“If there is a need to turn to the conventional reinsurance market then the Takaful operator should first try and obtain coverage from the cooperative and mutual insurance sector.”

Takaful reinsurance or Retakaful requires clearly defined joint responsibility which means that it is likely to be arranged on a proportional basis under quota share or surplus treaties. Although non-proportional reinsurance coverage could be arranged on a strict profit commission plan or on a reciprocal basis. However, there are very few retakaful companies in operation; with growing number of Takaful companies the existing retakaful capacity is not sufficient to meet the demand.  The only route available left for takaful companies is to reinsure on conventional basis, contrary to the customer's preference of seeking cover on Islamic principles.  Sharia scholars have allowed takaful operators to reinsure on a conventional basis so long as there was no retakaful alternative available. If there is a need to turn to the conventional reinsurance market then the Takaful operator should first try and obtain coverage from the cooperative and mutual insurance sector.

ICMIF Reinsurance Services (RS) acts as consultant intermediary to member companies for any reinsurance issues and provides reinsurance training. RS is the oldest member service and is the origin of ICMIF. It has steadily expanded over the years and today ICMIF secretariat’s reinsurance services facilitate the exchange of reinsurance business all over the world (in 2003 ICMIF RS facilitated USD 60 million of business between member organisations). Through its experienced staff and its worldwide contacts it can facilitate any type of treaty placement at normally better than market terms due to the low costs.

Amongst its member reinsurers is BEST Re of Tunisia, one the few Retakaful operators in the world. Established in 1985 BEST Re has a A.M. BEST rating of B++ (very good) in 2004. With clients in over sixty countries Best Re Takaful cedants totalled 28 in 2003. BEST Re focuses on emerging markets, promotion of the mutuality/takaful spirit and assisting low-income sectors.

The mission for the reinsurance services is to promote cooperation and understanding in reinsurance matters among members of ICMIF, to encourage reinsurance placements between members, and to advise members on their reinsurance requirements and assist them to obtain suitable cover with secure reinsurers within or outside ICMIF. Through reinsurance services, ICMIF offers a professional member-oriented advisory and placement service, including the collection and payment of premiums and claims, preparation of contracts and technical reinsurance accounting.


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