The London insurance market has been told now is the time to step up its efforts to offer Islamic insurance products as the world looks to the new risks that have been presented by the COVID pandemic.
Speaking at a virtual conference today organised by the Islamic Insurance Association of London (IIAL), the Secretary General of the Islamic Financial Services Board (IFSB) Dr Bello Lawal Danbatta said the opportunity for London to play a crucial role in the further development of the global re/takaful sector was real.
Dr Danbatta said the COVID pandemic has put pressure of the takaful sector as it had with the wider conventional re/insurance industry. However, it was still delivering growth and was faced with demand for new products top meet new risks.
“The change in the way we work has seen a rise in the need for a range of products to covert new risks such as cyber risk,” he said. “The pandemic has opened the window for greater opportunities for takaful.”
Dr Danbatta added: “Now is the time for the London market to look at how they can access the opportunities that the Takaful market can offer.”
He added that the digital transformation that has been driven by the pandemic had created new risks and a growing realisation from the commercial and individual consumer the need or financial protection was ever more acute.
“There is now a real opportunity for the industry to create new types of products that will address the new types of risks that the world faces,” he added.
As such Dr Danbatta said London had the history, and reputation alongside the financial strength to take a lead in supporting takaful and retakaful firms to deliver the new products.
“London has the ability to take a role in how the market reacts to the growing need for Islamic insurance coverage, the opportunities are clear and we hope that London is willing to play their part.”
In terms of regulation Dr Danbatta said the IFSB had been pleased to see that regulators had been quick to offer support to takaful and retakaful firms through a flexible approach to oversight.
“Flexibility in the regulatory approach to challenges that the pandemic has been welcomed,” he said. “But regulators have to have a clear exit plan from that flexibility when the time comes.”
IIAL Chairman Max Taylor told the event that the foundation blocks for London to play a part in the provision of Sharia-compliant capacity were in place. Earlier this year the IIAL has formed a working group of 15 insurers and syndicates which are discussing how London can create the capacity. Mr Taylor said he hoped that London would make tangible steps to launch sharia-compliant products in the months to come.
The association has also worked with the University of Bolton and the Chartered Insurance Institute on a new MBA in Islamic Insurance and Risk which will begin in February next year.