Takaful / Insurance

Exclusive - #Saudi Arabia preparing tougher rules for insurers - sources

Saudi Arabia’s central bank is preparing tougher rules for insurance companies. A new supervisory framework will be introduced in the coming months that will force insurers to boost capital significantly and improve internal risk controls. The moves are aimed at triggering consolidation in the insurance industry and forcing weaker companies to merge with stronger ones. The proposed changes were discussed during a meeting between officials of the Saudi Arabia Monetary Authority (SAMA) and senior insurance executives. Saudi Arabia’s insurance market is fragmented, with only a few companies dominating the sector and an abundance of smaller firms unable to make inroads. The central bank does not want the smaller companies to fail, as more than half of the shares are owned by politically sensitive retail investors in a market unaccustomed to liquidations.

Etiqa, ethics and #insurtech

Insurance technology or insurtech strives to innovate the insurance business of risk management. As a subset of fintech, insurtech uses big data to form a precise risk profile of the subject that is being covered. According to Maybank Ageas CEO Kamaludin Ahmad, one example is the telematics system in vehicle-monitoring. He said the intended market would include logistics companies, delivery companies and even small-medium enterprises with only three to five vehicles. Kamaludin believes insurtech can be sold and will be beneficial to people. However, it requires a change of mindset. Maybank Ageas and its household brand Etiqa Takaful are dominating the market share, capturing over half the total insurance and takaful market. Some argue that the size of the Maybank-Etiqa insurance is too big, to the extent of being deemed a monopoly. Kamaludin thinks Maybank is far from monopolising anything, the focus is not on pushing sales, but on being the best in the sector.

#Islamic #banks and #Takaful sectors likely to witness more #mergers

The merger of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) in the UAE last year had triggered a number of unconfirmed reports of bank mergers across the GCC. However, most of these reports were denied by bank managements. While bankers and analysts say the time is ripe for more bank mergers, they expect more merger deals to happen in the Islamic banking and Takaful industry. A proposed merger of Kuwait Finance House and Ahli United Bank is expected to result in second biggest Islamic Bank in the GCC after Al Rajhi Bank. The merger of Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar is progressing and is expected to complete by end of the year. Some countries have only a small number of local banks, which limits competition. This means that profitability has remained solid and is therefore less likely to be a driver for M&A. Another stumbling block is the ownership structure of GCC banks, well established local private shareholders often control sizeable stakes and foreign banks only hold minority stakes.

#Saudi #insurers soar after decision to allow women to drive

Investors in Saudi Arabia are betting insurance stocks will be key beneficiaries from allowing women to drive. An index composed of 33 insurance stocks rose the most in three months. The Company for Cooperative Insurance, or Tawuniya, increased the most in seven months, other beneficiaries include Al Rajhi Takaful and Walla. The announcement to allow women to drive is one of the most dramatic moves in the government’s bid to open up society. Accroding to Jaap Meijer, head of research at Arqaam Capital, the number of cars in Saudi Arabia is likely to increase at least 20% in the next ten years as a result of the decision. He added that the increase is expected to be gradual. Net loss ratios on female drivers is likely to be lower than for men, as empirical evidence suggests that women are in fact safer drivers than men.

First Shariah-compliant #M&A #insurance policy in MENA region launched

American International Group (AIG) has placed the first Shariah-compliant mergers and acquisitions (M&A) insurance policy in the Middle East and North Africa region (MENA). AIG’s Warranty and Indemnity insurance product helps protect buyers and sellers from financial losses if misrepresentations occur. Buyers can distinguish bids, sellers can reduce indemnity obligations. AIG was advised by global law firm Norton Rose Fulbright, led by corporate/M&A partner Adjou Ait Ben Idir. Associates were Agnieszka Braciszewska (lead associate), senior associate Rachel Moylan (IT/IP aspects) and of counsel Louisa Lynch (real estate aspects). Partner Dominic Stuttaford advised on tax aspects. Mark Storrie, M&A Manager at AIG said M&A insurance provided a unique solution for MENA clients investing both in the region and globally. He was very pleased to have placed the first M&A policy in the region.

