1. Sami GUELLOUZJakarta 6th, April, 20061 Syariah compliant General Takaful products A tailor-made service for Muslim community

2. Jakarta 6th, April, 2006 2 Overview Back to the roots of Takaful Takaful customer’s profile Emerging markets development trends General Takaful products landscape Conclusion

3. Jakarta 6th, April, 2006 3 Insurance not permissible Uncertainty (Gharar) Gambling (Maisir) Interest (Riba)

4. Jakarta 6th, April, 2006 4 Syariah relevant concepts Takaful Tabarru’ Dharoura’ Fortune sharing

5. Jakarta 6th, April, 2006 5 Takaful concept 1985 Grand Council of scholars approved Takaful Method and means left to scholars and practitioners Must have : Permanent Syariah Advisory Board Syariah compliant investment strategy Operating model based on Syariah concepts

6. Jakarta 6th, April, 2006 6 Operating models Pure mudharabah (Sudan) Modified mudharabah (Malaysia) Wakala (Bahrain) General Takaful Family Takaful

7. Jakarta 6th, April, 2006 7 Re-Takaful concept Preferred reinsurance is proportional (quota share or surplus) Non proportional permissible If Re-takaful is unavailable, then it is permissible to use a conventional reinsurer

8. Jakarta 6th, April, 2006 8 Overview Back to the roots of Takaful Takaful customer’s profile Emerging markets development trends General Takaful products landscape Conclusion

9. Sami GUELLOUZJakarta 6th, April, 20069 General Takaful contract A customer’s needs driven product

10. Jakarta 6th, April, 2006 10 Takaful industry in the World World Premiums 2003 USD 2.6 trillions Takaful contributions 2002 USD 2.1billions Takaful contributions / Ww premiums 1 per mil

11. Jakarta 6th, April, 2006 11 Takaful in Emerging markets Takaful contributions 2002 USD 2 billions Ww Takaful contributions 2002 USD 2.1billions Emerging markets contrib. / Ww contributions 99%

12. Jakarta 6th, April, 2006 12 Takaful industry in Emerging markets Takaful contributions 2002 USD 2 billions EM Total Premiums in 2002 USD 217 billions EM Takaful cont. / EM Total Prem. ~1%

13. Jakarta 6th, April, 2006 13 Main current Takaful Markets GCC Malaysia Other Arab countries Other South & East Asia Emerging markets…

14. Jakarta 6th, April, 2006 14 Takaful customer’s profile Muslim Citizen of 21st century Citizen of emerging markets

15. Jakarta 6th, April, 2006 15 Overview Back to the roots of Takaful Takaful customer’s profile Emerging markets development trends General Takaful products landscape Conclusion

16. Jakarta 6th, April, 2006 16 Emerging markets 86% of world’s population 1.3 billions (China) 1.1 billions (India) 0.2 billions (Indonesia) 23% of global economic output 10% of global non-life business in 2003 Asia is the most important in the emerging world with 62% of population 47% of GDP 47% of non-life premiums

17. Jakarta 6th, April, 2006 17 Non-life penetration rate & per capita spending 1.5% in 2004  3.9% in industrialized markets 26.6 USD in 2004  1275 USD in industrialized markets

18. Jakarta 6th, April, 2006 18 Non-life insurance dominated by motor and property insurance Motor dominant lob in most emerging markets Compulsory third part liability insurance Own damage insurance (ex: leasing contracts for cars) Property, accident and health insurance are generally next biggest Accident and health depends on governement’s role in this lob (high where WCA are covered by private insurance (Latin America, Asian markets) or where public health is unsufficient).

19. Jakarta 6th, April, 2006 19 Non-life insurance dominated by motor and property insurance Transport insurance Insignificant in Eastern Europ 6%-10% of non-life premiums in the other regions Liability still of minor importance in most markets Growth in recent years in Eastern Europe stimulated by EU regulation Smaller growth in Asia due to demand of product liability for exports to the USA and more widespread regulations.

