The Shariah Supervisory Council of Labuan Financial Services Authority (FSA)has resolved to permit captive and reinsurance forms of Islamic insurance, or ‘takaful’.
The Labuan Captive Takaful structure is licensed under Part VII of the Labuan Islamic Financial Services and Securities Act 2010, which states that: “The captive takaful operational business model based on the Shariah contract of tabarru’ is permissible and is concluded amongst the participants only.”
The act also states that, for retakaful arrangements, priority shall be given to retakaful operators or retakaful windows of reinsurance companies which have “the capacity to absorb the distributed risks; and financial strength to cater for the requirements of the participants as assessed by the Labuan Captive Takaful.”
In the event where the Labuan Captive Takaful is unable to secure retakaful arrangements from retakaful operators or retakaful windows of reinsurance companies, conventional reinsurance may be utilised.
The Labuan FSA has also commented that this arrangement should be reviewed on a periodic basis as may be determined by the Internal Shariah Advisory Board of the Labuan Captive Takaful.
