Global - Retakaful - Call for terminology and operating models to be standardised
Source: Middle East Insurance Review | Nov 2016
Retakaful companies need to undertake three major tasks in order to expand their business. They need to standardise retakaful terminology with clear legal terms, unify Shariah-compliant models and assess economic benefits to their investors, said Mr Adam Ahmed Hassan, General Manager of Baraka Insurance - Sudan.
He was speaking at the 9th general conference of the International Federation of Takaful & Islamic Insurance Companies (IFTI) held in Egypt on 12-13 October.
He said that it is necessary to review takaful fatwas, which were issued when retakaful companies started to be established in the 1980s, especially those that allow takaful companies to obtain reinsurance from a traditional reinsurer, reported Amwal Al Ghad.
He added that there is a need to support retakaful companies by providing the appropriate legislative and fiscal environment.
Another speaker, Mr Ahmed Arfeen, Managing Director of the Egyptian Takaful Insurance Company (Property), said that the capital and reserves of takaful companies are currently not sufficient to face the risks which they underwrite. Therefore, the takaful operators need to distribute the risk via reinsurance. Retakaful companies can help in this area, he said. He added that retakaful necessitates an international dimension and deals with brokers instead of individuals, so retakaful operators need capital of at least US$250 million.
Four recommendations
Takaful and retakaful operators were urged to adopt four recommendations tabled at the conference so as to promote Islamic insurance in all markets. The recommendations are:
- Takaful companies need to achieve a high solvency level in order to deal with developments and challenges in the industry;
- Takaful companies are to render full support to retakaful operators;
- The takaful sector needs to raise awareness of Islamic insurance products not only among customers but also among insurance professionals in order to boost takaful business and attract new customers; and
- Takaful players need to unify all Shariah fatwas related to takaful insurance.
Representatives of more than 70 companies from six Arab countries (Sudan, Qatar, Saudi Arabia, Libya, Bahrain and Lebanon) attended the conference.