The Central Bank of Bahrain (CBB) plans to issue new Islamic insurance standards, announced Mr Abdul Rahman Mohammed Al-Baker, Executive Director of Financial Institutions Supervision at the financial regulator.
Mr Al-Baker did not disclose when the proposed new standards would be published, reported the Arabic newspaper Alayam.
The central bank would continue to enhance and improve the regulatory infrastructure for the growth and improvement of the industry, he said. Standards last issued by CBB for takaful and related solvency capital were in January 2015.
Mr Al-Baker confirmed that takaful is one of the fastest growing businesses in the insurance sector. With gross contributions of BHD63.2 million (US$168 million) last year, takaful has grown to represent 23% of the total premiums in the Bahraini insurance market.
He explained that the growth in the takaful market is mainly due to greater public awareness and increased demand for Shariah-compliant insurance. He pointed out that the presence of international players in the local market has helped the development of takaful in Bahrain.
He said:”During the past three years, we have noticed positive changes in the mix of takaful contributions … the share of family takaful rose to 14.5% of total takaful contributions in 2015 compared to 10% in 2009. This growth in the share of family takaful is mainly due to an increase in public awareness about the importance of family takaful, as well as interest in investment-linked life products.”
Challenges facing the takaful industry, Mr Al-Baker said, include corporate governance, standardisation of accounting standards, lack of takaful talent and a limited range of Islamic investment instruments.
BHD1 = US$2.65