IslamicFinance.de

The Qatar Central bank (QCB) has extended the deadline set for the insurance, reinsurance and Takaful companies to implement its new regulations. As per original schedule, the institutions were supposed to comply to the new regulations from the end of May. After realising that the insurance companies needed more time to reposition themselves to implement the new regulations, the central bank has extended the deadline to November 30. The proposed regulations restrict the companies and insurance practitioners from getting involved in cross-border activities. Besides, the QCB regulation requires the insurance companies to simplify their procedures and finance agreements and to be transparent in relation to their pricing and features of products and services.

Datuk Dr Mohd Daud Bakar is the founder and executive chairman of Amanie Advisors. He chairs the Sharia'a Advisory Council at the Central Bank of Malaysia, the Securities Commission of Malaysia. A Sharia'a board member on various financial institutions in Malaysia and the Middle East, Dr Bakar is also deputy chairman on the board of Al Madina Takaful in Oman. Dr Bakar was recently in Muscat to attend Al Madina's Sharia'a board meeting. He spoke about the global Islamic finance industry and shared his views on the outlook for Oman's Islamic banking and takaful markets. He said that in Oman, awareness needs to be spread at all levels through all available channels.

Bahrain's Khaleeji Commercial Bank 's (KHCB) has recently signed an agreement with T'azur Islamic Insurance Company, one of Bahrain's Takaful International Islamic insurance Company providers. The agreement aims to provide Comprehensive and Third Party insurance services for vehicles, property, travel and tourism including other personal insurance products at KHCB 's branch in Budaiya. The signing ceremony was held recently at the Khaleeji Commercial Bank headquarters in the presence of KHCB Chief Executive Officer, Mr. Khalil Al Meer and T'azur Chief Executive Officer, Mr. Yahya Nooruddin, along with management officials and high-level representatives from both parties.

A.M. Best this week moved Abu Dhabi National Takaful Co. (ADNTC) from stable to positive with a financial strength rating of B++. ADNTC’s solid risk adjusted capitalization and track record of excellent underwriting processes are reflected in the new ratings. These positive factors were partially offset by an accumulated deficit within the policyholders’ fund and a modest, albeit growing, business profile. The revised outlook reflects ADNTC’s improved balance of earnings between policyholder and shareholder funds and enhanced enterprise risk management.

Kuwait-based Wethaq Takaful Insurance Company intends to sell its stake in the Egyptian unit, Wethaq Takaful Egypt for KWD1.3 million (US$4.3 million). The board of the Kuwaiti insurer had given Wednesday the go-ahead to sell its stake in the Egyptian unit in favour of a buyer whose name was not mentioned in the company's statement to the Kuwaiti Stock Exchange. The Shareholders' structure in Wethaq Egypt includes: Wethaq Takaful Insurance Company of Kuwait (60%), Kuwait-based Adeem Investment and Wealth Management Company (39.9%), and Kuwaiti investor Najeeb Al-Humaidhi (0.1%).

A recent survey carried out by private life insurer Allianz Life Indonesia in Jakarta, Bandung in West Java, Padang in West Sumatra and Samarinda in East Kalimantan showed a high demand for halal insurance products. As many as 97 percent of around 300 respondents agreed that halal investments were important. Furthermore, 93 percent of the respondents felt comfortable with sharia products because they provided transparent investments and profit-sharing schemes in addition to the management, which is according to Islamic principles. 87 percent of respondents had no problem to buy sharia products and 88 percent said it was important to apply religious values, including in financial management.

The latest fatwa from the Indonesian Ulema Council (MUI) declaring the national health insurance (JKN) program to be in violation of sharia law is deemed to be misguided, with officials saying that the public should not worry about the program being haram. The MUI issued the edict during an open meeting in Central Java recently, saying that the way the program was run by the Healthcare and Social Security Agency (BPJS Kesehatan) involved elements that were not consistent with sharia law, such as maisir (gambling) and riba (interest). House of Representatives Commission IX overseeing health said that it was up to the government to follow up on the demand by drafting a new regulation.

Lloyd's of London plans to apply for an onshore reinsurance licence and open an office in Malaysia, as part of its push into emerging markets. The licence application follows confirmation from the British and Malaysian governments. It is also targeting the Islamic insurance market. Lloyd's chairman John Nelson said around $130 million in business was written for Malaysia, but said an onshore presence would likely enable that figure to grow, without giving a target. Lloyd's said the licence is an opportunity to develop its marine, energy, construction, engineering and liability business, as well as introduce new products to the market.

Damaan Islamic Insurance Company (Beema) has announced the launch of the first of its kind service in Qatar, which enables its customers to renew or buy their motor insurance over the phone. As one of Qatar’s fastest growing Islamic insurance companies, Beema is taking its customer service to a whole new dimension at no extra cost, said Nasser Al Misnad, Deputy Chief Executive Officer of Beema.

The enhanced regulatory environment across GCC is expected to result in a surge in costs associated with the implementation of the regulations impacting the profitability of takaful players hard, especially the smaller players. According to S&P profitable insurance companies in the GCC region tend to rely on group medical business or policies that provide significant commission income from reinsurers. Only a few major local insurers can access this profitable commercial business; the smaller players, including the takaful companies, do not have a track record of servicing such contracts and lack the capacity to do so. This leaves all the small players in the region, including takaful companies, reliant on retail business sourced from agents charging high commissions.

