time to review the current products on the market.

Takaful insurance in the Middle East is currently dominated by the general insurance market, which covers the areas you will be looking for within your business. This includes products to protect against theft and damage to your offices as well as guarantees against certain lending agreements and payments to creditors. As the market matures, there is likely to be more interest in the personal insurance sector within the Takaful product portfolio.

As you are new to insurance, and the Takaful market in particular, it is advisable to sit down with an independent financial adviser. They will be able to help guide you through which the areas of your business which are most at risk, and which products best suit your needs.

The insurance market in the UAE is fully-equipped to provide advice on the Takaful products.

- The author is Deputy CEO at Nexus, one of the region's leading financial advisor. The views expressed here are the author's own and do not necessarily reflect the views of Gulf News.