Despite its significant growth for the last decade, Takaful is still the smallest segment within Islamic finance. KFH Research in 2014 reported that in 2013 Takaful only contributed 1% of global Islamic finance assets. In addition, the market share of Takaful within the total insurance industry is also still relatively small.

One of the challenges that may hinder the development of Takaful is the lack of adequately trained human resources. Most practitioners within the Takaful segment do not have a formal Islamic finance or specifically Takaful qualification. They use their experience in conventional insurance companies before embarking into this Islamic finance segment.

In fact, this issue is applicable in all segments of Islamic finance. A survey conducted by the Finance Accreditation Agency (FAA) and Islamic Finance news this year on human capital development within Islamic finance industry indicates that 75% of respondents believe that practitioners without a formal Islamic finance qualification are less capable of doing their job than those with a formal education.

However, surprisingly it was also found that there are many Islamic finance qualification-holders who find difficulties in getting a job within the industry. Thus, it is clear that there is a skill mismatch within the Islamic finance industry in general.

The issue of skill mismatch becomes worse in the case of Takaful. PwC reported in 2012 that the biggest deficit of skilled candidates among Islamic finance segments existed in Takaful. It is more difficult to hire a qualified person in Takaful than in Islamic banking, Islamic capital markets and asset management.

As a result, the development of Takaful is still far from its maximum potential. In order to overcome the challenge, intensive collaboration between Takaful qualification providers and Takaful practitioners is needed. Takaful qualification providers should continuously revise their curricula in order to meet the industry needs. They have to ensure that their graduates hold certain specific skills that the industry is looking for.

In addition, every Takaful qualification provider should get full accreditation not only from an academic accreditation agency but also from an industry-based accreditation agency such as the FAA. This is because accreditation has been proven by many studies to be an effective method of quality assurance.

Therefore, the involvement of industry-based accreditation agencies is important to help the qualification providers in ensuring their syllabus and their programs' intended learning outcomes are up to date and in line with what the industry needs. 

The report has been published on IFN Volume 11 Issue 25 dated the 25th June 2014.