It is not uncommon nowadays for the conventional Non-Life insurers to trade facultatively (reinsurance) with our brother in trade, the (Re)Takaful Operators. It is also not uncommon either to see our brethen inserting subjectivity in the guise of RETAKAFUL CLAUSE when accepting a share of our facultative reinsurance placement.
The (Re)Takaful boys usually cite that this clause is very common lah! Merely highlighting their practices that are in line with either or both the operating concepts of Wakalah and/or Mudharabah. So this is no big deal…. but is it? I have enclosed the .PDF file (Retakaful Clause) with comments made in respect of clause wordings that would one day pose real problem to the non-life insurance players.
“What was issued to the policyholder does not contain those disclaimers as spell out in the Retakaful Clause… However, this is not a problem for the Takaful operators – all their policy contain similar elements of disclaimer”
Without breaking into details, (you can get them from the attached .PDF file), the following are the salient pointers:
The real issue is really about a GAP somewhere between what’s being offered to the conventional markets and those reinsurance placed facultative outward to the Retakaful operators. Over a period of time, pretending everything is in order (in reality is NOT)……it only takes one failed (Re)Takaful operators to trigger some financial shocker of a different kind to the Conventional market-place.
I shall leave the conclusion to you….. And Happy & Prosperous Chinese New Year! It’s good to know Chinese New Year is celebrated for 15 days……