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Welcome to our Monthly Newsletter – July 2007

Talk Around the Bazaar

  • The Caribbean Cat Pool is now up and running. Romania is set to create a compulsory catastrophe pool for home owners. After the current flooding in England they may wish to patent it  
  • In Italy the final touches are being added to an environmental liability wording which will comply with EU Directives. The new non-binding wording is expected to be used by most Italian Pollution Pool members from September 2007
  • Israel is making a move into the U.S. market with leading insurer Clal buying Guard Financial Group. The Aussies have already made their move with QBE completing the deals with Praetorian and Winterthur
  • Aviva and Aksigorta are to merge their life and pensions units to create Turkey’s largest pensions provider. Meanwhile ING has decided to get into Turkey’s fast growing banking sector by buying Oyak Bank. Eureko is also flexing its muscles and is teaming up with Garanti Bank’s life and non-life subsidiaries
  • In Singapore Aviva has entered the long term care market  
  • China is to introduce an old age pension scheme for migrant rural workers. This will be welcome target for new business development for some of the new market entrants (140 million lives). At the same time there are attempts to improve road safety so that people can enjoy their pensions for longer
  • Talanx (in which Gerling, HDI and Hannover Re are the main players) has announced it would be willing to look at merger partners abroad and it also has set its sights on expansion in Brazil, India and Russia
  • Plans to extend the New Zealand Fire & Rescue Levy are under fire. And in Australia the old argument of who should fund fire services has raised its head again
  • AXA has obtained a licence to compete for the mandatory health insurance cover for expatriates in Abu Dhabi. Next stop, the other U.A.E. markets
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    We are currently discussing projects in the following markets:

  • Portugal
  • Greece
  • India
  • U.S.A.
  • Germany
  • South Africa
  • Jordan
  • Japan
  • Romania
  • Italy
  • Australia
  • Canada
  • Turkmenistan
  • United Kingdom
  • Netherlands
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    Disclaimer
    Information appearing in WoRdS is checked for technical accuracy but is not intended to provide a basis of knowledge upon which advice can be given. Worldwide Risk Solutions accepts no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this newsletter.

    A New Force in International Insurance

    Worldwide Risk Solutions is a U.K. based commercial organisation facilitating global business strategies and business development in the international insurance industry. For more information about us, please go to www.worldwiderisksolutions.com.

    Since Our Last Newsletter

    We have attended a dynamic brokers’ conference in Athens, we have carried out a review of key network partners in two continents and assisted various other organisations find solutions for their international needs.

    In our SPOTLIGHT series we will help understand the way different markets around the world operate so that those who do business there can feel more “at home abroad.” Different does not need to mean difficult but knowledge of the needs and characteristics of specific geographic markets is an advantage to those who are active in the global economy.  This helps avoid misunderstandings and unfulfilled expectations.

    Takaful

    Brief History

    During the past two or three years we have seen reports in the international media on the development of Shariah compliant insurance more commonly known as Takaful. It may only be recently that these developments have been reported but it is based upon Islamic practices going back many centuries. The modern version of Takaful was developed in Sudan in the late 1970’s and in the past couple of decades has spread as wide as Malaysia, Indonesia, Iran, Bahrain, Saudi Arabia and the UAE.

    Conventional insurance is said to involve elements of uncertainty which contravene writings of The Koran. The Takaful system is an approved alternative to insurance, written in compliance with Islamic Shariah principles. Some people have said that Sunni rather than Shia followers are taking out Takaful but in as much as both of these groups comply with the teachings of the Koran and Hadiths, it applies to both.

    Al-Takaful

    In Arabic means joint guarantee: a pact among a group of members who agree to guarantee jointly against loss or damage which may inflict any of them. As with insurance, there is a period of cover/validity. At the end of this period of takaful any net surplus in the company’s general takaful fund is shared between those participants who had no claims or incurred any other benefits and the company in accordance with the principle of Al-Mudharabah (a form of trustee profit sharing whereby the participant is the capital provider and the company is the entrepreneur/risk taker).

    In as much as insurance has its origins in the murky past (the Amsterdam Bourse and Lloyd’s really got it going as we know it now), followers of the Prophet practised a form of takaful more than 1400 years ago. As late as 1985 the takaful system of Shariah compliant insurance was formally approved.

    In the world of commerce, insurance and takaful have a greater penetration than for private individuals. There are various reasons for this such as poverty, extended family system, lack of awareness and suitable products. The growth of personal lines insurance, especially life assurance, in Muslim countries, has been restricted by cultural and religious blocks in society. Now that more takaful companies are being set up and run professionally, technology is assisting the administration and sale of products and more information is becoming available, about 25% of the world’s population will be seriously considering joining one of the fastest growing segments of the industry.

    Advantages to the participant are: cost savings, pooling of better quality risks, utilisation of a more equitable risk transfer system and the availability of funds at the end of the period.

    Co-takaful

    Is, as the term suggests, an arrangement where there is a leader and following companies.

    Re-takaful

    The arrangement where the takaful entrepreneur lays off portions of its risk in a process similar to direct takaful.

    Family takaful

    Usually relates to life assurance.

    The development of takaful is increasing quickly in a widening number of countries and also the penetration in the markets where it is used is growing at quite a pace. In the Middle East, Moody’s is outlining the approach to analyse the financial strength of takaful operators. The U.K.’s Prudential is one of the latest to launch a takaful venture – in Saudi Arabia. There will be more said about takaful and if we can help with any further understanding of this, we would be pleased to do so.

    In preparing this Spotlight article we received invaluable assistance from the leading broker, Anika Insurance Brokers Sdn Bhd in Malaysia for which we are grateful.

    If you would like Worldwide Risk Solutions to conduct an economic, business and insurance survey of any international markets please contact us – Details below.

    Worldwide Risk Solutions has a wide client base of internationally oriented organisations. Utilising the knowledge and experience gained over many years, we can put this capability at your disposal. If you would like us to conduct a swift appraisal of your global activities or if you have questions about international developments, just give us a call +44 (0)1444 450 919 or send us an e-mail and we will be happy to look at some of these questions and to start providing answers.

    In our next e-newsletter we will look at Spotlight: India. This fast growing and interesting market has undergone a lot of change over the past few years. We will catch up with some of these developments and discuss some of them in our next edition of WoRdS.

    See our Contact Details

    George Worsley, Director
    Worldwide Risk Solutions
    Telephone +44 (0)1444 450 919
    E-mail info@worldwiderisksolutions.com

    © Worldwide Risk Solutions LLP 2007