UK: London body issues takaful guidelines to help underwriters
Source: Middle East Insurance Review | Jan 2019
The Islamic Insurance Association of London (IIAL) has launched a set of guiding principles covering takaful, seeking to address capacity constraints in the sector, reported Reuters.
The IIAL, an industry group launched in 2015, said its framework would help underwriters to create their own Islamic windows, through which they would be able to deliver both shariah-compliant insurance and reinsurance covers.
The move would help London’s insurance market to address a lack of capacity for takaful operators, which have their core markets in the Gulf and Southeast Asia.
“The principles have been designed to deliver a certainty to those operating in the market and, more importantly, Islamic clients across the world,” said IIAL chairman Max Taylor.
“This is not only a huge opportunity for London to access new risks and new markets, but also it has wider implications.”
Takaful operators, which have their core markets in the Gulf and Southeast Asia, held a combined $46bn worth of assets globally in 2017, according to Thomson Reuters data.
Takaful operators have been limited in their ability to take on large commercial risks partly because of a lack of scale. Reinsurance options are also scarce, with some firms forced to reinsure through conventional lines, a practice allowed under the concept of necessity. Industry scholars, however, are increasingly challenging whether such exemptions are still applicable in the growing market and are encouraging alternatives. M