The Principles for #Sustainable #Insurance #Initiative partners with the Microinsurance Network

The UN Environment’s Principles for Sustainable Insurance Initiative is the largest collaboration between the United Nations and the insurance industry. It announced its partnership with the Microinsurance Network, a global multi-stakeholder platform for the international microinsurance community of experts and institutions.
The partnership is expected to advance the social and financial inclusion dimension of sustainable insurance with the goal of closing the insurance protection gap.
Katharine Pulvermacher, Executive Director of the Microinsurance Network said in an interview: “We are committed to achieving our vision of a world where people of all income levels - particularly the underserved, are more resilient and less vulnerable to daily and catastrophic risks. We believe that access to insurance and better risk management to reduce vulnerabilities are essential to sustainable development, and the world’s poor will not achieve lasting prosperity without them”.

Interest-free #insurance expected to draw #investments from Gulf

Turkey's Deputy Prime Minister in charge of the economy Mehmet Simsek announced that they have established the infrastructure of the interest-free insurance system. He noted that there have been no separate regulations for Islamic insurance or insurers so far, adding that the regulation is of great importance. He suggested that many questions in the framework of Islamic insurance will be answered with the new regulation. Simsek informed that in addition to serving interest-sensitive citizens, the system will also attract capital from the Gulf countries to Turkey. The system is based on the UK model, which is seen as an opportunity for Turkey as well. The Deputy Prime Minister also pointed out that one of the most important opportunities that the system brings to citizens is the balance return.

#Takaful remains challenged sector within Islamic finance industry

While Islamic banking is on a solid path to form competitive ecosystems within the global finance industry, takaful is still an underperformer within the sector. A look at the figures shows that takaful remains a small-volume and fragmented industry with total contributions of just $25bn and only around 300 takaful and retakaful operators worldwide. In comparison, the global volume of life- and non-life insurance was worth $3.6tn in contributions in 2016, according to figures from Allianz Group. According to Deloitte, the challenges are underdeveloped risk management and internal controls, improvable operational and business excellence, achieving better product governance and strategy, governance and regulatory compliance and a lack of talent building. Adding to these issues is that takaful is currently concentrated on just a few world regions. Most Islamic jurisdictions have untapped market potentials, but takaful operators are struggling with product innovation and general outreach to uninsured persons.

#Merger set to create largest #takaful firm

The entire business of Solidarity General Takaful (SGT) is proposed to be transferred to Al Ahlia Insurance Company. The Central Bank of Bahrain (CBB) received separate applications from SGT and Al Ahlia. SGT has applied to transfer its business to Al Ahlia and be dissolved under article 66 of CBB Law. SGT, a subsidiary of Solidarity Group Holding, is aiming to consolidate its position through the merger. The combined entity, which would be named Solidarity Bahrain, will have a paid-up capital of BD11.2 million and an estimated 15% market share with 10 branches, making it the largest takaful company in the country. In order to facilitate the merger, Al Ahlia shareholders approved the conversion of the insurance licence from conventional to takaful. Last year, Solidarity acquired a majority stake in Bahrain Bourse (BHB)-listed Al Ahlia Insurance Company via an open offer in a deal worth BD10.7m. Officials had said then that Al Ahlia would continue to be listed on BHB.

GCC #Islamic #insurance companies to #face #headwinds: S&P Global

Islamic insurers in the GCC will probably continue to face headwinds, despite a better overall. The forcasted slowdown follows years of annual growth in gross premiums of up to 20 %, which was mainly driven by the introduction of new mandatory covers, as well as strong increases in premium rates in Saudi Arabia, as new covers and actuarial pricing guidelines were adopted, S&P Global Ratings noted yesterday.
“Now that more policies are adequately priced, overall premium growth has slowed,” said S&P Global Ratings’ credit analyst Emir Mujkic. “The slowdown in premium growth has also been influenced by lower economic activity across all GCC states, as governments are trying to reduce or delay their spending due to lower revenues from hydrocarbon sales,” Mujkic added.

