Embracing a sustainable competitive strategy is the need of the hour for Takaful Operators
12th edition of conference to focus on the need for Takaful operators to revamp current strategies with the aim of increasing dwindling bottom line and underwriting profit margins
The 12th annual World Takaful Conference (WTC), convened by leading financial intelligence platform, Middle East Global Advisors, and held in strategic partnership with the Dubai International Financial Centre (DIFC) will gravitate around the theme of “Stability, Authenticity & Technological Transformation”.
In the quest to maximize gross sales, the top line growth rate of the Takaful industry has found itself in double digits. However, this has come at a heavy expense with the bottom line margins dwindling considerably. Echoing the universal dilemma of increased gross sales vs increased net profit, the Takaful industry has found itself battling with decreased net profits due to implementing aggressive growth strategies with a single-handed focus of acquiring increased market share. With such growth being perceived unstable and short-term, devising new strategies to increase the bottom line and underwriting profit margins has emerged as the need of the hour.
The root cause of dwindling net revenues lies in analysing the current competitive strategies in place for Takaful operators. With intense competition, a lack of uniformity in following industry standards, severely fragmented markets and a market that recognises price as the primary factor in making purchase decisions, the current strategies are excessively undifferentiated and price-based, and likely to squeeze out underperformers.
Despite a year-on-year premium growth of over 10 per cent in most GCC markets, the Takaful market has long since been considered overpopulated with more than 70 Shari'ah-compliant insurers in the GCC region competing for premium income of nearly $10bn, about 80 per cent of which is based in Saudi Arabia. A major reason for this is targeting the same customer base as conventional insurance, and unsuccessful product differentiation. (S&P, 2015)
Due to this intense competition, Takaful operators in the GCC are now looking at alternative consumer segments and exploring merger options. The lack of uniform regulations to operate easily across different Takaful models has however, emerged as a major growth obstacle. (EY, 2014)
A shift to a wholesome strategy that leverages the unique features of Takaful, takes into account risk-based pricing and explores new consumer segments and rapid growth markets for achieving profitable and sustainable long-term growth is crucial. It is also important to encourage consolidation within the industry to form large-scale operators.
Focusing on the pressing issue at hand, WTC will witness an immersive panel discussion with a strong focus on the need to devise sustainable profitability and growth strategies for Takaful. Leading experts comprising Dr Hatim El-Tahir, Director, Islamic Finance Group Leader, Deloitte ME Islamic Finance Knowledge Centre (IFKC), Deloitte & Touche - Bahrain; Sager Nadersha, Managing Director & CEO, Al Jazira Takaful; Adeel Mushtaq, Director, Ernst & Young and Mohamed Seghir, Vice President, Middle East North Africa, Swiss Reinsurance Company Ltd. will delve deep into the issue at hand with the aim of generating breakthrough insights that will navigate the way ahead for the niche industry.
WTC 2017 will build on its decade-long reputation for nurturing the development of the Takaful industry by facilitating thought-provoking discussions, producing quality research and generating actionable insights.
In 2016, WTC convened high profile guests and dignitaries from Dubai Islamic Economy Development Centre, Dubai International Financial Centre, Islamic Insurance Association of London, Insurance Authority UAE, PwC, Moody’s, EY, Swiss Re, Munich Re, Noor Takaful, Emirates RE and many more organisations.
WTC will take place on the 11th and 12th of April at the Dusit Thani Hotel, Dubai. The second day of the conference will take shape in the form of a dedicated stream called InsurTech Integrated that will focus on the impact of disruptive technologies on the insurance industry. The stream aims to highlight the importance of developing digital proficiency amongst insurance operators in the light of stiff competition by spearheading a series of insight-generating discussions. To find out more about WTC, visit www.wtc17.com.