Retakaful is an efficient tool to diversify the risk portfolio of businesses over various territories and diminishes the probability of the industry’s risk of destruction during large catastrophic losses. The COVID-19 pandemic in 2020 has greatly impacted every industry and business, and the retakaful market in Malaysia is not spared either. Read about the development of the retakaful market amidst the pandemic here.

An Overview of the Market Performance

  • According to the Malaysian Takaful Association, Family Takaful business has recorded double-digit growth in Malaysia in 2020. Its market value increased by 14% to RM364.2 bil in September 2020, arising from RM4.84 bil new business contribution.
  • The general takaful industry recorded a decent growth of 3.6%, with total gross contributions of RM2.57 bil compared to RM2.48 bil in 2019. Out of the various takaful categories, motor takaful held the largest proportion of 65.3%. In contrast, fire takaful is the second-largest business class with a gross contribution of RM450 million.
  • The industry’s durable position is an encouraging development given the fact that 70% of the country’s insurance premium are comprised of motor and properties, consumption-based sectors which typically mirrors the country’s GDP.

Future Development of The Retakaful Market

There are an estimated 324 Takaful operators around the world — Malaysia has the most comprehensive Family Takaful market while Saudi Arabia has the most significant General Takaful market. Demand for motor takaful, fire takaful and even family takaful is projected to rise following the Islamic financial system’s phenomenal growth, particularly in the Islamic banking sector and Islamic capital market — which can subsequently lead to a growth in the retakaful industry too. Nevertheless, at this stage of development, there is a limited amount of retrotakaful capacity available.

Challenges to Develop The Retakaful Industry

  • Retakaful operators usually operate with a limited appetite, and most of them only have enough business capacity to focus on providing coverage to domestic business.
  • The issue of limiting financial exposure comes into play, as some operators avoid accumulating exposures by accepting both retrocession and retrotakaful as it complicates the administrative and financial process.
  • Due to the relative financial strength and capacity of conventional players, conventional markets could offer more value-added services to their clients as compared to retakaful providers.

Malaysia’s national reinsurer, Malaysian Reinsurance Berhad (Malaysian Re), underwrites all classes of general reinsurance as well as general and family retakaful businesses, with an extensive business portfolio across Asia and the Middle East. Head over to to read more.