As the global financial landscape continues to shift towards ethical and inclusive financial models, Sharia-compliant insurance, known as takaful, is experiencing accelerated growth. This growth is propelled by increased demand for ethical alternatives, regulatory support, and technological advancements. With a projected global takaful market size exceeding USD 60 billion by 2025, takaful operators face both immense opportunities and intense competition.
To thrive in this dynamic ecosystem, Sharia insurance providers must implement comprehensive and forward-thinking strategies. Below are the key approaches to strengthening market presence and staying ahead in the competitive race.
1. Driving Digital Transformation for Operational Excellence
Digital transformation is not just an option; it is a necessity in 2025. The modern consumer demands convenience, speed, and transparency—traits that digital platforms can deliver. Sharia insurers need to revamp their operations using cutting-edge InsurTech innovations, including:
- Mobile-first platforms for policy applications, premium payments, and claims processing.
- AI-driven customer service tools, such as chatbots and virtual assistants, to provide instant responses.
- Blockchain technology to ensure secure, tamper-proof contracts and enhance transparency.
- Robotic Process Automation (RPA) to handle repetitive tasks efficiently, reducing operational costs.
These technologies streamline operations and improve the overall customer experience, enabling takaful providers to compete with conventional insurers.
2. Developing Ethical and Innovative Products
As consumers become more socially conscious, there is a rising preference for financial products that align with ethical values. Takaful companies must tailor their offerings to meet diverse customer needs while adhering to Islamic principles. Potential areas for product innovation include:
- Micro-takaful solutions for underbanked and rural populations, offering basic coverage at affordable rates.
- Customized family takaful plans with integrated savings, investment, and protection elements.
- Health and wellness takaful packages that cover preventive care and mental health support.
- Green takaful focusing on coverage for climate change-related risks, appealing to eco-conscious clients.
Such differentiated products can open new market segments and enhance customer loyalty.
3. Enhancing Awareness and Financial Literacy
Despite the ethical benefits, many potential customers still lack awareness of how takaful operates and how it differs from conventional insurance. To bridge this gap, Sharia insurance firms must:
- Conduct multi-channel awareness campaigns, utilizing TV, social media, and community events.
- Collaborate with Islamic scholars and influencers to build credibility and promote understanding.
- Offer free financial education workshops, both online and offline, especially in emerging markets.
Boosting public understanding will foster trust and attract a broader customer base looking for faith-aligned financial solutions.
Illustration of being protected by sharia insurance. Image by Creativa Images via Shutterstock
4. Building Strategic Partnerships and Integrated Ecosystems
Strategic partnerships are crucial for expanding reach and creating value-added services. Takaful operators should explore alliances with:
- Islamic banks to cross-sell insurance products.
- Halal e-commerce platforms to bundle coverage with goods and services.
- Healthcare providers for integrated health insurance packages.
- Fintech startups to innovate distribution and customer engagement models.
These collaborations allow Sharia insurers to embed their services into daily consumer touchpoints, increasing visibility and accessibility.
5. Strengthening Sharia Governance and Regulatory Compliance
A strong commitment to Sharia governance not only ensures compliance but also builds consumer confidence. Key practices include:
- Establishing independent Sharia boards for oversight and product approval.
- Conducting periodic Sharia audits to maintain compliance.
- Aligning with international standards from AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) and IFSB (Islamic Financial Services Board).
Regulatory clarity and robust governance are especially critical in international expansion, where companies must navigate diverse legal frameworks.
6. Capturing Growth in Emerging Markets
Emerging economies in Southeast Asia, the Middle East, and Africa offer fertile ground for Sharia insurance expansion. Strategies to enter and thrive in these regions include:
- Localizing products to fit cultural and economic contexts.
- Partnering with local entities for distribution and trust-building.
- Investing in grassroots marketing to build awareness and educate potential customers.
- Adapting to regional regulatory frameworks while maintaining global best practices.
With a youthful and digitally connected population, these markets are ideal for takaful providers willing to innovate and invest long-term.
Overall, in 2025, success in the Sharia insurance market will depend on how well providers can integrate ethical values with digital innovation and customer-centric strategies. By investing in technology, developing inclusive products, educating the public, and forging strategic alliances, takaful companies can significantly boost their market share and stand resilient against rising competition.
As the demand for ethical finance continues to grow, takaful stands at the forefront of reshaping the future of insurance—offering a sustainable, inclusive, and faith-aligned alternative for millions worldwide.
References:
- https://aaoifi.com/product/shari-a-standards/?lang=en
- https://aaoifi.com/announcement/aaoifi-makes-all-its-standards-accessible-on-its-website-on-a-complimentary-basis/?lang=en
- https://www.ifsb.org/standards-page/
- https://www.ifsb.org/core-principles/
- https://www.theedgemarkets.com/node/751749
- https://www.theedgemarkets.com/node/733255
- https://aaoifi.com/announcement/aaoifi-issues-the-final-standard-on-code-of-ethics-for-islamic-finance-professionals-for-industry-adoption/?lang=en
- https://www.ifsb.org/wp-content/uploads/2024/01/IFSB-30-Revised-Guiding-Principles-on-Corporate-Governance-for-IIFS.pdf
- https://aaoifi.com/announcement/aaoifi-accounting-board-issues-financial-accounting-standard-fas-50-financial-reporting-for-islamic-investment-institutions-including-investment-funds/?lang=en
- https://www.ifsb.org/press-releases/the-ifsb-council-adopts-three-3-new-standards/
