Page 1

Emerging Issues & Challenges in Retakaful Safder Jaffer FIA Swiss Reinsurance Company Ltd Z端rich

Safder Jaffer 30 June 2009


Slide 2

Key Issues


Swiss Re Retakaful



Slide 3

Key Issues


Swiss Re Retakaful


Key Issues

Slide 4

Plurality of Models

Retrocession & Shariah Dilligence

Large Risks & Retakaful Capacity

One Large Pool vs Several Small Pools

Surplus distribution

Inforce Block Takeover

Diversity within Islam Share of Muslims as a % of total population

Slide 5

Sources: US State Department, CIA world fact book, Swiss Re Economic Research & Consulting: Gfk GeoMarketing

Plurality within Islam

Slide 6

73 Sects

5 Schools of thought

Range of Shariah Scholars

South Asia vs Middle East

Regulatory Framework

Plurality of Models

Slide 7

Mudharaba vs Surpluses

Wakalah vs Incentive fees

Wakalah –Waqf vs PRE

Regulatory Regimes

Retrocession & Shariah Dilligence

Slide 8

Transparency of retakaful contract

Retakaful “Branding”

Shariah Drill Down

Large Risks & Retakaful Capacity

Slide 9

Large Risks

low-frequency, high-severity & risk transfer?

surplus distribution & volatility

Halal vs Haram Risk?

One Large Pool vs Several Small Pools

Slide 10

Heterogeneity of Risk

Currency Risk

Geographical Risk

Family Takaful – Individual vs Group Life vs Credit Life

Reinsurance Structures – OT, RP, NLP

P&C – Short vs Long Tail Pools

Surplus Distribution

Slide 11

Incentive fee

100% less wakala fees

Contingency/Stabilisation Reserves

Nil Surplus ?

Cross-subsidy between generation of participants

Recouping Qard


Inforce Block Takeover

Slide 12

EV of takaful business?

From Haram to Halal?

Who pays the difference?

Can Qard be used to pay the EV?

Cross-Subsidy between “Old” and “New” Participants


Slide 13

Key Issues


Swiss Re Retakaful



Slide 14

Lack of Standardisation

Shariah, Technical & Regulatory Balance




Slide 15

Key Issues


Swiss Re Retakaful


Swiss Re’s Retakaful Solution

Slide 16

Set up individual and group life reinsurance pool

100% of the surplus generated in the pool is distributed to participants on an annual basis

Swiss Re charges a fee

Investments are shariah compliant

Swiss Re ensures that best practice risk control measures are implemented by all Takaful companies participating in the pool

KL Branch Developments

Wakala/Waqf Model Swiss Re

Fund Participants

Conventional Pot Investment Income Profit Sharing Basis

Contributions (unconditional

Claims/surplus distributions


Wakalah Fees

Waqf Fund:

Retakaful Operator: (Swiss Re) Slide 17

Initial Donation Qard al-Hasan (if required)

Mutual Pool for collection of contributions, payment of claims & setting of technical and stabilisation reserves

Wakalah with Waqf – Benefits

Slide 18

Relationship of participant and operator is with the fund

Donation is unconditional (gharar removed)

Operator is a mudharib of the investments of waqf

Contingency Reserve Fund may be set up

Cross Subsidy of various generations of policyholders is permissible

Surplus distribution can be predefined on a variety of criteria with the primary condition that the operator does not get any share as a wakeel to the waqf fund.

Bank Negara Issues

Slide 19

New in Malaysia

Concept of Tabarru?

Policyholder Protection Mechanism

How independent is “Waqf”

Thank You and Questions

Slide 20

Safder Jaffer: Emerging Issues & Challenges in Retakaful  

Takaful Masterclass: Swiss Reinsurance Company Ltd

Read more
Read more
Similar to
Popular now
Just for you