An analysis of the takaful market using technical ratios for 2022 alone reveals major differences in claims experience between different countries.
Takaful non-life insurance: incurred losses
In 2022, the highest loss ratio was reported in Turkey, a country heavily impacted by natural disasters and high inflation. This 99% loss ratio for 2022 compares with 73% for the same country over the 2019-2021 period.
Loss ratios for 2022 are also high in Jordan, Saudi Arabia and Kuwait, reaching 87.7%, 85.1% and 68.8% respectively.
The higher 2022 loss ratios recorded in some countries are mainly due to higher claims frequency and higher costs, particularly in the motor and health lines, the main components of takaful business.
Takaful non-life insurance: management expenses
Operating expenses for non-life takaful business remain high in some markets, due to competition and inflation. Four markets have ratios in excess of 30% (Pakistan, Kuwait, Indonesia and Malaysia). Thanks to better cost control and appropriate management, however, an improvement in this indicator was noted in seven countries in 2022 compared with the 2019-2021 period.
Management ratios improved mainly in 2022 in Kuwait, the Maldives and Jordan, from 44.9% to 37.9%, from 44.7% to 22.4% and from 27.7% to 25% respectively.
In 2022, Turkey recorded the lowest expense ratio at 16%. This country is followed by Saudi Arabia (17.6%), Qatar (18.2%) and Bahrain (18.9%).
Takaful non-life insurance: combined ratio
In most of the countries surveyed, the 2022 non-life combined ratio increased significantly, sometimes exceeding the one recorded in the pre-pandemic period. This deterioration is mainly due to high operating expenses and a significant increase in claims, mainly in the health and motor classes of business.
In contrast, some markets managed to improve their combined 2022 ratio, as in the case of Kuwait and Qatar, with decreases of 49.2 points and 12.9 points respectively compared with the 2019-2021 period. This performance is largely attributable to growth in non-life premiums and a decline in claims experience in these two countries.
