Business Conduct in Islamic Insurance with Special Reference to Emerging Markets
The takaful (Shari'ah-compliant) industry, although relatively young, has grown significantly as the Islamic alternative to conventional insurance and evolved from being a regional business to a global one. In the coming years, it will evolve rapidly, gaining critical mass and holding the promise of building brand recognition globally. The industry is still in a development process whose eventual outcome is the convergence of the practice of Islamic financial intermediation with its conceptual foundations. The major challenges faced by the national and cross-border takaful operators in this growth process include raising customer awareness and education, and developing performance benchmarks and market-based standards at par with the conventional insurance industry. Typically, this will involve areas such as: (a) ongoing monitoring of compliance with high ethical standards; (b) transparency, including disclosure of different terms and conditions and of charges; (c) frequency of reporting; and (d) principles and procedures concerning ex ante Shari'ah compliance of products and services complemented with the ex post attestation of such compliance. Better compliance will enable the insurers and the intermediaries to identify potential risks before problems occur, in order to protect their reputation and revenues, and most importantly, their customers.
But how ...