Ernst & Young Says Global Islamic Insurance to Grow 31% in 2011

Islamic insurance contributions worldwide will rise 31 percent to $12 billion in 2011 from $9.15 billion last year, according to a report by Ernst & Young MENA published today.

“Key takaful markets are characterized by low insurance penetration rates and comparatively high rates of economic growth, leading to a positive outlook for the sector as a whole,” Ashar Nazim, executive director and Islamic Financial Services Leader at Ernst & Young, wrote in an e-mailed statement. Saudi Arabia is the biggest market for Shariah- compliant insurance, followed by Malaysia and the United Arab Emirates, according to the report.

Takaful is based on the Islamic principle of mutual assistance and is similar to mutual insurance in that members are the insurers as well as the insured. Conventional insurance is prohibited under Shariah law because Muslim scholars judge it to involve speculation and interest payments, both of which are forbidden.

The industry grew 33 percent globally in 2010 from $6.9 billion the previous year, the report said. Ernst & Young MENA is part of Ernst & Young LLP, a New York-based consultancy company.

To contact the reporter responsible for this story: Dana El Baltaji in Dubai delbaltaji@bloomberg.net.

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net.