Islamic insurance, despite its good intentions, can’t just take off in PH

Etiqa, the insurance arm of the Maybank Group, is seeking to introduce “takaful” or Islamic insurance in the Philippines if it finds a local Islamic bank to partner with.

For its part, the Insurance Commission (IC) is eyeing to amend the Insurance Code to allow takaful products here.

Insurance Commissioner Dennis B. Funa told the Inquirer last week the regulator still didn’t have regulations covering takaful.

“We might have to amend the Insurance Code because takaful funds cannot be commingled with other funds,” Funa explained in a chance interview.

Funa said interested insurers could not just offer takaful whenever they wanted because Islamic insurance was not simple. “Even its terminologies are hard,” he said.

But insurers interested to introduce takaful here such as Etiqa already offered to provide training to IC personnel in Malaysia, according to Funa.

Last year, Funa pointed to potential obstacles in introducing takaful to the Philippine market as Islamic rules do not allow interests. Investments also have to be made in sukuk bonds, also yet unheard of in the regulatory space.

Chris Eng Poh Yoon, chief strategy officer at Etiqa Insurance and Takaful in Malaysia, told reporters Wednesday they were interested to enter the Philippine market “once there is an established Islamic bank that has access to the Muslim population.”

Etiqa sells takaful in Malaysia through Maybank and another agency, Eng said.

While the Philippines had Al Amanah Islamic Bank—the only lender allowed to offer Islamic banking in the country—its reach was only “small” such that it still needed to scale up, according to Eng.

In Malaysia, Etiqa could sell takaful to both Muslims and non-Muslims as it appealed to customers who preferred products with lower risk and profit-sharing, Eng said.

“If you don’t make claims, you get a profit share of your contributions,” Eng explained, such that takaful was a less profitable venture compared to other insurance products.

If Etiqa would be allowed here, Eng said they would likely start with small contribution products such as those covering personal accident and fire before gradually scaling up to include life and medical plans. —BEN O. DE VERA