Abu Dhabi National Insurance Company (Adnic ) is talking with partners to launch takaful products in the second half next year, Emirates Business has learnt.

The UAE's second-largest insurer is looking at substantially increasing its revenue by taking advantage of the growing takaful pie, said Walid Sidani, Adnic Chief Executive Officer.

"We have been discussing takaful as a viable solution for the UAE via Adnic . We are having discussions with four partners to establish a founders' committee, " he said.

"There's first the licensing process through the UAE insurance Authority," he added. "We are in the process of completing and establishing strategic business plan. We hope that will happen in 2010, by the second half."

Takaful is the Islamic alternative to conventional insurance products. It is based on the principle of mutuality with an emphasis (particularly for life) on co-operation, inter-responsibility and assistance between groups of participants.

In essence, the economic structure of a takaful company can be seen as a hypid between that of a mutual insurer and a conventional insurer.

Takaful has had a slow start overall with cultural factors playing a strongly suppressive role. The first takaful company was founded in Sudan in 1979 and since then the takaful industry has grown in size and acceptability.

Malaysia is the leading takaful country with South East Asia as a whole accounting for 56 per cent of premiums. Arab countries account for only 36 per cent of global takaful premiums due to minimal penetration of family takaful.

The GCC, however, is now gearing up to maximise its potential in the takaful industry.

Ernst & Young's World Takaful Report 2008 said GCC accepted more than $1 billion contributions compared with global contributions of $2bn in 2006. Currently the six member states have 59 takaful providers.

The report expects GCC's takaful contribution globally would increase to more than $4.3bn.

Slump hits Cargo insurers

Insurers of cargo vessels have been affected adversely by the construction sector downturn in the UAE, where projects on hold/cancelled have reached $600 billion (Dh2.2 trillion) or nearly half of the entire projects in the pipeline.

"As the construction boom has gone down, lesser raw materials are being shipped into the UAE. Therefore, there is less marine cargo work," said Chris Mills, partner at Clyde & Co LLp.

Insurance premiums from marine cargo has dropped by up to 30 per cent in the first eight months of this year compared to last year, said Walid Sidani, Adnic Chief Executive Officer.

He said activities in the marine cargo business have slowed down due to slump in international trade.

"Our marine cargo has been affected by the crisis. There has been a reduction in material shipments," he said.

By Karen Remo-Listana

© Emirates Business 24/7 2009 omar 1.1:zy