Bahrain mulls solvency rules for Takaful industry
Manama, December 5, 2013
The Central Bank of Bahrain (CBB) has drafted new enhanced framework for the Takaful and Retakaful industry aimed at strengthening the solvency position of the firms, enhancing operational efficiency of the business, and safeguarding the interest of all stakeholders.
The Takaful industry in the country has experienced a remarkable growth in terms of gross contributions in the last ten years.
In 2012, the Takaful industry grew by almost 22 per cent from the previous year which shows the huge potential for growth in Takaful business, said senior banking officials.
The CBB has always strived to ensure that the industry remains healthy by providing a highly developed and robust regulatory infrastructure.
In this direction, the central bank had introduced enhanced rules on the operational and solvency framework for Takaful and Retakaful industry for consultation in October and had asked the industry to review the new enhanced regulatory framework and submit their comments by November 10.
Also meetings were held with the Takaful industry to facilitate their understanding of the new rules and successfully conclude the consultation process.
On the new solvency framework, A. Rahman Al Baker, the executive director of Financial Institutions Supervision (CBB) said: “The new enhanced framework has been drafted with an objective of strengthening the solvency position of the firms, enhancing operational efficiency of the business, and safeguarding the interest of all stakeholders.”
The new framework, he stated, will ensure that the firms, both new to the business and incumbents, have adequate liquidity and are able to generate surplus through operational efficiency.
"This will help the Takaful firms to effectively compete with not only the other Takaful firms in the industry but also with the conventional insurance counterparts," he added.
The CBB said the new rules will be implemented by month end after considering the views of the Takaful and Retakaful industry through the consultation process and meetings.-TradeArabia News Service