Takaful And Actuarial Practices 18 Nove

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Takaful and Actuarial Practices (TK
“Regulations shape the Industry”. The development of the Takaful (or Islamic insurance) industry is very much dependent on its regulations and related guidelines. In many parts of the world Takaful is hardly visible as there are still subject to the Insurance Law. Only Malaysia has its own set of regulations. The first Takaful Act was promulgated in 1984 and recently was replaced by the Islamic Financial Services Act 2013. Even that many of the provisions of the Act and related guidelines are similar to that of insurance. a. Discuss whether or not a Takaful Operator can be successful in an environment without its own regulations. b. Critically examine existing regulations (and if preferred that in your own country) and define the issues that can hinder the growth of takaful. c. Provide recommendations how the regulation can be modified or enhanced to promote further growth of the Takaful industry.

Abstract
The development of takaful industry is very much dependent on its regulation and guidelines. Malaysia has proven that with robust and effective regulatory framework in place, the takaful industry can be developed and continuously growing. Without its own regulation takaful industry might not be able to success. New regulations and guidelines have been issued in Malaysia recently for the purpose of promoting further growth. However, these guidelines may pose various implication and drawbacks to the industry.

Key terms of Research:
1. Takaful 2. Regulation 3. Islamic Financial Services Act 2013 4. Takaful Operational Framework 5. Risk Based Capital framework for Takaful

Table of Contents
1.0 Introduction………………………………………………………..4 1.1 Insurance……………………………………………….............4-6 1.2 Islamic Insurance (takaful)……………………………………6 1.3 Fundamental difference between Insurance & Takaful…….6-7 1.4 Regulation………………………………………………………7 1.5 Takaful and Regulation………………………………………..7-8 2.0 Regulatory Framework for Takaful………………………………8-9 3.0 Development of Takaful in Malaysia………………………………9-10 4.0 Regulatory Framework for Takaful Industry in Malaysia………10-12 5.0 Regulation and its Impact to Takaful Industry…………………...13-17 6.0 Conclusion and Recommendation………………………………….17-18 7.0References…………………………………………………………..19

1.0 Introduction
Regulations are the essential parts of any industry. These regulation are the set of rules and norms which are set by the regulatory and authoritative bodies. Malaysia being a pioneer of Islamic Banking has achieve another milestone in becoming pioneer in developing takaful industry. As at to-date there are 11 takaful operators and 4 retakaful operators in Malaysia.

Takaful and conventional insurance have similar philosophy that are to mitigate hazard and perils that one might face in his life. Takaful system consist the elements of mutual cooperation, common interest and joint indemnity.

Takaful consist of 2 tier structure that is hybrid of mutual and commercial form of company. This itself poses significant issues for regulation and supervision. In addition, all function of takaful should follow the rules of Islamic Law (Shariah) and this has other implication in other area of supervision and regulation (Dirir, 2011)

The development of takaful industry in Malaysia is being shaped by the regulation. The latest regulations issued aimed to develop level playing field with its conventional counterparts. However, these regulations has also come with few implication and drawbacks.

1.1 Insurance
Insurance has existed for many centuries, some historian trace the origin of insurance to 215CE, when Roman government required by military supplies to accept all risks arising from enemy attacks, storm and other natural disaster for supplies carried on the ships Modern insurance can be trace to begin in 1600’s, when British merchants and ship owners began to meet at a coffee house called...
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