Takaful insurance: no link in Islamic finance

For years, participating banks, which are constantly complaining about the lack of this important financial link, Takaful Insurance is designed to intensify Moroccan financial markets with the arrival of new companies with significant financial ambitions.

Despite the unfavorable economic context and the lack of an insurance component, partisan banks are still experiencing marked enthusiasm among Moroccans. In March 2022, these institutions, the launch of which was controversial, distributed loans amounting to about 20 billion dirhams, of which more than 17 billion went to the real estate sector. Many experts believe that this enthusiasm is likely to accelerate with the approvals just given by the Insurance Supervision Authority (ACAPS), which is dependent on the Ministry of Finance.

Among the recently authorized new entities is Takafulia Assurances, created by the Holmarcom group, which has joined forces with three other Moroccan and foreign partners, including CIH Bank and two Qatari banks. The new company officially started with the immediate offer of Takaful Family and Takaful General. Takafulia Assurances intends to develop a diversified insurance offer in accordance with Sharia principles.

Insurance fund management
The company seeks to make an active contribution to the development of Takaful insurance in Morocco and to the development of a national participation financing ecosystem in general. The Insurance Supervision Authority has also just published a circular establishing a new Islamic insurance regime. The first section of this circular is devoted to the takaful insurance contract and the rules of takaful insurance fund management. The second section is devoted to Takaful insurance and reinsurance companies. In particular, it establishes the administrative regime of these companies, as well as the financial system of the Takaful insurance fund, as well as regulates companies that carry out exclusively reinsurance operations, as well as their management system. The presentation of takaful insurance transactions is described in Section 3.

Financially, Takaful will bring new money to the capital market. Takaful Insurance is really organized in the image of the asset management sector. Thus, in Takaful there is a difference between Takaful Funds and Takaful Company. The circular shows that the investment world of such full funds is quite limited, which is less about the technical reserves of companies. The Takaful Fund may have several asset classes. An example is real estate built in urban perimeters.

But each of these types of investments should not exceed 10% of the fund’s investments. The fund may also have Sukuk certificates, which are identified as shares listed on the stock exchange according to the conclusion of the Ulema High Council, investment certificates of participating banks and cash investments in these banks. As for the technical reserves of companies, they are diverse. These are, first of all, the sovereign Sukuk, advances on life insurance policies and other contributions to the Solidarity Insurance Fund. These assets allow companies to meet their financial obligations.