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Islamic Insurance: A New Partnership Between Dubai and London

The Huffington Post The Huffington Post 11/11/2015 Abdulla Mohammed Al Awar
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Dubai successfully hosted the first international conference on Islamic insurance in early November organized by the Islamic Insurance Association of London (IIAL) - marking a new chapter in the ongoing collaboration between Dubai and London.
In my keynote speech at the conference, I emphasised the relevance of this event at a time when Dubai - and the wider UAE - is evolving into a global business hub that offers the most attractive ecosystem for the Islamic economy to thrive. This development reinforces our commitment to positioning Dubai as the global capital of Islamic economy, while reflecting our leadership's vision to fast track the UAE's transformation into an advanced knowledge economy.
We are focused on identifying collaborative opportunities with other jurisdictions with a strong belief in "co-opetition" to achieve better results. It is precisely for this reason that the Islamic Insurance Association of London is looking at the UAE and Dubai with renewed interest. Our country has established its credibility as a global hub for an area of economic activity that perfectly encapsulates the core values of cooperation and shared responsibilities - also known as Takaful in Arabic.
London and Dubai share an awareness of the need for a cooperative and synergistic ecosystem in the Islamic insurance sector.
To date, Takaful premiums, which represent less than 1 per cent of sharia-compliant assets worldwide, have not gained a high uptake to the same degree that Islamic equity instruments have. While forecasts estimate that the growth in the global Takaful sector could reach US$52.5 billion by 2020, there are still some crucial shortcomings that need to be addressed by industry practitioners, experts and business leaders.
Takaful's future success will require a substantial concerted effort, including input from regulators, market players and the wider community to help create a strategic blueprint that will chart the future direction of the sector.
This notion of shared and mutual responsibility - a fundamental assumption with Takaful - is what we are seeking to encourage in order to proactively shape a vibrant and stable platform that will enable operators to create increased capacities and absorb larger risks.
Other growth opportunities include micro-Takaful products for low-income individuals and investments in Islamic instruments, such as sukuk.
Islamic insurance was originally conceived as a vehicle to promote collective welfare and brotherhood. This unique view of insurance can be traced back to the second century of the Islamic era, when Muslim Arabs started to expand their trade to India, the Far East, and other countries in Asia.
The insurance industry has a rich history dating back centuries in the West. In the 16th century, British merchants who frequented a coffee house called Lloyd's in London developed an agreement to collectively share the profits or losses resulting from their sea trade. In the late 17th century, the first fire insurance company was established in Britain following the Great Fire of London.
Today, the Takaful sector is well positioned to expand beyond its traditional Muslim markets and clientele. Takaful is a financial instrument that is becoming increasingly attractive as a sustainable protection tool against the potential risks faced by us all.
Given the current trend towards sustainable and ethical investments, Takaful provides the means to safeguard assets and wealth against financial crisis and risks. It can also protect physical property assets against unpredictable occurrences and potential losses. Most importantly, Takaful can help safeguard an individual's health against illness, injury, disability, and death.
As individuals in positions of influence, it is our primary responsibility to ensure that the world is a safer place for our coming generations.
Therefore, savings and pension plans should not only address societal concerns of longevity and ageing. They should also help to build responsible members of society who are willing and capable of contributing to the prosperity of the community - and consequently assist in making the world a better place.
Given this scenario, Dubai and London are today well poised to lead the global Takaful sector and unlock its full growth potential.
Our joint efforts will surely shape a future we can all be proud of.

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