Maroc- En attendant le #takaful, le financement de l'immobilier par les banques islamiques sera une prise de risque

Deux banques islamiques ou ''participatives'' ont démarré mercredi 26 juillet 2017 officiellement leurs activités au Maroc. Le takaful n’existant pas encore sur le marché, explique Adnane El Guetari, le directeur général d'Umnia Bank. Si les Umnia Bank et Bank Assafa se sont engagées dans ce créneau pour des opérations de base, toute la profession attend cependant la réaction de la Banque centrale du Maroc, Bank Al Maghirb, et les modèles de contrats contrat ijara et au placement des dépôts d’investissements. Selon l’agence américaine de notation Standard & Poor's, la finance islamique pourrait représenter entre 10 et 20% du système bancaire du Maroc.

#Saudi #insurer Enaya to offer Sharia-compliant policies

Health insurer Saudi Enaya has joined hands with Shariyah Review Bureau, a global Sharia Advisory firm, to offer Sharia-compliant value creating policies. CEO Lee Shurey stated that offering Sharia compliant products provides a tremendous opportunity to strengthen Enaya’s position in the region. The company had already identified Islamic cooperative insurance as a major potential more than three years ago. Enaya's HR director Moneer Brembali said that the insurer has undertaken several initiatives over the years and this agreement with SRB is another demonstration of their commitment to customers. He added that SRB’s Sharia Review Certification and Audit experience will complement the company's knowledge. SRB is a Sharia Advisor which currently serves 24% of the Saudi Cooperative Insurance market in the kingdom. It also has an established record of innovation to expand and improve leading insurance practices.

Gulf African banks on Shariah compliant #insurance scheme

#Kenya’s first fully Shariah compliant bank Gulf African is banking on a Shariah compliant insurance premium financing facility. The regular Insurance Premium Financing (IPF) enables customers to cover costs of immediate insurance premiums while spreading repayment over an agreed period. This Shariah compliant IPF enables the lender to enter into an agreement with both the insurer and the insured. The bank pays the full insurance premium of the insured immediately while operating under the Tawarruq model. Gulf African Bank CEO Bdalla Abdulkhalik said this policy will act as security for the bank and customers will also enjoy effortless renewals as agreed upon. Gulf African Bank will also act as the billing and collecting agent.

#Takaful industry reports double-digit growth in the #GCC

According to the Global Takaful Report 2017, the Takaful industry has grown in double digits across the Gulf Cooperation Council (GCC) in recent years. Between 2012 and 2015 the GCC markets grew by a compounded annual growth rate (CAGR) of 18%. While South East Asia reported a negative growth of 4% due to currency depreciation, Africa reported a CAGR of 19% during the same period. According to Safder Jaffer, Consulting Actuary at Milliman, Saudi Arabia is the largest Takaful market with a gross written contribution (GWC) of $9.7 billion (Dh35.62 billion) in 2015. The Saudi market is dominated by general insurance with limited life insurance business. GCC markets continue to dominate general takaful whereas South East Asia continues to dominate life takaful. In the GCC, family takaful achieved a record growth of 34% in 2015. Global takaful GWC is estimated at $14.9 billion as at the close of 2015. There is strong growth in overall global takaful market in the range of 13 to 14% each year. The split of the family and general takaful market in 2015 is approximately 17% and 83% respectively.

