The worldwide Takaful market is represented by some 60 companies with an annual gross premium income of around US$3.5 billion. Currently the European Third Life, Non-Life and Consolidated Life Directives permit an authorized licensed insurance company which fulfils the requisite conditions to operate cross-border in another member state. These are referred to as “passporting rights” and can be exercised after notification to the local insurance regulator within the relevant EC member state. Hence there is limited need for establishing a new subsidiary. Within the international markets including the GCC there are currently limited opportunities for an authorized insurance provider to service multiple markets with a single licensed entity. Most national regulators require the Takaful operator to be licensed locally. In certain jurisdictions like Pakistan, Saudi Arabia, UAE and Malaysia, the rules for foreign ownership are being liberalized and may permit foreign ownership stakes in locally established insurance companies. Alternatively, foreign Takaful companies may choose to enter into a strategic alliance or tie up with a local Takaful operator. One other possibility is to establish a branch operation within a regulatory international environment which permits such a setup. Currently the Dubai International Financial Centre (DIFC) is an onshore capital market designated as a financial free zone designed to create a unique financial services cluster economy for wealth creation initiatives. The DIFC offers a hub for insurance and re-insurance companies, brokers, captives and other service providers, enabling them to establish their wholesale regional operations in a single business base in the Centre.
SOHAIL JAFFER
I agree with Professor Rodney Wilson from Durham University’s statement that: “Other central banks in the Muslim world have been less pro-active either because governments have associated Islamic banks (wrongly) with Islamic political parties and movements, or because there has been skepticism, and often ignorance of Islamic Banking”. However it is worth pointing out that the oil-rich states of the Gulf have difficulties in reaching Islamic countries such as Indonesia and as such intermediary countries like Singapore play a role in meeting their capital liquidity needs. A case in point is my previous company, Karim Business Consultant, a specialist Islamic finance consultancy from Indonesia that expanded to Singapore. With the opening of the Singapore office and its role as a hub, Middle East investors could be connected to Indonesia. In this manner we could still service clients from the Middle East that would have otherwise not been possible, as Indonesia’s regulations are less familiar to Middle East investors.
ABDUL GHONI |