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Last Updated: Jun 25th, 2007 - 17:07:26 |
AMMAN — The remarkable growth in Islamic insurance, or takaful, should propel insurance regulatory bodies and experts to draw up a legal framework for the supervision and regulation of this ground-gaining industry, panelists said Monday.
They stressed that regulations must be consistent with international insurance norms and that this growing industry should not jeopardise conventional insurance establishments.
In opening the seminar on the Regulation of Takaful, Insurance Commission (IC) Director General Bassel Hindawi said "the takaful industry has been growing steadily in an environment of financial stability; and thus, it is prudent to realise that the regulatory and supervisory issues inherent in this growth are tackled."
The two-day seminar is organised by the IC in cooperation with the Islamic Financial Services Board (IFSB). It precedes a three-day symposium titled: The International Symposium on Islamic Insurance, which is also organised by the IC in cooperation with the UK-based Islamic Conferences Group.
Hindawi praised the efforts of the IFSB "to develop prudential, regulatory and supervisory standards and core principles that comply with Sharia rules and principles," adding that such efforts are expected to yield a breakthrough in the regulation and supervision of the Islamic financial services industry.
The Kuala Lumpur-based IFSB has been granted the status of an international organisation by the Malaysian government under a law tailored for this purpose.
The organisation "serves as an international standard setting body of the regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry," according to the organisation's web sources.
Hindawi proposed to set up a working group, comprising representatives from the IFSB and the International Association of Insurance Supervisors "to achieve conformity, mutual development and integration on issues of common interest to all concerned."
Hindawi told his audience that implementing financial regulation for takaful operators entails the challenge to formulate a framework that "not only takes into account the unique characteristics peculiar to takaful business, but also avoids putting other Islamic financial takaful institutions at a comparative disadvantage and affect their competitiveness and growth potential in the overall financial system."
"These regulatory requirements need to be consistent with the Sharia [Islamic law] rules," he stressed. "At the same time, we must be mindful of the need to ensure that the rules create a level playing field for both takaful and conventional insurers."
Panelists addressed on Monday issues like the best approach to regulating takaful and the relationship between regulatory systems of takaful and conventional insurance as well as takaful in Sharia.
Tuesday's sessions will look into the aspect of transparency and market discipline with regard to takaful and the related issue of corporate governance before the final conclusions are released.
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