Over the past number of years, we have noticed various changes in customer purchasing patterns. An area we have noticed a significant change in via our data has found that more customers are opting for takaful over conventional insurance – nearly two-thirds of its annual transactions.
Takaful is a type of Islamic insurance where members contribute to a pool system to guarantee each other.
Dubai, 2 February 2021: In its most comprehensive analysis of customer data ever undertaken, Yallacompare, the number one finance site in the Middle East, has identified a significant increase in the number of site visitors choosing takaful-based vehicle insurance.
Figures show that in 2018, takaful sales made up just 25% of overall transactions. But last year, 2020, saw 65% of vehicle insurance sales based on takaful products.
Takaful is derived from the Arabic word ‘kafalah,’ meaning guaranteeing other, or joint guarantee. Members of a takaful scheme all pay into a pool, jointly insuring each other against loss or damage. Takaful insurance encompasses shared responsibility, joint indemnity, common interest and solidarity, and Arabic tribal culture.
The data pool garnered across the site’s customer sales activity helps unveil the patterns revealed by over 200,000 car insurance sales transactions and shows a clear shift towards takaful-based vehicle insurance.
Jonathan Rawling, CFO, Yallacompare, explains: “Our data dig into trends since 2017, allowing us a deep dive into consumer behavior, and enough data to be able to model potential future consumer behavior with a greater degree of confidence. One aspect of the data we didn’t necessarily predict is the large uptake in takaful-based vehicle insurance, compared to conventional insurance.”
The meteoric rise in takaful sales does not seem to be driven by changes in customer demographics. While we might expect customers from Muslim nations to favor takaful and customers from Europe and the subcontinent to favor conventional insurance, this is not what the underlying data shows us: 70% of Indians favored takaful over conventional products, compared to 56% of Emiratis and 57% of Saudi nationals.
Jonathan Rawling explains: “We believe the large uptick in takaful sales in the last two years is down to several factors. Firstly, there has been a ‘standardization’ in the rules regarding cover and benefits under the Insurance Authority’s unified motor policy. This means that all car insurance policies, be they takaful or conventional, offer the same levels of mandatory cover.’’
“Secondly, and much more significantly, takaful providers are increasingly looking to acquire customers from outside their traditional base. Takaful providers are more interested in customer acquisition and now target customers from right across the spectrum of nationality and religion. This represents a win for consumers – more firms bidding for their business means more choice and better products and prices.”