American int’l group starts Islamic insurance

MUSLIM WORLD

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American International Group (AIG), the world’s largest insurer, said it will offer its first insurance coverage complying with Islamic law, tapping a market that could be worth $15 billion by 2015.

AIG’s Enaya unit will offer Islamic insurance coverage, or takaful, for areas such as health, autos and property to Gulf Arab customers, Abdallah Kubursi, Enaya’s regional vice-president, was reported as saying on October 1.

The market for takaful, which is based on a concept similar to mutual funds, is growing at about 20 per cent a year and could expand six-fold from about $2 billion now, Kubursi said.

“With the boom of Islamic finance and insurance in the region, there is an inherent need for sharpie-compliant products,” he added.

Germany’s Hannover Re (HNRGn.DE) and Prudential (PRU.L) are among European companies that have started tapping into the Islamic insurance industry as the market grows.

AIG could expand the offer to Muslims in Asia, followed by Europe and the United States, Charles Bouloux, AIG president for the Middle East, Mediterranean and South Asia was reported as saying.

“We’re not limiting our resources to just this region,” Bouloux said.

AIG, based in New York, plans to open offices in Morocco, Algeria and Tunisia by the end of next year, he added.

It already operates in North Africa, South Asia and the eastern Mediterranean.

The Islamic banking industry, which began almost three decades ago, has made substantial growth and attracted the attention of investors and bankers across the world.

There are an estimated 300 Islamic banks and financial institutions worldwide holding $300 billion in assets predicted to grow to $1 trillion by 2013.

Europe’s giants like Britain, Germany and the Netherlands expanded over the past three years in producing banking services and products aimed at the Muslim clients.

Japan is planning to introduce Shari’ah-compliant dealings into its beefy banking system in a bid to attract lucrative Middle Eastern oil money.