A certification committee should be established which would certify all operations related to takaful, said Mr Abdelhakim Hadjou, general manager of Trust Insurance and Reinsurance Algeria.
It is necessary to ensure that not only takaful products conform with shariah rules and standards, but also the organisation and operations of takaful should accord with Islamic principles as well, he said in an interview with El Mujahid.
In other words, shariah compliance should be adhered to from product design and pricing to the payment of benefits to participants and the distribution of surplus, he said.
Mr Hadjou has also called for new regulations to manage insurers offering takaful. “Current Algerian regulations do not prohibit the practice of takaful in a conventional insurance company with an Islamic window (takaful window) or with a pure takaful company. However, what is not in the current framework is the regulation of the takaful fund’s management method and model, and the distribution of surplus,” he said.
He pointed out that there are currently four takaful fund management models in the world: mudharaba, wakala, hybrid of the wakala and mudharaba and waqf takaful.
Asked about the current status of takaful legislation, Mr Hadjou said that a Bill to introduce Islamic insurance in Algeria is at the gestation stage at the regulator level. He said, “We hope that it will emerge very soon.”
Insurance law
Turning to the proposed new law for the insurance industry as a whole, he said that the new law must consolidate the gains made under the current insurance law that was amended in February 2006 which allowed the establishment of specialised life insurers and bancassurance operations.
“Improvements are needed for future challenges, such as digitalisation and remote payments; the opening of the market to other new forms of distribution; and especially the establishment of an autonomous regulatory authority, like the central bank for the banking sector. This will allow neutrality in the supervision of operations and the consolidation of this highly strategic sector,” he said.
Commenting on price competition in the insurance market accompanied by the lack of focus on the quality of products and services, he said, “Unfortunately, in Algeria, we insurers have failed to instil the insurance culture in the consumer, whether the individual or corporate. As a result, the insured simply evaluates insurers’ offers on the basis of the price alone.
“But if we take the trouble to read between the lines, we will find that the offers are never the same. However, the insured will become aware of these differences only at the occurrence of a disaster,” he said. M