Dr. Habib Al Mulla, Chairman of the Dubai Financial Services Authority, called upon governments to open the insurance market in the region and for Islamic insurance companies to adopt an innovative approach to their products.
Dr. Habib outlined the viability and sustainability of the Takaful industry. “Insurance remains an important tool to reduce risk, and it is as important to emerging markets as it is to developed economies. Regulators must recognise that the modern Takaful industry is still in its formative stages and many issues need to be resolved.”
Dr. Habib said: “These problems notwithstanding, it is important to encourage an open and dynamic market that allows for innovation, competition, and the highest standards of transparency and regulatory discipline.”
Dr. Habib urged Takaful operators to work with other members of the financial community to develop innovative Sharia-compliant investment vehicles.
He said: “Regulators need to have a clear understanding of risk and adopt a risk-based approach to Takaful and Retakaful. They should ensure that all firms, both conventional and Islamic, meet the same international standards.
“By instigating and maintaining international standards, the Takaful and Retakaful industry will become more robust and develop as a recognised alternative to conventional insurance. Through international cooperation and agreement, the industry will go from strength to strength and gain a solid foothold in the international insurance market.”
Dr. Habib Al Mulla shared his perspectives on Islamic insurance models in a speech to inaugurate the first World Takaful Conference. The conference runs in Dubai from April 9-10 at the Grand Hyatt hotel.
The World Takaful Conference will discuss current issues and bring together international Takaful and Retakaful operators and experts, representatives of conventional and Islamic banking, financial regulators, brokers, and policy-makers.
Takaful is an Islamic insurance model based on the principles of Sharia Law. Takaful insurance dates back more than 1,400 years and stems from the Arabic word ‘Kafalah’, which means ‘mutual guarantee’.
The Takaful system is based on mutual cooperation between different groups, where members contribute a certain sum of money to a common pool.
Just as the global Islamic Bonds or Sukuk market has grown from a mere US$100 million in 2000 to US$12.75 billion early this year, analysts predict heady annual growth for the Takaful market of around 15 to 20 per cent. Takaful operators are gearing up to capitalise on opportunities emerging from one of the fastest growing financial industries in the world.
The Dubai Financial Services Authority (DFSA) is a central component of the Dubai International Financial Centre (DIFC), a new financial centre established to position Dubai as a recognised hub for institutional finance, and the regional gateway for capital and investment to the Middle East.
The DFSA is an independent, integrated regulatory authority responsible for the regulation of all financial and ancillary services conducted in or from the Centre, including asset management, banking, securities trading, Islamic finance, re-insurance, and an international financial exchange. The DFSA has been created using principle-based primary legislation modeled closely on that used in London and New York, and the DFSA regulatory regime operates to standards that meet or exceed those applying in the world's major financial centres.
