Insurance industry players are preparing for the introduction of new regulations on Islamic insurance in Kenya by the end of the year.
However, the long-awaited regulations are still subject to a tedious regulatory and Shariah process by the National Treasury, even though the Insurance Regulatory Authority (IRA) is optimistic that the regulations will be ready before 2019, reports The Arabian Business Fortune.
“The draft is ready, and all stakeholders involved are okay with the recommendations and proposals on the regulation. We are now ready to present it to the Treasury Cabinet Secretary Henry Rotich for endorsement. With the law in place, stakeholders will now be able to do business with certainty,” said IRA’s Manager, Supervision, Kalai Musee.
The Insurance (Amendment) Act 2016 came into force with effect from 1 January 2017, providing for the licensing and regulation of takaful in order to encourage investments in the sector. Specific regulations are needed to give effect to the legislation. The process has run into conflicts among stakeholders involving the law or Shariah compliance, leading to the delay in issuing the rules.
Takaful and retakaful business is seen as essential to building a participatory financial ecosystem in the country as Kenya positions itself as an Islamic financial hub in the region.
Still, sources say that professionals in the sector are confident that there will be an effective start to a new era in takaful and retakaful before the year closes.
“We believe that the hard task is behind us, now that general conditions have already been validated by professionals,” said Mr Mohammed Badamana, the chairman of the Shariah Supervisory Board.
Experts believe that the law could boost the issuance of Islamic bonds or sukuk, and raise the insurance penetration level which currently stands at below 3%.
Three unnamed companies have already applied to IRA to be allowed to offer takaful in the country.