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بسم الله الرحمن الرحيم

بسم الله الرحمن الرحيم. New Retakaful: Is it time to convert from conventional?. By: Chakib Abouzaid CEO - Takaful Re. ICMIF, Bahrain - 5 th & 6 th of May 2009. Agenda. Introduction Islamic Takaful industry today Retakaful Technical & Shari'a requirements Existing Retakaful

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بسم الله الرحمن الرحيم

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  1. بسم الله الرحمن الرحيم New Retakaful: Is it time to convert from conventional? By: Chakib Abouzaid CEO - Takaful Re ICMIF, Bahrain - 5th & 6th of May 2009

  2. Agenda • Introduction • Islamic Takaful industry today • Retakaful • Technical & Shari'a requirements • Existing Retakaful • Capacity & demand • Challenges for Retakaful • Conclusions: is it time to convert to Retakaful?

  3. Introduction Three main questions: • Size of the Takaful market? • Is the existing Retakaful financially sound and reliable? • Are they having enough capacity? • Is the “darura” still the rule? • Is the increasing number of Retakaful and additional capacities a threat for established companies?

  4. The need for Retakaful • Technical requirement to spread the risk and avoid the insolvency risk; • Takaful companies cannot survive within Retakaful and/or reinsurance; • Is Retakaful a risk transfer or risk sharing? • Takaful & Retakaful are risk sharing operations even if formally the operation appears as a risk transfer; however: • Takaful & Retakaful is liable for all the claims occurred and falling under the contract, • In case of deficit, Takaful or Retakaful can only: • Ask the shareholders for “Qard al hassan”, • and/or adjust the pricing for the new or renewed contracts.

  5. Shari’a requirement • Takaful are obliged to comply with all Shari'a requirements including the Retakaful; • Retakaful is completing the Takaful operation chain; • Using conventional when unnecessary is harmful for the credibility of Takaful; • Is “darura” still the rule? • 10 Retakaful: • USD 1,150 Paid up capital • 7 “A” rated, 2 “BBB”,1 Non rated • Treaty capacity > USD 67,5 – 77.5 Million • Fac. Capacity : • Non Marine >USD 165.5 Million • Marine > USD

  6. Contributions per Region

  7. Contributions by Region

  8. Number of Islamic/Takaful companies 179 companies *GCC: 72 companies including all licensed companies in KSA

  9. Contribution Split 2007 by Line of business

  10. Contributions volume and split by LOB • Islamic insurance is growing all over the world: • The contribution increased in 2007 from USD 5.9 to 7.2 billion • There is no major change in the split by geographical area; • Cooperative KSA is the main component of the GCC Islamic/ Takaful markets; • The Iranian market represents over all 48%; • Motor remain the main line of business 42%, property 25% and Family + Medical 25% • The differences in statistics comes from the definition and whether cooperative Saudi model and Iranian markets are included or not.

  11. Existing Retakaful(*) (*) Retakaful windows are not included in this presentation

  12. Existing Retakaful

  13. Existing Retakaful

  14. Available Capacities (*) Million USD (*) Tokio Marine write only Family Takaful, and capacity non available (**) Retakaful windows are not included in this presentation

  15. Sample for requested capacities Mln USD

  16. Capacity vs. demand • Treaties: few big players are asking for huge capacities: • USD + 67 million • Only 2 companies needs capacity exceeding USD 45 million • Facultative: • Property & Engineering: Available capacity 156.5 million, which can accommodate more than 95% of the Facultative business • Marine: USD 81.5 million • The need for conventional capacity will only remain for very large risks or special lines; as Retakaful/ Reinsurance are global activities by nature

  17. Challenges for Retakaful • The Retakaful must: • Provide the needed capacity for the development of the industry; • To move from the follower position to lead the companies programs; • To be able to price all lines of business; • To have a dual strategy: • For personal lines: to develop Family Takaful offer, • For industrial risks, to have the expertise, the tools & the pricing models, • Retrotakaful: Till now “darura” is still the rule (with limitations to XOL only) • to complete the chain: 2 options; • GTG Lloyd syndicate; • And/or Retakaful pool

  18. Conclusion • The Takaful operators are required to cede to the existing Shari’a compliant capacities and “Darura” cannot/no longer invokes as a rule: • The obligation to cede to Retakaful will be implemented gradually by Takaful; • Takaful will continue relaying on conventional and London market for some LOB and for retrocession. • Treaty capacity exceeds the need for almost 90% of the existing Takaful / cooperative operators, and can absorb almost all the treaty programs. • However, there is still a gap to be fulfilled by Retakaful: • Specialty lines • Aviation • Energy, petrochemical • Very large property and engineering risks • The 10 Retakaful and the global players’ windows are now operational. • The available Retakaful is encouraging the Takaful companies to convert to Retakaful. The time o convert to Retakaful has come; and it is up to the Retakaful by their professionalism and commitment to attract Takaful.

  19. Thank you

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