The International Association of Insurance Supervisors (IAIS) and the Islamic Financial Services Board (IFSB) have published a consultation paper on the regulation and supervision of microtakaful.
Microtakaful is a Sharia-compliant mechanism for insuring certain losses, which is specifically aimed at those who are not eligible for participation in general takaful arrangements, due to their low income and/or other factors for example medical history or hazardous occupation.
The paper aims to provide an overview of the issues relating to microtakaful and its role in enhancing financial inclusion. Microtakaful is presented as having the potential to promote access to insurance in Islamic communities and regions.
- Identifies the current practices and models used for offering microtakaful products, and the challenges and potential issues arising from microtakaful transactions.
- Reviews the current regulatory framework for the microtakaful sector in various jurisdictions and suggest initiatives to strengthen the framework and therefore enhance financial inclusion.
- Provides guidance to supervisors in creating an enabling environment for the overall development and growth of the microtakaful sector.
A copy of the consultation paper can be found at http://iaisweb.org/index.cfm?event=getPage&nodeId=50177. The consultation closes for comments on 6 August 2015.