Allianz Takaful to grow 15%

Abdul Rahman Tolefat, chief executive of Allianz Takaful, expects general insurance to grow by 15% a year, he told the Reuters Islamic Banking and Finance Summit Summit.

Global takaful premiums are estimated to have reached $2-3bn, Tolefat said.

"Growth will be driven by international players coming to the market," he said.

Insurers are increasingly turning to banks to distribute their products.

"For us that's a big priority, people here trust banks more than insurance companies; insurance is very new in this market, because only car insurance has been mandatory," he said.

But Tolefat said takaful companies lack both short-term and long-term assets to invest the funds in. The market for Islamic bonds, or sukuk, has not yet developed a strong secondary market as investors hold most sukuk until maturity.

Tolefat said that while medium-term investments such as sukuk with 5-year maturity are available, takaful companies also struggle to manage their short-term liquidity, as they typically have to rely on ordinary three- to six-month deposits with banks with no exit option.

The credit crunch and global economic slowdown have virtually frozen sukuk markets worldwide, adding to pressure on the $1 trillion Islamic finance industry as a whole.

But Tolefat said there were still plenty more products that can be developed by asset managers of Islamic banks, he said.

"You take a sukuk, put it into a fund, get a rating, give it a liquidity option and a lot of takaful companies will come and invest," he added.