By Mohammed Abbas
MANAMA (Reuters) - About a third of Islamic insurance premiums will come from the West by 2020, up from almost zero today, and premiums will grow ten-fold to $15 billion, the world's largest Islamic insurer by capital said on Monday.
By the end of this year Bahrain-based Solidarity will have operations in six Arab states, plus Malaysia and Luxembourg, and is eyeing the rest of Europe for expansion, but a lack of long-term investment vehicles and cultural barriers stand in its way.
In Islamic insurance, or takaful, the risk and reward are shared between the customer and insurer, while in conventional insurance the insurer takes on all the risk for a premium.
"Takaful may have started as a prerogative of Muslims; it's become widely acceptable to the entire marketplace. In Europe there is a lot of demand for ethical and principled products," Ashraf Bseisu, a general manager at Solidarity, told the Reuters Islamic Finance Summit.
The firm aims to raise $55 million by the end of next year through an initial public offering. In the West, the company is in talks with potential distributors of its insurance products.
"We are aiming that something will happen in Europe during 2008. We might consider the UK and France as markets, to start with," Solidarity Chief Executive Sameer Al Wazzan said.
The takaful industry is growing at an annual rate of about 15 to 20 percent, compared with about 9 percent for conventional insurance, and premiums were worth about $1.5 billion in 2006, Bseisu said.
About two-thirds of current premiums come from Asia, predominantly from Islamic banking hub Malaysia, and almost all the rest in the Middle East, he added. Continued...
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