Insurance Industry Starts to Pay Attention to Muslim American Market

24% of All Muslims in U.S. Have College Degrees; 16% Are High Income Earners

While there are an estimated 130 entities selling takaful — cooperative insurance that is true to Shariah tenets of Islamic religious law — in foreign countries around the globe, the insurance industry has largely overlooked the needs of Muslims in the U.S. But that is changing.

A 2008 report by Ernst & Young estimated that the takaful market will surpass $10 billion by 2010.

This alternative insurance market is definitely growing, particularly in the Middle East and Malaysia, according to A.M. Best.

Only recently has the potential of the takaful insurance market within the U.S. attracted attention. Last year, a division of American International Group (AIG), which sells takaful abroad, began adapting its traditional insurance products and operations to the meet the needs of Muslims in the U.S. This is not giant AIG’s initial foray into the takaful market. The company launched AIG Takaful Enaya in 2006 in business-friendly Bahrain to provide takaful products in the Middle East.

The first U.S. takaful product from AIG is a homeowners policy and AIG says it’s a first for the industry. It’s available in all states.

“The introduction of takaful products in the U.S. represents an important and emerging growth opportunity for AIG Commercial Insurance,” said Matthew F. Power, president, Risk Specialists Companies, Inc. (RSC), a surplus lines brokerage subsidiary of AIG Commercial Insurance.

This new U.S. takaful homeowners policy builds on LexElite, the popular homeowners policy from AIG’s surplus lines insurer Lexington that is sold throughout the U.S. While AIG’s takaful homeowners operations honor Islamic law, the coverage, terms, commissions and sales procedures are the same as they are for LexElite, according to Jim Crain, associate vice president and personal lines underwriting director for RSC. AIG plans a series of products under the name Lexington Takaful Solutions.

Muslims in America

Estimates of the Muslim population in the U.S. vary considerably from 2 million to 7 million. While the exact number may be up for discussion, the Muslim-American population has been growing rapidly as a result of immigration, a high birth rate and religious conversions, according to the U.S. State Department.

According to Being Muslim in America, published by the State Department’s Bureau of International Information Programs, Muslims live in just about every city and state, with concentrations in the metropolitan areas of Detroit, Chicago, New York and Los Angeles. The 10 states with the largest Muslim populations are California, New York, Illinois, New Jersey, Indiana, Michigan, Virginia, Texas, Ohio and Maryland.

The 2007 Pew survey found that Muslim Americans are similar to the general U.S. public in education. Twenty-four percent have college degrees, compared to 25 percent for the U.S. general population.

The Muslim American population also mirrors the nation in income. Forty-one percent of all Muslim Americans report annual household income of $50,000 or higher; the U.S. average is 44 percent. Muslims are well represented among higher-income earners, with 16 percent having incomes of $100,000 or higher – compared to 17 percent for the U.S. average.

Topics USA Homeowners Market AIG