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BancaTakaful: A cost-effective way to promote Takaful services

Updated: Jumat 23 Agustus 2013 - 15:38 Kategori: Info Pilihan Posted by: Administrator

Islamic Finance News, May 2013.Takaful is one of the areas in Islamic finance which has seen substantial growth over the last decade. According to the Ernst & Young World Takaful Report 2012, global gross Takaful contributions grew at a compound annual growth rate of 29% during 2005-09. The number of Takaful operators worldwide also increased from 196 operators in 2012 to 200 operators in April 2013. These developments have resulted in a significant increase in the market share of Takaful.

Despite the positive signs, there are still untapped potential markets that needto be explored by Takaful operators in order to sustain the growth. In exploring those markets, Takaful operators need to establish an effective distribution channel. One of these distribution channels is bancaTakaful.

BancaTakaful is defined as a strategic alliance between a Takaful operator and an Islamic bank, where the latter markets the Takaful products underwritten by the former. The alliance is considered as cost-effective since Takaful operators can use relatively more established Islamic banking channels in marketing their products. BancaTakaful is not a new concept. MNI Takaful, a Malaysian Takaful operator licensed in 1993, was perhaps the first company in the world that entered into bancaTakaful business.

BancaTakaful offers benefits to Takaful operators, Islamic banks and the customers. Among the benefits for Takaful operators are access to Islamic banks’ ready customer database and strong brand identity. For Islamic banks, bancaTakaful is an additional source of funds and a means to mitigate risk (such as credit risk). Customers also benefit from bancaTakaful since the alliance allows them to access integrated financial services in one place.

However, it is believed that bancaTakaful is applied only by a few Takaful operators, mostly in Southeast Asia. There are still many Takaful operators that still do not apply this mechanism. In order to increase the application of bancaTakaful; strong support from the regulators, commitment from both Takaful operators and Islamic banks, the development of human capital and product innovation are necessary.

Sutan Emir Hidayat is a senior lecturer at University College of Bahrain & Chairman IAEI-Bahrain. He can be contacted at