1 International Takaful Summit 2007, London The Role of Pure Retakaful Operators versus Conventional...

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International Takaful Summit 2007, London

The Role of Pure Retakaful Operators versus

Conventional Reinsurers:

Envisioning the Future

2nd November 2007, London, UK

Kamsani Tati Tokio Marine Retakaful

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Sharing of experienceand perspective

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Business Models

• Traditional• American• Japanese

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History & Development of Islamic Finance

Source: Islamic Financial Services Industry Development. The Ten–Year Framework and StrategiesA Joint initiative of the Islamic Research & Training Institute of IDB and IFSB

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History & Development of Islamic Finance

Source: Islamic Financial Services Industry Development. The Ten–Year Framework and StrategiesA Joint initiative of the Islamic Research & Training Institute of IDB and IFSB

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History & Development of Takaful

Sudan 1979Malaysia 1985

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Family Takaful in Malaysia

New Business Business In Force

Calendar Year

Year(Period)

No. ofCertificates

Contribution(RM million)

No. ofCertificates

Contribution(RM million)

1985 1 834 0.94 792 0.91

1987 3 2,185 1.69 2,835 3.35

1990 6 3,491 4.39 11,582 17.55

1993 9 6,940 10.96 24,590 38.22

2000 16 191,726 297.30 554,809 798.10

2001 17 205,873 368.00 726,398 1057.80

2002 18 237,037 452.20 888,879 1357.60

Source: BNM, Takaful Annual Report, 2000 & 2002 and Syarikat Takaful Malaysia Bhd

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History & Development of Takaful

Encouraging development in Malaysia createda tsunami of interest in Takaful in other regions

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Takaful and Insurance

Twins but not identical?

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Insurance in Islam

• Providing protection is encouraged• Elements of uncertainty (gharar) in the

contract and usury (riba) in its operations made it not in line with Islamic law

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Sharing …….

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Islamic Insurance

• Collectively providing protection• Modus operandi within the parameters of

Islamic law

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Insurance in Islam

• Islam is not only a religion, it is also a belief

• In Islam, law and religion, law and morals, and law and so-called “church” are inseparable

(Gibb, Modern Trends in Islamic Law, p.87)

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Commercial Insurance isprohibited

International Islamic Fiqh Academy’s resolution 9 (2/9)

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Takaful

The difference with Insurance is only visible from Islamic perspective.

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Takaful The risks that Takaful companies managed

are no different from those risks taken by conventional insurance companies.

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Takaful

• It is the duty, responsibility and accountability of Takaful operators to ensure that their entire business operations (including Retakaful arrangements) are Shariah compliant

• Takaful operators must refrain from invoking the doctrine of necessity so easily

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Insure the Insurer

It can be liken as the suspensions of a

car; the road remains bumpy but the

jerks experienced by the driver is

reduced.

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Reinsurance Retakaful

• From the first dollar – Quota share– Quota share plus surplus

• In excess of retention– Surplus

• Retained portfolios– Cat XL

• Capital– Financial Re

• From the first dollar– Quota share– Quota share plus

surplus

• In excess of retention– Surplus

• Retained Portfolios– Cat XL

• Capital – Financial Re

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Retakaful Companies

• Hire experienced & professionally qualified staff• Training & development programs match the

insurance industry• Develop core competencies matching the

insurance industry • Remuneration package within the insurance

industry standards

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Retakaful Companies

• Capacity with attractive rates• Technical supports such as product pricing and

design etc• Technical training- actuarial, underwriting, claims

assessment etc• Inputs are in Shariah perspective• Pay zakah

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The Role of Retakaful

Source: Islamic Financial Services Industry Development. The Ten–Year Framework and StrategiesA Joint initiative of the Islamic Research & Training Institute of IDB and IFSB

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“AA/Stable

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A Shariah compliant Takaful operator would readily submit that Retakaful providers are vital to the Takaful industry

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Complete and Caring

• It completes the whole chain of Takaful concept

• It accelerates the growth and development of the Takaful industry

• It creates distributable fund for the needy in the form of zakah paid by Takaful and Retakaful companies

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Envisioning the future….

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Takaful and Retakaful

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Thank you