IRA plans new regulations on Islamic insurance
- Posted by: frokem
- Category: Re-Insurance, Technology
The Insurance Regulatory Authority (IRA) plans to establish new regulations targeting islamic-based insurance (Takaful) as Kenya positions itself as an Islamic financial hub in the region.
This follows the enactment of the Insurance (Amendment) Act 2016, which came into force in January 1.
The new law provides for the licensing and regulation of Takaful insurance business in order to encourage international investment in the sector.
IRA Head of Composite Insurers Supervision Mary Nkoimu Monday said the current status of the Insurance Act is not appropriate for the growth of the Takaful insurance, hence the need to have a different set of regulations.
“It may not be a parallel Act for Takaful, but there are those specific regulations which will apply to Takaful only, so that’s what we are going to touch on,” said Ms Nkoimu during Kenya Re Takaful and Retakaful conference in Nairobi.
“But where there is no conflict between the operations of Takaful and the current Insurance Act, then we’ll expect them to comply,” she said.
Takaful is an Islamic insurance based on Sharia law, an alternative to conventional insurance products.
According to the Islamic Financial Services Board (IFSB)’s industry stability report 2016, the global Islamic financial services industry reached an overall total of $1.88 trillion (Sh193.64 trillion) in 2015, with an expectations of market size growth to $3.4 trillion (Sh350.2 trillion) by end of 2018, an 81 per cent growth.
During the 11 months to November 2015, the Takaful insurance sector was estimated to be worth $23.2 billion (Sh2.389 trillion) globally, while the Islamic banking sector’s assets stood at $1.5 trillion (Sh154.5 trillion).
Last year, the Treasury launched the Islamic Finance Project Management Office (PMO) comprising members from Capital Market Authority (CMA), Central Bank of Kenya (CBK), and Islamic Finance Advisory & Assurance Services(IFAAS), an international consultancy firm specialising in Islamic finance.