MALAYSIA: In the name of innovation and sustainability, the Malaysian central bank is revising its framework for Islamic insurers to include a more robust Shariah regime in a bid to bolster Takaful fund management practices and ensure the sector's longevity.
Building on its existing framework issued almost a decade ago, Bank Negara Malaysia (BNM) is seeking industry feedback on a new exposure draft which introduces operational requirements for Shariah contracts commonly adopted in the Takaful business, namely: Tabarru', Wakalah, Mudarabah, Qard and Hibah.
"These proposed Takaful operational requirements complement the Shariah standards and operational requirements issued by the bank by providing additional guidance dealing with the specificities of Takaful business," BNM explained.
The exposure draft, as viewed by IFN, also sets out requirements to enhance internal controls over the creation of additional Takaful funds. Under the revamped standard, Takaful operators would be required to establish a process to assess the performance of the additional funds and their long-term sustainability, ascertain different pricing methodologies specific to different products and consider different surplus distribution methods, among others.
"Collectively, these revisions seek to spur greater innovation in Takaful while further safeguarding the position of Takaful participants," the central bank noted. Malaysia is one of the largest markets for Islamic insurance globally: combined net contributions of Family and General Takaful businesses were up 9.5% last year to RM8.3 billion (US$2.08 billion), accounting for 15.2% of the total insurance market in terms of net premiums and contributions, according to official figures.
Market participants have until mid-July to submit their comments on the revised Takaful Operational Framework including any potential implementation issues on applying Shariah contracts in designing participants' individual fund for savings in Family and General Takaful businesses and investment funds for General Takaful, on the need to create an additional participants' risk fund for group Takaful products and on whether the creation of an additional participants' risk fund should be mandated to ensure equitable surplus distribution, among others.
The new rules are expected to come into effect in six months' time. |
Still hoping for an Italian sovereign Sukuk issuance
According to a recent press release of the Ministry of Finance, the value of Italian public real estate assets – some one million cadastral units with a surface of 325 million square meters – is in the region of EUR283 billion (US$331.78 billion). In terms of the type of assets, the large majority, approximately 77% with a value of some EUR217 billion (US$254.4 billion), are directly used by the public administration itself. |
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