Nairobi: Kenya is likely to grow more in Islamic Finance as the Kenya Reinsurance Corporation is looking for venturing in shariah-compliant business as it is willing to expand its presence in the growing Islamic finance segment.
The local reinsurer has confirmed that it will start ReTakaful insurance in the country and the areas where it already has a presence in West Africa and the Middle East markets.
“There is a change in the insurance market and we want to take full advantage when it fully blossoms,” said the firm’s Managing Director, Jadiah Mwarania, during an interview at the head office in Nairobi.
ReTakaful is the alternative form of the conventional reinsurance, which strictly forbids the aspect of brokerage, profiteering and issues of commission which are against the Islamic faith.
According to Mwarania, the development is part of Kenya Re’s 2013-2017 core strategic areas that touches on market expansion and development of products.
The firm elected a shariah-based supervisory board last year to advise the firm on acceptable aspects of the ReTakaful.
“The intention is to have a department that fully complies with all ReTakaful requirements so that Takaful firms do not shy from giving us business. Now that we are compliant, it will give confidence and inspiration to the Muslim community,” he said.
Members of the board are Abdulkadir Hashim (University of Nairobi lecturer), Mohamed Badamana (Chairman, Department of Animal Production, University of Nairobi), Mohamed Ali (Thika Islamic College), and Mwanakombo Noordin (Director of the Moi University Coast campus).
Takaful started in Sudan in 1979 and has experienced sizable growth over the past few years.
The mode of religion insurance is defined into three distinct settings; the Wakalah Model, which is fee-based and where the administrator acts as both an agent and the administrator.
The fee, which is usually a combination of the administration and investment fee, remains fixed annually and all the surpluses belong to the policyholders.
The second model is Mudharabah, which is the pooling of funds for purposes of profit-sharing.
The reinsurer acts as the entrepreneur and participants provide the capital.
Profits and losses are shared between the firm and the participants in a pre-arranged ratio.
Lastly, which Kenya Re has actively taken part, is the ReTakaful hybrid model, which is a combination of the two.
In Kenya, Takaful Africa Insurance Company pioneered the segment, with Gulf and Community banks taking part in penetration of shariah-based products.
First Community Bank has partnered with Cannon Assurance to develop and sell Takaful products in general insurance.
Africa Trade Insurance Agency (ATI) also joined hands with the Islamic Cooperation for the Insurance of Investment and Export Credit last year in March to offer ReTakaful services for imports and exports between Africa and the Middle East.