The Insurance Commission (IC) has released baseline guidelines for insurers and mutual benefit associations for carrying out takaful or Islamic insurance undertakings.
The guidelines took effect immediately on the publication of a circular on takaful which was dated 27 January 2022. Hitherto, there had been no regulatory framework for Islamic insurance in the Philippines.
The circular says that the guidelines shall apply to all existing and authorised insurance companies and mutual benefit associations that will set up takaful windows.
Insurance Commissioner Dennis Funa said in the circular, "The takaful operator shall have in place an appropriate mechanism for obtaining rulings from Shariah scholars, applying fatwa and monitoring Shariah compliance in all aspects of its products, operations and activities."
A complete governance policy framework, which outlines the strategic duties and tasks of each organ of governance, as well as procedures for balancing stakeholder accountability, must also be established by an operator.
The IC notes that lslamic finance is a rapidly growing segment of internalional finance, which when expanded in the Philippine setting, may attract funds from lslamic investors looking for opportunities to support social and infrastructure requirements in the country.
The regulator adds that it recognises the need to provide broader insurance coverage and options for all Filipinos, especially the Muslim community.
Takaful is a budding area that the insurance sector can explore in light of the implementation of the Updated Philippine Development Plan (PDP) 2017-2022 that identifies the need for a resilient and inclusive financial sector and lays down, as one of the strategies, the development of legal infrastructure for lslamic banking and finance, the IC says.