gateway to islamic finance interview - Institute of Islamic Banking ...

islamic.banking.com
  • No tags were found...

gateway to islamic finance interview - Institute of Islamic Banking ...

NEWHORIZON Rajab–Ramadan 1429

IIBI LECTURES

May: Current issues

in takaful

Mohammad Khan, director of takaful,

Islamic finance, actuarial and insurance

solutions at Pricewaterhouse-

Coopers LLP, presented an overview

of takaful structures used around the

world and what the current issues

facing the industry are.

The lecture was hosted by the

Chartered Insurance Institute (CII)

and chaired by Nick Plastow,

operations manager, face-to-face

training at the CII.

The lecture began with a brief history of

takaful and the features of the business that

ensured it was Shari’ah-compliant

compared to conventional insurance.

Khan explored the various factors for why

takaful is estimated to be growing at over

20 per cent a year. These include the

increased wealth and propensity to buy

financial products of individual Muslims

around the world, the increase in awareness

and demand for Shari’ah-compliant

products by individual Muslims and the

realisation by potential providers that

Islamic products can be offered at a similar

price to competitive products and that there

is demand for these products.

Khan discussed the issues affecting the

growth potential of takaful in the EU, in

particular the challenges faced by takaful

businesses ensuring that they are not only

Shari’ah-compliant but also meet all of the

national insurance regulations in the

country in which they are based. There was

a discussion with the audience about how

takaful products could be successfully

marketed to both Muslims and non-

Muslims, and how different marketing

strategies would be required to successfully

market to these different sectors.

Khan pointed out that takaful products are

inherently ethical (i.e. takaful assets are

invested in ethical assets, the customers

share in any surpluses generated by the

takaful company, and an independent

Shari’ah board ensured that the company

was run on a Shari’ah-compliant, or

‘ethical’, manner). Consequently, if takaful

businesses could offer price-competitive

products such as motor insurance, they

would have a valuable marketing

proposition to non-Muslims in the UK, US

and Europe. Khan highlighted that in more

mature Islamic finance economies (such as

Malaysia), a significant proportion of

takaful customers are non-Muslims.

The issues of risks involved for policyholders

and shareholders, and how these risks are

Shari’ah-compliant were explored. Although

policyholders bear the underwriting risk

within a takaful business, the operating

capital, regulatory capital and operating

expense risk are borne by the shareholders.

Also, the shareholders and their managers

are responsible for the strategy and therefore

the possible future viability of the takaful

entity. There was then a lively debate

amongst the audience as to how takaful met

the Shari’ah challenges of the conventional

insurance and whether all issues of Shari’ah

compliance could be met.

May Lecture

Khan highlighted that the major issue for

Islamic financial institutions around the

world is the availability of Shari’ahcompliant

investments. This is proving to be

an issue in the GCC and Asian countries,

not just Europe and the US. In particular,

there is a lack of short term Shari’ahcompliant

assets, and although there is

greater availability of sukuk and Islamic

investment funds, the shorter term Shari’ahcompliant

asset class still appears to be

under-resourced.

Khan concluded the talk by highlighting

that the major issue for the growth of

takaful was the lack of skilled professionals

who not only understand insurance but also

understand the Shari’ah principles required

for each function within an Islamic

insurance company.

June: Islamic hedge funds

– a possibility or a

contradiction in terms?

Ruggiero Omar Lomonaco, head of

Islamic finance at ABN AMRO,

presented an overview of Shari’ahcompliant

hedge funds and proposed

Islamic dynamic strategies’ as a

possible way forward for the Islamic

wealth management industry.

The lecture was chaired by Haliza Abd

Rahim, legal counsel at BMB Islamic,

an international Shari’ah advisory firm.

Various strategies used by hedge fund

managers include long/short,

leveraging and margin trading.

However, statistics indicate that

long/short funds represent the largest

proportion of current funds.

www.newhorizon-islamicbanking.com IIBI 43

More magazines by this user
Similar magazines