Islamic Finance Ecosystem, Economic Recovery Drive Malaysia’s Takaful Growth

Malaysia’s takaful industry is likely to continue its steady growth in 2021 amid government initiatives and a supportive Islamic finance ecosystem, further propped up strong economic growth, which Fitch Ratings forecasts at 6.7% in 2021, increased digitalisation, higher awareness and a low life-insurance penetration rate.

Malaysia’s vibrant Islamic finance ecosystem includes Islamic banks, sharia-compliant corporates, Islamic fund managers and halal industries that seek takaful products. Bancasssurance is one of the main distribution channels of takaful products. Takaful demand also arises from sukuk issuance, which makes up more than 60% of outstanding domestic issues and is often linked to projects and insuring the underlying assets. Takaful firms can also invest their liquidity in diverse sukuk and other Islamic options.

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