Firms intend to take advantage of insurance penetration rates in the Middle East, which are amongst the lowest in the world
About five new companies offering Islamic insurance, or takaful, are expected to launch in the UAE by mid 2011, boosting competition, industry executives said on Monday.
There are now six takaful companies in the UAE with a seventh to be launched in the first quarter of 2011.
"At least four to five companies have applied for licences and they could launch initial public offerings (IPOs)," Ezzeldin Elmassry, chief operating officer of Abu Dhabi National Islamic Finance (ADNIF), told a round table.
"There is fierce competition between takaful and conventional insurance companies," he said, adding that there are 54 insurance firms in the UAE.
ADNIF, the Islamic finance unit of National Bank of Abu Dhabi, plans to launch a takaful company in the first quarter of 2011 in a joint venture with three Abu Dhabi government backed firms.
Insurance penetration rates in the Middle East are among the lowest in the world at about 1 percent of per capita expenditure compared to 9 or 10 percent in Western countries, said Osama Abdeen, CEO of Abu Dhabi National Takaful Company.
He said: "Penetration is very low and demand is there and there is money to be made."
The new takaful firms are mostly backed by strong existing entities, said ADNIF's Elmassry.
An official of the UAE regulator Securities & Commodities Authority said several applications for insurance licences are pending and some would be approved shortly, declining to provide any names. (Reuters)