It may take sometime before “Takaful” or Islamic insurance can be introduced in the Philippines given regulatory challenges, Insurance Commissioner Dennis B. Funa said.
“I have studied Takaful. It’s a bit complicated because the rules are totally different from that provided in the Insurance Code,” Funa told the Inquirer last Friday.
“A new law may have to be drafted or we will have to write a totally new rule [for Islamic insurance],” Funa said.
“For example, the concept of interest is not allowed in Islamic rules. Investments will have to be made in sukuk or Islamic bonds,” he noted.
The terms are also very different, he added. “We will have to hire an Islamic consultant with knowledge on Shariah laws. I don’t think there is such a Filipino expert, so it will have to be foreign.”
Also, the domestic demand for Takaful would likely be “initially small because the market will have to be middle-class Muslims,” he said, adding that this segment was still small.
In an Asian Development Bank Institute working paper titled “An Overview of Islamic Banking and Finance in Asia,” authors Akbar Komijani and Farhad Taghizadeh-Hesary noted a “small but growing” Takaful market in Asia.
Citing data from the Islamic Financial Services Board, they said that “the total size of the Islamic finance sector in Asia in 2014 amounted to more than $419 billion or an estimated 22.4 percent of the global Islamic financial assets, of which 48.6 percent ($203.8 billion) was Islamic banking assets, 44.93 percent ($188.4 billion) was outstanding Sukuk, 5.5 percent ($23.2 billion) was Islamic funds, and 0.93 percent ($3.9 billion) was Takaful.”