The IFSB Releases Working Paper on Regulatory and Supervisory Issues in Takāful Windows Operations
Date posted: 18 December 2020
18 December 2020, Kuala Lumpur - The Islamic Financial Services Board (IFSB) today issued its 16th research paper in the Working Paper series.
WP-16 explores regulatory and supervisory issues in takāful windows operations across IFSB jurisdictions. The findings reveal that the available regulatory toolkit includes market entry requirements, as well as key elements of supervisory review process (market correction). These toolkits are used to assess the adequacy of a takaful window’s compliance and accountability of organs of governance with the intent of protecting stakeholders’ interests. In addition, these toolkits also assist supervisory authorities to develop an integrated system for assessing the governance framework, capital adequacy, risk management framework and retakāful programme, as well as other matters relevant to all areas of supervision applicable to takāful windows. However, not all supervisors and operators of takāful window accord due recognition to shariah compliance, other than their expectation that it will increase their customer numbers and gain them additional market shares. There may be a reputational risk associated with such a practice in the long run if it is left unchecked.
The Secretary-General of the IFSB, Dr. Bello Lawal Danbatta stated, “This paper discusses the basic elements in the regulation and supervision of takāful windows. It identifies specific issues and challenges, particularly with regards to the applicable principles and benchmarks, as well as, addresses Sharī`ah requirements in the takāful windows operations. This is in light of the challenges encountered by supervisors who have recently introduced takāful window, as they may be unfamiliar with some procedures and expertise required for supervision of this type of activity” he further added.
WP-15 and WP-16 are available for download from the IFSB website: www.ifsb.org
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