Under the patronage of Mansour bin Zayed, The Insurance Authority organizes the Islamic Insurance Conference in Abu Dhabi on 8 March 2015

: 2/11/2015

Wednesday, February 11, 2015

 

Al Mansoori: The Conference seeks to establish a scientific and jurisprudential reference from Abu Dhabi that can develop the Islamic insurance industry worldwide

 

Abu Dhabi on February 8, 2015

 

Under the patronage of H. H. Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, the Insurance Authority has organized the Islamic Insurance Conference (IIC). The event will be held in Abu Dhabi on 8-9 March 2015 under the motto “Reality and Prospects for the Development of Islamic Insurance Regulations”.

 

H. E. Eng. Sultan Bin Saeed Al Mansoori, Minister of Economy and Chairman of the Insurance Authority (IA), said that the IIC seeks to establish a scientific and jurisprudential reference from Abu Dhabi that can develop the Islamic insurance industry worldwide and achieve a turnaround in the Sharia and legal rules associated with Takaful insurance activities.

 

Through its scientific sessions and through the participation of decision makers, stakeholders, and specialized experts (in the types of insurance and the jurisprudence of Islamic financial transactions), the IIC will seek to capture the reality of the Islamic insurance industry. It will set a comprehensive vision of the industry’s future and will ensure the development of the Sharia and legal rules governing the Islamic insurance industry. These efforts will lead to the sustainable growth of Islamic insurance companies and global Takaful markets.

 

He asserted that the Insurance Authority will organize this international conference amidst the growth and increasing penetration of the Islamic insurance industry in the UAE, the region, and international markets. This growth is largely due to a rising demand for the products of Islamic insurance by large segments of customers in all markets of the world.

 

“The UAE in particular, and the region in general, have seen a strong growth in this industry during recent years, leading experts to form an optimistic image of the future of this industry worldwide”, he added.

 

He affirmed that in order to expand the desired scope of this industry, we need to overcome the obstacles that hinder it. He indicated that it is important to collectively set a comprehensive framework and vision of the future and look to empower the industry from the legal, regulatory, and Sharia perspectives.

 

The IIC aims to achieve a pool of objectives that will serve the Islamic insurance industry, most importantly, by introducing the significant role that the Takaful insurance sector can play in protecting the national economy. Other objective include providing economic protection to the members of the society, improving awareness, boosting the confidence of markets in Islamic insurance products and Takaful services, and boosting growth opportunities for Islamic insurance industry worldwide. These objectives can be achieved by setting legislation and laws that promote development from the legal and Sharia perspectives.

 

The IIC further aims at detect the real challenges that the Takaful insurance industry faces, pinpoint the methods and tools needed to face and overcome these, and state the ways of developing the security which is provided to clients by Takaful insurance companies. The IIC also aims to expand the transparency of Takaful insurance company operations, in order to create more links between the company and the participants and thereby improve the general contribution made by the insurance sector to GDP.

 

Over two days, the IIC will focus on many key pillars that address the reality of the Islamic insurance industry and capture the challenges it faces, thereby providing the current and future prerequisites of developing the industry. These pillars represent a source of new perspectives on Takaful insurance activities in the UAE, the region, and the world.  Other pillars include the Sharia principles and rules  that serve as the foundation of Islamic (Takaful) insurance, how to develop the Sharia principles and rules that govern the relationship between the participants and the Takaful insurance company (in terms of the security which is provided by the company to the participants), the importance of codifying the Takaful sector, the importance of informing the participants of the work progress made by Takaful insurance companies, how to engage participants in the technical and financial controls they have over the company’s business, governance in Islamic insurance companies, the technical aspects of participants’ accounts (inputs, outputs, outcomes, and how to determine the cost that the participants’ account is charged with), and the rules governing the distribution of the surplus accrued by the participants’ account.

 

It is worth mentioning that the Insurance Authority has recently issued resolution number (26) of 2014 concerning the financial regulations governing Takaful insurance companies. This resolution regulates the financial, technical, investment, and accounting activity of public Takaful insurance companies in the UAE.

 

The issued regulations are consistent with the Takaful insurance regulation which were issued by the Insurance Authority and are still applicable in the UAE. Furthermore, they are consistent with the honorable Islamic Law. It can be demonstrated that the policies required to be adopted in Islamic insurance companies are consistent with the terms of the Principal-Agent (Wakala) model or the Wakala & Mudarabah model. In addition,  provisions related to the distribution of the surplus accrued by Takaful insurance participants and the importance of separating the assets of participants’ accounts from those of shareholders’ accounts in the company are also consistent with Islamic law.

 The issuing of regulations represents an important turnaround in the development of the regulatory principles and technical rules. These changes should develop the performance of the UAE’s Takaful insurance market and protect the participants, shareholders, and companies from the risks they may be exposed to in the future. The rules achieve this by by proactively verifying the solvency of companies and the integrity of their financial procedures.

 

The financial regulations applicable to Takaful insurance companies include seven key sections that address the financial, technical, investment, and accounting aspects. These include the principles of investing policyholders’ rights, the solvency margin and minimum guarantee amounts, the rules for calculating technical allocations, the ways of determining  the assets of a company against the insurance liabilities that arise, the instructions concerning the records that the company should create and maintain, the data and records that should be presented to the Insurance Authority, the rules for drafting the accounting books and records of the companies, agents, and brokers, the ways of determining the data that should be listed in these books and records, and the accounting policies and procedures that should be adopted by the insurance companies.

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