KUALA LUMPUR (Oct 24): The local takaful insurance sector should widen its range of products to increase market penetration, International Centre for Education in Islamic Finance (INCEIF) president and chief executive officer Datuk Dr Mohd Azmi Omar said.

“We need to diversify [takaful products] and have more innovative products available in the industry so we can increase the penetration rate and market share of the sector in the country,” he told reporters after the signing of a Memorandum of Agreement (MoA) between INCEIF and University of Reading and University of Reading Malaysia today.

“In Malaysia, we have moved beyond just the banking industry in Islamic finance and we are now looking at the incorporation of financial technology within the sector. We want to make Islamic finance an alternative financing solution to the mainstream insurance options in Malaysia,” he said.

Mohd Azmi added that Islamic finance is a strong option for consumers due to its strong ethical basis, its responsible and green financing measures that are embedded in its framework.

He noted that currently, the penetration rate of Islamic finance in banking activities is nearly 40% in Malaysia, while the takaful insurance sector’s penetration stands at 15% — the highest penetration rate in the world.

“We do still have the highest penetration rate in the world, but I believe we can do more to nudge this number higher. More should be done to improve the takaful industry such as increasing human capital, providing more Syariah support, as well as seeing how the government can provide more incentives to support the sector,” Mohd Azmi said.

“There tends to be a misconception that Islamic finance is related to terrorism financing, when in fact it has been accepted by the International Monetary Fund, the World Bank and the Asian Development Bank,” he added.

Earlier, the MoA between INCEIF and the University of Reading and the University of Reading Malaysia is to signify all three parties’ collaborative efforts to foster opportunities for research, provide academic materials and publications, and other intellectual enrichment opportunities for the staff and students at the education facilities.

“We hope to produce graduates with strong Islamic finance background, so this collaboration is very important to us, and we hope that more collaborations will be done in the future so that Malaysia will be viewed as a key hub for Islamic finance globally,” Mohd Azmi said.