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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 Middle
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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