20. Jakarta 6th, April, 2006 20 Liability products Liability accounted for USD2.8billion in 2003 Asia for 50% Latin America & Eastern Europe South Africa & Middle East (less than 10%) General & product liabilty are the main in emerging markets Professional indemnity in Easter Europe in response to EU requirements. In Brazil, South Africa and India, increasing demand for D&O coverage

21. Jakarta 6th, April, 2006 21 Commercial - Personal lines Commercial lines dominate the developing markets Individual consumption limited  Lack of risk awareness among consumers as well as low household income. Commercial lines show higher growth rate than personal lines

22. Jakarta 6th, April, 2006 22 Real growth by major LOB Real premiums growth 1998- 2003 Non-LifeMotorProperty India8.9%na6.2% Singapore13.7%8.3%6.8% Asia8.8%8.2%4.6% Africa5.6%5.0%16.8% Middle-East8.6%7.2%8.2%

23. Jakarta 6th, April, 2006 23 Strong growth between 1998 and 2003 Non-life growth was mainly driven by increases in property business Risk awareness and rates increases since 2001 Motor premiums strongly increased mainly driven by improving economic conditions More motor vehicles sales

24. Jakarta 6th, April, 2006 24 Different in size and structure, but common development trends Strong economic growth will continue to drive development. New products and new distribution channels will help to tap growth potential. Regulations to be aligned to international best practices (Solvency, corporate governance and transparency). Insurers will find stronger incentives to maintain sound underwriting standards. Emerging insurance markets are moving towards a more liberal regime with fewer entry barriers.

25. Jakarta 6th, April, 2006 25 Cat nat in the emerging markets Cat nat like Tsunami (dec 2004) in SE Asia  Many emerging markets to rethink their vulnerability to natural catastrophy,  Better and broader use of insurance as a tool for managing these exposures. Policy shift that should encourage insurance development in these countries.

26. Jakarta 6th, April, 2006 26 Forecast growth Increase 1 to 2 times faster than overall economy Countries where per capital 2000 USD <per capita income<10000 USD 7,5% increase for 2004-2014 period In real terms per year 8,9% in 2004

27. Jakarta 6th, April, 2006 27 Conditions to achieve this growth potential General factors Economic growthProducts offered Wealth/distribution of income Distribution channels Religion-cultureRisk awareness EducationInsurance regulation Property rights; legal certainty Trust in insurance Non-life insurance Compulsory insurance Natural cat exposure Public role in health and workers compensation insurance Claims awards

28. Jakarta 6th, April, 2006 28 Overview Back to the roots of Takaful Takaful customer’s profile Emerging markets development trends General Takaful products landscape Conclusion

29. Jakarta 6th, April, 2006 29 Increasing array of risks faced by individuals and companies Natural catastrophy Fire, Business interruption, Product recalls, Directors and officers, Asbestos litigation, Terrorism, Financial volatility, Weather volatility; etc.

30. Sami GUELLOUZJakarta 6th, April, 200630 No limits for the General Takaful products landscape Except the criteria of insurability

31. Jakarta 6th, April, 2006 31 Criteria of insurability CategoryCriterionCharacteristic 1 Actuarial Risk/UncertaintyMeasurable 2 Loss occurencesIndependent 3 Maximum lossManageable 4 Average lossModerate 5 Loss frequencyHigh 6 Moral hazard, adverse selection Not excessive 7 Market- determined Takaful contributionAdequate, affordable 8 Takaful cover limitsAcceptable 9 Industry capacitySufficient 10 Societal Public policyConsistent with cover 11 Legal and syariah systemPermit the cover

32. Jakarta 6th, April, 2006 32 Conclusion, hopefully… General Takaful will benefit from the growth trend in emerging markets in motor, property and liability lob Both commercial General Takaful lines and personal will benefit from this growth trend Personal lines will increase more than commercial lines owing to Takaful concept General Takaful will participate to natural catastrophies covers Innovative contracts targeting specific needs of Muslims will make the growth of General Takaful faster than that of non-life insurance

33. Sami GUELLOUZJakarta 6th, April, 200633 Thank you Sources : Sigma6_2003 ; Sigma5_2004 ; Sigma1-4-5_2005