He says high premium growth reflects the difficulties that traditional insurers are facing in complying with Shariah as a result of their investment strategies.

"Under Shariah, riba (interest) is forbidden. This disqualifies conventional bonds — which usually comprise a substantial portion of an insurer's investment portfolio — as an acceptable asset class," says Boudkeev.

The report gives an overview of how takaful differs from conventional insurance, the benefits that a rating offers takaful companies and the approach taken to analysing the financial strength of such companies.

Seven key factors underlying an insurer's business and financial profile are reviewed in Moody's rating process. The seven include the insurer's market position, brand and distribution, reserve adequacy/liquidity and asset liability management, and asset risk.