Islamic insurance to grow 30% this year: Consultant

(Bloomberg)—Global contributions to the Islamic insurance industry, known as takaful, may rise 30% to $8.9 billion worldwide this year, Ernst & Young L.L.P. said in a report published Monday.

Gulf States will account for $6.47 billion, or 73%, of the world’s contributions this year, the report said. Assets held by Islamic financial institutions may rise five-fold to more than $5 trillion as demand increases for products that comply with Muslim principles, according to Moody’s Investors Service.

Takaful is a Sharia-compliant alternative to conventional insurance, where uncertainty and interest aren’t allowed.

Islamic insurance firms need to consolidate to boost capital and the quality of services offered by takaful companies needs to improve in order for the industry to reach the next level, Justin Balcombe, director of Middle East Insurance at Ernst & Young said at a conference in Dubai Monday.

&Copy;2010 Bloomberg News