Market not ripe yet for Islamic insurance products

ING Life says it would have had to have charge quite a high fee to cover the complexity of producing Islamic, or Al-Takaful, products and the cost of putting them in place.

Managing director Naomi Ballantyne says the numbers do not stack up.

Al-Takaful products must adhere to strict Islamic law surrounding financial instruments, including how profit gets generated and shared, where underlying funds are invested and the nature of the risk benefits.

“There are 45,000 Muslims in our market place, but their average income is quite low,” Ballantyne says.

Offshore markets where these products have been successful and profitable have much bigger volumes.

Investment funds build up quickly from both Islamic and non-Islamic investors.

While ING Life also considered what volume Australia might contribute, Ballantyne says for now it has been concluded the money is not there.

“I do believe there is huge future potential for Islamic insurance products,” she says.