London- United Kingdom

Rethinking the Takaful Model: A New Approach for the Retakaful Industry

The 9th International Takaful Summit back to the UK after a break of two years to reflect the growing interest in Takaful provision from the premier London insurance market.

There are three developments which can galvanise the growth of the Takaful and re-Takaful industry. There is a mismatch between the growth of Islamic Finance assets and Takaful Contribution pools. This is primarily due to the lack of Takaful provision for large commercial risks. We now have a potential solution for the provision of Re-Takaful for large real estate and construction projects. We also have the beginning of re-thinking on the merits of mutuals and their potential contribution to Takaful provision in many markets. Finally, we have a need to meet the emerging challenge of pensions provision in which Takaful will need to play a pivotal role. Each of these developments creates potential for new entrants to the field and enriching the scope of available solutions.

We also note that there is a divergence emerging in the range of acceptable Takaful provision models in many countries. As a result of recent experience, there is a fundamental re-think of the key underlying principles of Takaful that were enunciated over thirty years ago. Thus, issues like the balance between risk sharing and risk transfer and provision of Qard Al Hassan by Takaful operators are coming back to the fore. Hitherto, these subtleties have been addressed non-transparently, via Wakala fees, performance incentives and the like. Now many jurisdictions and regulators are keen on addressing these in a more transparent manner. The process is also expected to be assisted by the emergence of standards for the industry, especially efforts of bodies like the Financial Accreditation Agency (FAA) of Malaysia. In this Summit we have tried to further debate on this re-thinking and re-tooling in the Takaful world.

The 9th International Takaful Summit builds on the eight successful events: in London, November 2007, July 2008, July 2009, July 2010, July 2011, July 2012; in Cairo, February 2013; in Abu Dhabi, February 2014. At the International Takaful Summits we endeavour to enable market participants from all over the world to capture the potential for Islamic Finance and Insurance in the world. At every Summit, we strive to offer robust thought leadership and the most informed platforms and opportunities for our participants to get maximum benefit from these interactions.

Prof. M Iqbal Asaria, CBE
International Takaful Summit 2015