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Malaysian group develops takaful model Web posted at: 3/19/2010 0:51:8 Source ::: Reuters KUALA LUMPUR: Islamic finance researchers backed by the Malaysian Central Bank have developed a new wadiah retakaful model which could boost protection for Shariah insurers. The structure aims to address some of the sharia objections to the popular wakala, mudaraba and hybrid models currently used by Islamic reinsurers who play a key role in the $14bn takaful industry. Based on the contracts of wakala and wadiah yad dhamanah, the concept devised by the International Shariah Research Academy for Islamic Finance (ISRA) states that takaful players own the surplus from contributions paid into a fund. �The wadiah fund is owned by the takaful companies so there is no issue of ownership and with that you can resolve quite a number of other issues,�ISRA Executive Director Mohamad Akram Laldin said. Under the pure wakala and mudaraba models now used, there are differences in opinions as to who is entitled to the surplus in the funds, with some companies sharing it with participants while others returning it to the participants only. Under the new model, takaful companies would contribute to a fund managed by an Islamic reinsurer. The reinsurer is paid an agent�s fee and invests the fund or uses it for other purposes. The retakaful firm gets the profits earned from investments. Reserves and claims are deducted from the fund and the surplus is returned to the takaful companies. The system is similar to operating a current account with an Islamic bank which guarantees the principal, ISRA said. �It�s sensible to say that these assets are owned by the participants in the fund rather than the retakaful operator,�said Peter Hodgins, a Dubai-based takaful lawyer with Clyde & Co. �If you didn�t have the ownership point, what happens in insolvency then starts to just look like a conventional reinsurance model ie. all of those assets in the fund are owned by the retakaful operator.� The Kuala Lumpur-based ISRA said the new model would help takaful companies reach a wider market. �The return of the full surplus to participants complies with (industry body) AAOIFI guidelines,�ISRA said in a report to brief industry players. �It will consequently result in a greater number of (takaful companies) that can do business with the retakaful operator.� Akram said the wadiah model was not expected to affect the profitability of retakaful companies and would �motivate them to really find a good avenue (of investments)�. He said the concept would be refined taking into account industry feedback. Despite the entry of new players, the retakaful industry remains small and the limited capacity has been cited as a key factor holding back the global takaful industry. The world�s largest retakaful company is ACR ReTakaful Holdings Ltd, owned by ACR Capital Holdings, the Dubai Group and Malaysian sovereign wealth fund Khazanah Nasional Bhd, with a paid-up capital of $300m, according to its website. Other companies that have retakaful business include Swiss Re, Munich Re and Best Re. ALLAH BLESSES MOHAMMAD AND GIVES HIM PEACE Your Brother; NIDAL ALSAYYED, PhD Researcher, MSc, (CIFE™), Islamic Economics, Banking and FinanceNIDAL's PUBLICATION, NIDAL RESUME Kuala Lumpur, Malaysia Tel. +60172559700, Fax. +603 414 70700 Email(1): [email protected] Email(2): [email protected] Email(3): [email protected] Email(4): [email protected] On Google: http://groups.google.com/group/nidal_islamic-finance On LinkedIn: http://www.linkedin.com/in/alsayyed On Skype: nidal_IslamicFinance On Fringe: nsayed70 On Facebook: [email protected] -- You received this message because you are subscribed to the Google Groups "Kantakji Group" group. To post to this group, send email to [email protected] To unsubscribe from this group لفك الاشتراك من المجموعة أرسل للعنوان التالي رسالة فارغة, send email to [email protected] For more options, visit this group at http://groups.google.com/group/kantakjigroup?hl=en سياسة النشر في المجموعة: - ترك ما عارض أهل السنة والجماعة. - الاكتفاء بأمور ذات علاقة بالاقتصاد الإسلامي وعلومه ولو بالشيء البسيط. ويستثنى من هذا مايتعلق بالشأن العام على مستوى الأمة كحدث غزة مثلا. - عدم ذكر ما يتعلق بشخص طبيعي أو اعتباري بعينه. باستثناء الأمر العام الذي يهم عامة المسلمين. - تمرير بعض الأشياء الخفيفة المسلية ضمن قواعد الأدب وخاصة منها التي تأتي من أعضاء لا يشاركون عادة، والقصد من ذلك تشجيعهم على التفاعل الإيجابي. - ترك المديح الشخصي. To unsubscribe from this group, send email to kantakjigroup+unsubscribegooglegroups.com or reply to this email with the words "REMOVE ME" as the subject.
