Turkey: Regulator outlines local model of takaful
The Insurance and Private Pension Regulatory and Supervisory Agency (SEDDK) has published the “Definition of the Turkish Model within the Framework of Participation-Based Insurance Activities”.
Under it, the minimum requirements to be met for takaful include:
- Establishment of an advisory committee,
- Not guaranteeing issues and risks that violate religious tenets, and
- Management of financial assets based on Shariah-compliant (participation) principles.
Framework
The minimum framework of the Turkey model should also ensure:
- the takaful contract is grant-based,
- determination of remuneration, eg. profit sharing methods such as mudarabah,
- separation of shareholders’ and contributors’ funds,
- establishment of a fund with a legal entity,
- return, balance or qard and similar applications are not obligatory.
The Turkish government introduced a new law to regulate takaful in 2017.
