Consultation: Draft Paper on Issues in Regulation and Supervision of MicroTakāful (Islamic Microinsurance) 

Public Consultation

Consultation: comments due by 6 August midnight Basel time (CEST)

Background:

As part of the workplan included in the Roadmap 2014-15 the Financial Inclusion Working Group (FIWG) was assigned the development of a “Paper on Issues in Regulation and Supervision of Microtakāful”. This is arranged through participating in the joint working group of the IAIS and the Islamic Financial Services Board (IFSB).

The objective of the paper is to provide an overview of the issues in respect of microtakāful and its role in enhancing financial inclusion. Microtakāful (Takāful or Islamic Insurance for the low-income population) is considered a type of insurance that could promote access to insurance in Islamic communities and regions. The paper will enhance the understanding of these particular issues among regulators and supervisors and other organisations and parties with an interest in this area.

The paper was developed in a joint initiative of the IAIS and the IFSB building on the mandates of both organisations. As part of their cooperation both standardsetters earlier developed the paper “Issues in Regulation and Supervision of Takāful (Islamic Insurance)”, which was issued in August 2006, providing a background to Takāful as well as an analysis of the applications of ICPs to the Takāful industry. 

The draft Paper on Issues in Regulation and Supervision in Microtakāful intends to:
(a)          identify the current practices and models used for offering Microtakāful products, and the challenges and potential issues arising from Microtakāful transactions;
(b)          review the current regulatory framework for the Microtakāful sector in various jurisdictions and suggest initiatives to strengthen the framework and thus enhance financial inclusion through the Takāful sector; and
(c)           provide guidance to the supervisors in putting in an enabling environment for the overall development and growth of the Microtakāful sector.

In this paper, four major themes are outlined to address the regulatory and supervisory issues within the Takāful industry:(a)          Corporate Governance;
(b)          Financial and Prudential Regulation;
(c)           Transparency, Reporting and Market Conduct;
(d)          Supervisory Review Process.

How to provide comments

To align the consultation process with that of the IFSB the consultation period is proposed to be 45 days. Therefore feedback on this draft paper is invited by 6 August. Please use the Consultation Tool available at the consultation page of the public section (accessed below) to provide your comments. Instructions for use are available when you access the Tool. Please note that only comments submitted through the tool will be considered. ​ All comments will be published on the IAIS website.

Please note that some formatting (eg bullet points) may not be preserved when copying and pasting your comments into the Consultation Tool from other software such as Microsoft Word.