The Islamic Insurance Association of London (IIAL) is seeking to build on its work of the past 12 months, even as there remains much to be addressed, said its Chairman, Mr Max Taylor, at the opening of its first winter conference in London.
At the IIAL’s formation a year ago, “we as a market understood that we needed to engage with Islamic businesses and markets but we also needed to identify areas where the sector was lacking”, he said. “One of these was how London could help to break the cycle where local takaful underwriters assumed the risk only to cede the vast majority to non-sharia capacity via the reinsurance markets.”
He said that while it will take some time for takaful markets to increase capacities, the momentum is there. He added that the London market and Lloyd’s syndicates are offering products to cover large commercial risks in an Islamic manner, referring to the recently launched Lloyd’s first Shariah-compliant political violence product by Chaucer. He said that Islamic businesses can now access London market capacity for a range of risks including bloodstock, cargo, marine and property risks, with an aviation product also very close to launch.
Mr Taylor said that IIAL is also working with the Chartered Insurance Institute (CII) to support Islamic insurance education, and discussing with Islamic insurance associations about working together to raise the understanding of the workings and processes of the London market.
Focusing on Asia
In 2015, IIAL focused on the Middle East, and the focus this year will be on the Islamic insurance market in Asia, with plans to host a one-day event in Kuala Lumpur in October, said Mr Taylor. He said IIAL looks to stimulate better Shariah-compliant products in Asia and to reinforce London’s role in that process.
Among the Association’s aims is to make London a centre for Islamic insurance and it is seeking to work with the wider Islamic risk markets to discuss where it can make a difference, he said. He added that the industry needs to engage with regulators to ensure the regulatory regimes facilitate an environment that does not stop insurers from innovating and bringing new products to market.
Exploring new markets
Mr Cameron Murray, Head of UK, Ireland, Middle East and Africa at Lloyd’s, said demand is increasing for Shariah-compliant covers for Islamic businesses across the world. He added that Lloyd’s market is keen on attracting talent, not only capital, in line with its 2025 Vision.
Commercial clients need to understand that though they might not be direct victims of terrorism acts, they would still suffer from the repercussions, and hence need to seek protection against such threats, said Mr Fawzi Omari, Deputy Class Underwriter, Political Violence, Chaucer. Chaucer’s Syndicate 1084 recently introduced a political violence insurance product in partnership with Cobalt Underwriting.
Mr Mahesh Mistry, Director Analytics at A.M. Best said large businesses are being reinsured in the international market, with less than 5% of sophisticated risks retained. He said retakaful capacities in the Middle East are struggling with competitive rates, the quality of businesses they are writing and distressed investment returns – altogether creating a challenging business environment. However, the limited capacities and expertise provide opportunities for international players to step in.