Dhabi- March 10, 2015
UAE ranked number one internationally for its initiatives that pass laws and
legislations that regulate the Islamic financial transactions sector, including
the Takaful insurance industry.
In a press release issued on Tuesday, the IA affirmed that
the UAE is a global pioneer in creating initiatives that regulate Islamic
financial transactions and the Takaful insurance industry. The UAE follows a
unique model that considers and issues Takaful legislations and laws that are followed
across international markets.
to the press release, the UAE pursues the creation of a global Islamic financial
transaction product, by conducting a comprehensive codification of the Takaful
sector. It aims for its recommendations to be adopted internationally in accordance
with competitive standards that are adequate to all markets worldwide.
IA explained that the UAE is seeking a comprehensive law to govern Islamic
financial transactions, in which the Islamic insurance sector constitutes a
part thereof. By transforming Jurisprudential and Sharia (lawful) opinions into
laws and legislative regulations that can be adopted by insurance markets and by
judicial and legal authorities, new frameworks can be used as a reference
across international markets. The IA indicated that once it is developed and
adopted in reality, this initiative would constitute a turnaround
in the area of Islamic financial transactions. It will contribute to the
achievement of sustainable growth at the level of the international Takaful
IA’s press release emphasized the UAE’s superiority in the area of legislations
and laws that support Islamic financial transactions, the Takaful insurance
sector, and other areas. It has translated its international leadership and the
universality of its development model under the direction of H. H. Sheikh
Khalifa bin Zayed Al Nahyan (President of the UAE) and H. H. Sheikh Mohammed
bin Rashid Al Maktoum (Vice President and Prime Minister of the United Arab
Emirates and Governor of Dubai). The IA indicated that this superiority proves
that the UAE is on top in all fields and is developing based on international
standards. The UAE’s people are capable of creativity, innovation, and
competitiveness in international forums.
IA’s press released noted that the UAE has multiple and diverse initiatives for
regulating the Takaful insurance industry. They are founded on many core
pillars, including the Takaful insurance statute, the financial, technical,
investment, and accounting aspects, and others.
press release stated that the UAE has issued the Takaful insurance law of 2010,
which represents the lead in insurance which has been taken by the UAE at the regional
level. It is also considered one of the most comprehensive laws at the Islamic
level. The financial regulations, which regulate the financial, technical,
investment, and accounting activities of Takaful insurance companies, were
issued at the end of 2014. This has given the UAE the lead at the regional
level, as it has adopted state-of-the-art solvency measurement requirements
which have improved the credit rating of the UAE’s companies. It has also reinforced
the positive outlook that rating institutions have of the UAE, as well as those
of global financial and investment institutions.
financial regulations designed for Takaful insurance companies constitute a
milestone in the history of the UAE’s insurance sector. The regulations are
consistent and competitive with the best applicable standards worldwide and, at
the same time, they are compatible with the Takaful insurance law applicable in
the UAE. The regulations are also consistent with the principles of the honorable
Islamic law; it has been demonstrated that the policies which are 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, the provisions related to the distribution
of the surplus accrued by the underwriters of Takaful insurance and the
importance of separating the assets of participants’ accounts from those of the
company’s shareholders’ accounts also comply with Islamic law.
issuing financial regulations to Takaful insurance companies, the IA has adopted
the best global legislative practices when developing their regulations. The
laws facilitate adoption on one hand and oversight on the other hand, and in a
manner that upgrades the principles and technical rules required to promote the
establishment of modern and advanced regulatory principles for the UAE’s
insurance market as per international best practices. This approach protects
the rights of policyholders and shareholders alike, and protects the companies
from any future potential risks.
financial regulations that target Takaful insurance companies include the
financial, technical, investment, and accounting aspects. These include principles
of investing policyholders’ rights, the solvency margin and minimum security
amounts, the principles for calculating technical allocations, defining the
company's assets against the insurance liabilities that arise, the regulations that
enforce companies to develop and maintain their records, and the data and
records that should be delivered to the IA.