Treasury targets billions through #Sukuk #securities

The Kenyan Treasury will push through the country’s first Sukuk bond in the coming year. The changes will see the Public Finance Management Act amended to allow the issuance of the bond, which has been in the works since 2014.
Treasury CS Henry Rotich said that the Capital Markets Act, the Co-operatives Societies Act and Sacco Societies Act are also lined up for ammendment.
The government plans to borrow up to Sh256 billion from external sources in the next fiscal year, to plug a budget deficit of Sh524 billion. The State has in the recent past taken up foreign loans in form of the Eurobond and syndicated loans from commercial lenders. Kenya has been mulling over a Sukuk bond for the past two fiscal years, given its highly discounted nature, which would provide cheaper financing compared to commercial loans. The lack of the necessary regulatory framework has, however, delayed this option. In the current fiscal year, Kenya has turned to syndicated loans to finance part of her budget deficit. These loans include the just signed $800 million loan from four international banks, and a similar $500 million facility taken from the African Export-Import bank.

#Takaful Ikhlas to introduce online platform by year-end

Takaful Ikhlas aims to introduce its online platform for basic term life insurance to encourage youths to obtain insurance coverage. Senior Vice-President, Wan Rosli Shaharuddin Wan Yaacob is optimistic the online platform will attract youths as they will be able to compare the products' features, policies, as well as pricing via the platform. He said Malaysians below 35 years old currently constituted the largest group in the country who have yet to be covered by any insurance company. According to Bank Negara Malaysia (BNM) Financial Stability and Payments Report 2016, Malaysia's overall insurance penetration remained flat, within the range of 54% to 56% over the last five years. The central bank had earlier set the penetration rate target at 75% by 2020. It specifies that standalone protection products must be available through direct channels from Jan 1, 2017, followed by critical illness and medical and health insurance/takaful products by Jan 1, 2018.

#GCC #insurers’ gross premiums set to grow despite slowing economies

The insurance sector across the GCC is expected to report growth in gross premiums on continued growth in infrastructure investment and favourable regulatory changes. S&P Global Ratings analyst Emir Mujkic said gross premiums will increase in 2017 by around 30% in Kuwait, and by up to 10% in the other three markets. GDP growth will range between 1.5% for Kuwait and about 3.5% for Qatar. The Saudi Arabian Monetary Authority (SAMA) is expected to support the efforts of the traffic police to ensure drivers of illegally uninsured vehicles to buy motor coverage. There are currently 2.5 million Saudi nationals working in the private sector that are not covered by their employers’ group medical schemes.During 2017, the authorities will seek to prompt private employers to provide medical cover for all their staff.

Jaiz #Takaful Insurance to commence in 3 states

The Jaiz Foundation has expressed readiness to commence Islamic Takaful Insurance in 3 Nigerian states, Kaduna, Kano and Lagos, with the head office being in Abuja. This was disclosed by the Chairman of Jaiz Takaful Insurance, Dr Umaru Abdul Mutallab, who explained that the insurance products give equal opportunity for customers to be owners of the company as well. Also speaking on the operation of the insurance policy, the Managing Director of Jaiz Islamic Takaful Insurance, Momodou Musa Joof, said the company shares profit by 80% to its participants who have not suffered losses. In the meantime, those who suffer losses would have been paid first before the distribution of profit. The element which goes to the needy called Zakat is also distributed before profit is shared. Joof noted that the good thing in Takaful is that, if no loss occurs, the customer's contribution becomes an automatic investment.

Jaiz Foundation Commences #Takaful Islamic Insurance

The Jaiz Foundation is set to kick start Islamic ‘Takaful’ Insurance in Kaduna, Kano, Lagos with head office in Abuja. As part of the final preparation, the Foundation held a week induction training for the staff of the organization. The chairman of Jaiz Takaful Insurance advised Nigerians to take advantage of the new insurance concept. According to Mananging Director of Jaiz Islamic Takaful Insurance, Momodou Musa Joof, the company shares profit by 80% to its participants who have not suffered losses. In the meantime, those who suffer losses would have been paid first before the distribution of profit. The elements which goes to the needy, which is called Zakat is also distributed before profit is shared. Prominent scholars like Prof Muhammed Nasirudeen Maiturare, the Vice Chancellor of Ibrahim Badamosi Babangida University, also participated in the induction training for the staff of Jaiz Takaful Insurance.

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