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Takaful Islamic Insurance: Concepts and Regulatory Issues by Volker Nienhaus, Rifaat Ahmed Abdel Karim, Simon Archer

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Chapter 14

Concluding Remarks

Simon Archer, Rifaat Ahmed Abdel Karim, and Volker Nienhaus

14.1 INTRODUCTION

Takaful is the means of bringing the social and economic benefits of modern insurance coverage, in a form consistent with their religious beliefs, to Muslims and to the emerging economies of many predominantly Muslim countries. As such, the development of takaful is crucial, both to social inclusion in non-Muslim countries and to economic development in a number of countries with emerging market economies.

Yet the development of takaful faces some formidable barriers, which have been examined in this book. These barriers are largely due to the complex structure of takaful undertakings and the unresolved issues associated with it, which make the development of an appropriate legal and regulatory infrastructure for takaful problematic. Other problems are the consequence of the newness and relatively small size of many takaful undertakings, coupled with a lack of Shari'ah-compliant reinsurance (retakaful) capacity, within a globalizing insurance industry in which the “law of large numbers” and risk diversification play a key role and economies of scale are of major importance.

This chapter sums up the conclusions on these matters that may be drawn from the chapters that precede it. Section 14.2 focuses on the unresolved issues resulting from the complex structure of takaful undertakings. The resultant regulatory and legal problems, including those in relation to corporate governance ...

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