The Islamic insurance industry has developed remarkably over the last four years. Indeed, the number of Islamic insurance companies grew by nearly 73% between 2008 and 2010 (i.e. from 113 to 195), with these being based in more than 30 countries. Given its depth, the European insurance industry is an established and fully-equipped vehicle for the introduction of Islamic insurance operations. Furthermore, the European market is familiar with the concept of mutuality and cooperative insurance, which has many similarities with Islamic insurance. The regulatory reforms across Europe have helped to accelerate the expansion of Islamic insurance products and services in this region.

GCC countries have experienced massive regulatory change with respect to the insurance sector over the past 12 months, a move that could result in shakeout in the sector, ratings agency Standard & Poor’s said. While the new set of regulations are expected to have a positive long-term impact on the sector — in terms of better capital management, liquidity, internal controls and corporate governance — regional insurance firms, particularly Islamic insurers are facing rising costs. Despite year-on-year premium growth of over 10 per cent in most GCC markets, the GCC insurance sector is overcrowded. Competition is particularly high in the takaful segment.

Bahrain's Arab Insurance Group is in discussions to take full ownership of Dubai-based Islamic reinsurer Takaful Re, as regulatory moves add pressure on firms to consolidate. ARIG is planning to buy the remaining 46 percent of shares it doesn't already own in Takaful Re, subject to shareholder and regulatory approval. Major shareholders of Takaful Re include Dubai Investments, Emirates Funds, Emirates Industrial Bank and the Islamic Development Bank, each holding a 10 percent stake. The regulatory measures have already prompted some consolidation steps, like Bahrain Kuwait Insurance Co raising its stake in local peer Takaful International to 40.9 percent.

The UK should capitalise on the growing Takaful insurance market, or other countries will steal London's lead, said experts at an IUA briefing on Islamic insurance held at Lloyd's on Tuesday. The UK government wants London to become the western hub for Islamic finance, particularly commercial insurance, said Susan Dingwall, head of Islamic insurance and partner at Norton Rose Fulbright. The government's focus on commercial lines of insurance is big break from the past, said Dingwall, speaking at a briefing hosted by the International Underwriting Association (IUA) in London this morning.

Egyptian Takaful Insurance Company (Non-life) aims to achieve premiums worth EGP 10 million (US$ 1.3million) in FY 2015-16, Managing Director Ahmed Arfeen revealed. The company expects to attain premiums volume of EGP 350 million at the end of June 2015, Arfeeen said. The initial indicators showed that the company has achieved 95% of its plan for current FY 2014-15. On other side, Egyptian Takaful Company is negotiating with a number of banks to sign bankassurance agreement in 2016, Arfeen said, noting that banks had not signed any agreements with non-life insurance companies till now. It is worth mentioning that 66% of the shareholding structure of Egyptian Takaful Company (Non-life) is divided equally among seven financial institutions.

The Islamic Financial Services Board (IFSB) has issued the Exposure Draft of its joint paper with the International Association of Insurance Supervisors (IAIS). The ‘Issues in Regulation and Supervision of Microtakaful (Islamic Microinsurance)’ paper has been issued for public consultation until August 6, a statement said. It has invited comments from regulatory and supervisory authorities, international organisations, market players, academics and other interested parties, it said. The main objective of the Joint Paper is to highlight and identify regulatory issues prevailing in the Microtakaful sector and outline the role this sector can play in enhancing financial inclusion.

Malaysia’s Islamic insurers are seeking to double policy holders in five years by investing more in digital technologies to attract a younger audience, according to Ahmad Rizlan Azman, chairman of the Malaysian Takaful Association. Takaful operators should also step up educational campaigns to boost customers to 8.4 million by 2020 from about 4 million now, he said. Attracting more professionals is another prerequisite to achieving Malaysia’s targets, Ahmad Rizlan added. Syarikat Takaful’s Mohammad Hassan said the nation’s Islamic insurers have to push for innovative new ideas to keep their growth momentum going. The company is considering an acquisition in the next two years to increase its customer base, he said.

A final approval for the draft takaful or Islamic insurance regulation, which was cleared by the State Council in February, is expected soon. The draft Takaful Insurance Law, which was prepared by the insurance regulator, Capital Market Authority (CMA), is expected to give the much-needed impetus to the development of the Islamic financial sector. The law, which was drafted with the assistance of a consultant in line with the principles of the Islamic Financial services Board, was circulated among all related parties, especially insurance firms for their feedback, before seeking approval from various entities like the Ministerial Council and the Ministry of Legal Affairs.

Takaful regulation across the GCC remains fragmented between specialist takaful regimes, general insurance regimes that are also applicable to takaful insurers and regimes which have little or no specific recognition of takaful. Despite this, the GCC takaful market remains one of the most important and fast growing in the world. The relatively recent introduction of specialist takaful regimes means we are still very much in the developmental stage of regulatory oversight. The recent introduction of the new Financial Regulations in the UAE and the potential establishment of a Shari’a Oversight Committee represents steps firmly in the direction of closer and more robust regulatory scrutiny of takaful in the UAE. We are yet to see if other GCC States will follow.

Dar Al Takaful has been recently granted the approval by Dubai Health Authority to provide medical insurance coverage to the category with salaries below AED.4000, the service is offered to the SMEs and sponsors. Saleh Al Hashmi, the Managing Director of Dar Al Takaful expressed his pleasure with the selection of Dar Al Takaful by Dubai Health Authority to provide this service and said that this confirmed the strong partnership between the government and the private sector and assure. This cooperation comes in line with Dubai Strategic Plan 2015 aims at securing the wellbeing of Dubai citizens and residents. He added that the new service is part of the firm's strategy that aims to provide the best medical care with competitive rates and without imposing extra fees on the insurance policy.