Takaful Insurance Market Expected to Reach $126.8 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Takaful Insurance Market, By Type (Family Takaful, General Takaful), By Distribution Channel (Agents And Brokers, Banks, Direct Response, Others), By Application (Personal, Commercial): Global Opportunity Analysis And Industry Forecast, 2023-2032". The takaful insurance market was valued at $31.7 billion in 2022, and is estimated to reach $126.8 billion by 2032, growing at a CAGR of 15.2% from 2023 to 2032.

Takaful insurance provides various types of coverage such as family takaful, health takaful, motor, marine, business protection takaful and others. These coverage helps to minimize the risk and provides financial assistance at the time of emergency. Furthermore, under takaful, capital is only invested in funds that are fully Shariah compliant and ensures that no one member can gain an advantage at the expense of another creating a cooperation among policyholders for the common good of all members. In addition, during a deficit in any participants’ fund, shareholder fund provides an interest-free loan to the participant. The takaful insurance market has been witnessing several significant trends, as there was a growing demand for digitalization and technology integration within takaful operations. This encompassed online sales channels, AI-powered underwriting, and blockchain for transparency in transactions. In addition, there was an increasing emphasis on product diversification, with takaful providers expanding their offerings beyond traditional segments like life and property, into areas like health and microinsurance. Sustainability and ethical investing were gaining traction, with takaful companies looking to invest in Sharia-compliant and socially responsible assets. Furthermore, collaborative ventures between takaful providers and fintech startups were emerging, fostering innovation and widening the reach of takaful services. Moreover, as there was a growing demand for digitalization and technology integration within takaful operations. This encompassed online sales channels, AI-powered underwriting, and blockchain for transparency in transactions. In addition, there was an increasing emphasis on product diversification, with takaful providers expanding their offerings beyond traditional segments like life and property, into areas like health and microinsurance. Sustainability and ethical investing were gaining traction, with takaful companies looking to invest in Sharia-compliant and socially responsible assets. Furthermore, collaborative ventures between takaful providers and fintech startups were emerging, fostering innovation and widening the reach of takaful insurance market analysis. 

The key factors that boost the growth of the takaful insurance market trends are acceptance of takaful insurance in non-Muslim countries and added benefits of takaful insurance as compared to conventional insurance. However, limitation of consumer awareness and lack of availability of market players restrict the takaful insurance market growth. Conversely, development of advanced technology in the insurance sector and government friendly rules and regulations are expected to create huge opportunity for the market in the coming years.

On the basis of distribution channel, the agents & brokers segment is expected to witness growth at the highest rate during the forecast period. This lead is attributed to independent agents & brokers leveraging many websites and online selling platforms, which has become a prominent trend in the market, as demand for tailored and personalized takaful insurance coverage grows. Meanwhile direct response segment attained fastest market share in 2022 for takaful insurance market size. This was attributed to the fact that the increasing use of digital channels, including websites and mobile apps, has made it easier for Takaful providers to reach customers directly. Many customers prefer the convenience of researching, comparing, and purchasing insurance products online.

On the basis of region, Gulf Corporation Council (GCC) attained the highest market share in 2022 and emerged as the leading region in the takaful insurance market. This is attributed to the fact that Muslims make up the majority of the population in the GCC nations, and Islamic financial products, such as Takaful insurance, are strongly preferred in both culture and religion. Demand for insurance products that adhere to Shariah is driven by this tendency. On the other hand, the Asia region is projected to be the fastest-growing region for the takaful insurance market during the forecast period. This is attributed to the fact that Many countries in the Asia region have experienced robust economic growth over the past few decades. This growth has led to increased affluence and a greater awareness of the need for insurance and risk management, driving the demand for takaful insurance industry.

The COVID-19 pandemic had moderate impact on the takaful insurance market. As people and companies sought financial security against health and economic concerns, the pandemic on the one hand raised awareness of the value of insurance, including takaful. This increased interest in some takaful goods, particularly health and life insurance. However, the pandemic also brought about economic difficulties that had an impact on investment returns and takaful providers' ability to operate efficiently. Overall, it had a conflicting effect on the takaful insurance market since, while it offered expansion prospects in certain categories, it also caused financial and operational difficulties.

Key Findings of the Study

• By type, the general takaful segment led the takaful insurance market in terms of revenue in 2022.
• By distribution channel, the agent and brokers segment accounted for the highest takaful insurance market share in 2022.
• By application, the commercial segment accounted for the highest takaful insurance market share in 2022.
• By region, North America generated the highest revenue in 2022.