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.
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.
Sharia law
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.
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