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Plugging the Middle East takaful insurance gap
21 December 2010
Takaful insurance sounds good in theory but a number of obstacles have emerged to making it work in practice.
Clyde & Co
standard & poor's
– the Islamic alternative to conventional insurance
– represents a radical new insurance business model
that is firing a potentially very big emerging market in the
But although it is a genuine alternative to the familiar
product, takaful companies face many of the same
challenges besetting their western counterparts.
Heightened competition is one of the biggest challenges
facing insurance companies around the world, for example
– and takaful firms operate in the same
market conditions as conventional insurance companies, says
Peter Hodgins, Dubai-based partner with the law firm Clyde
& Co. "While they compete among themselves they also have
to compete with conventional insurance in their home markets,"
he says. "So in the Middle East, for example, where rates have
historically been fairly soft, there are a substantial number
of conventional insurers and takaful operators competing for
the same pool of business."
Contrary to popular perception, few individuals or
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