Being a Jordanian business leader I operates closely within the financial industry and had the opportunity to witness the growth of the takaful market in Jordan in the recent past. Takaful, which is an Islamic insurance model that relies on cooperation and mutual risk bearing, has gradually extended its presence in the Jordanian market. However, similar to any other sector, its operations are subject to the general economic factors. In this blog, Dr raed el omari will provide analysis of how these economical forces are affecting the Takaful market of Jordan and why it is relevant for the future of Islamic Finance.
ANALYZING THE CURRENT STATE OF TAKAFUL MARKET IN JORDAN
Takaful market in Jordan plays a significant role in the development of Islamic finance system in Jordan and serves as faithful and halal substitute for conventional insurance companies. As an Islamic insurance, takaful is based on the tenets of mutual assistance, sharing of risks, and social fraternity to accommodate people with conventional insurance products. As a Jordanian business leader, I have seen the market evolving through the heightened awareness and demand for Islamic products.
THE EFFECT OF ECONOMIC VARIABLES
ECONOMIC GROWTH AND GROSS DISPOSABLE INCOME
Economic growth is one of the biggest drivers for the takaful industry. During rapidly growing economy, consumers and business entities are likely to have more surplus currency that make them spend more on takaful products. Insurance policies are bought when the individuals feel financially secure and as the business expands it will look for ways to secure it accordingly.
However, when the economy weakens, impacts are experienced in the reverse. Less disposable income, and economic risk thus other risks, may impact on the demand for takaful policies. As a Jordanian business leader, I have realized that movement in the economy affects it in one way or the other.
INFLATION AND COST OF LIVING
Therefore, another general factor that has a significant impact on the takaful market is inflation and this is due to the fact that it determines the cost of living. Since inflation leads to a reduction in the purchasing power of the consumers, it becomes a major issue that hinders the potential of consumers from paying their takaful contributions. Such measures may slow down the market as people will focus on paying for basic needs in opposition to insurance.
REGULATORY ENVIRONMENT
The other economic factor that affects the takaful market is the regulatory environment. The Jordanian government has embraced Islamic finance, which has led to an enabling environment for takaful business. Nevertheless, this market is rather sensitive to the changes in legislation, some of which might be as crucial as the taxation legislation and the legislation concerning financial reporting.
As a Jordanian business leader, I would encourage the government to remain engaging with the takaful industry so that the appropriate mechanisms foster its development without compromising on the principles of disclosure and protection of the end users of takaful products.
CONCLUSION
In conclusion, the takaful market in Jordan plays an important role and demonstrating a good level of growth within the financial systems in the country. Nevertheless, economic factors must have an effect on its advancement, the basics of takaful remain sound on the matter of viability and experiment. It is for these reasons that as a Jordanian business leader, I would like to urge the stakeholders to keep on researching the potential of this market and therefore embrace the changing economic bearing.
Visit my https://drraedelomari.com/for any queries or insights. As a Jordanian business leader, I am here to help you navigate the complexities of the business world. Contact me today, and let’s work together to achieve sustainable growth in different industries.
