Swiss Re launches Shariah compliant Family Retakaful

Chris Singleton, Swiss Re's Head of Life and Health, Middle East, Turkey and South Asia, said: “At present, the global life Retakaful market is around $10 million but this concept has a huge potential to grow as it is very cost-effective. The design of Swiss Re's Retakaful scheme for this market has been reviewed and certified by Shaikh Muhammad Taqi Usmani, the chairman of Swiss Re's Shariah board. Moreover, in Swiss Re's Family Retakaful solution, Swiss Re pools the risk and administers the business. Further, the business is supported by the full financial strength of Swiss Re.

He further added: “As this new product fully complies with the rules and principles of Islamic Shariah it is ethically, technically and financially the perfect solution for Family Takaful companies. This niche product means that Family Takaful Industry will no longer need to use traditional commercial reinsurance for the bulk of its business. There are around 40 Takaful companies in the Middle East region and with the support of clients and consultants and based on extensive research, our company developed this solution to meet the market demand."

The company's experts examined both the Wakalah and Mudharabah models for few years and found that while the Mudharabah model, currently used in some markets is attractive from a pricing perspective but it is not universally accepted as being fully Shariah compliant. Swiss Re therefore opted to use a Wakalah model to ensure global Shariah acceptance.

A Wakalah model requires a pooling of business from various sources in order to make a profit participation cost efficient and viable. Swiss Re will apply this approach in the best interests of all the companies participating in the Retakaful Pool.

The launch of its Family Retakaful solution marks another milestone for Swiss Re in further demonstrating its commitment to the Middle eastern markets.