Regulations for Shari’ah Controller position passed

UAE Insurance regulator, the Insurance Authority recently promulgated regulations for the appointment of Shari’ah Controller within takaful insurance companies.

According to the regulation, in order to approve employment, the applicant must be appointed by the Board of Directors, based on the recommendation of the Shari’ah Supervisory Committee in the company. The applicant will be expected to practice the duties of a Shari’ah Controller full-time and hence will not be able to combine his duties with any other job within the company. The regulation also stipulates that the applicant should be a Muslim with full legal capacity and has sound reputation, good conduct and be knowledgeable in the Arabic language. He should have an exemplary record without being dismissed from service for disciplinary reasons. For this purpose he should submit a certificate confirming that he has not been sentenced in a felony or misdemeanor that violates honor or honesty and public morals, and to submit a declaration that he has not been declared bankrupt unless he is rehabilitated.

With regard to qualifications and experience, the regulation requires that the applicant must hold university qualification in Shari’ah principles and a degree in either law, insurance, business or economics. He must have passed training courses in Shari’ah or any legal, insurance, business or financial training courses. The IA has also instructed that the personnel should be knowledgeable in the jurisprudence of Islamic financial transactions.

He should have practical experience for a period of not less than three years in the field of insurance or have worked in the field of Shari’ah Control and other related activities. The experience shall be for one year for UAE Nationals.

The new regulations go on to state the duties and functions of the Shari’ah Controller:

1. To review Insurance contracts and transactions to confirm that they comply with the provisions of the Islamic Shari’ah Principles and the Fatwa(s) issued to newly originated transactions;
2. Ensure Takaful insurance operations in the company are carried out in accordance with the provisions of Islamic Shari’a Principles;
3. Comply with the Wakala and Mudaraba principles in the course of carrying out business;
4. Separate policyholders’ accounts and the accounts of shareholders;
5. Covering the realised deficit in participants’ account is followed up through Qard Hassan;
6. Ensure the existence of a documented and approved mechanism for the distribution of surplus to the participants in the Company’s Takaful insurance operations;
7. Confirm that the company has prepared the membership document, attached to the insurance policy and its clauses are reviewed;
8. Review to ensure that there are no charges imposed on the participants’ accounts in the general insurance more than the percentage of the Wakala remuneration prescribed in the Financial Regulations for Takaful Insurance companies;
9. Provide the Insurance Authority with a copy of the report of the Shari’ah Supervisory Committee;
10. Implemented any recommendations contained in the reports of the Shari’ah Supervisory Committee;
11. Confirm that the External Auditor’s report is prepared to review the extent of compliance with the Anti Money Laundering and Terrorist Financing Instructions and other relevant decisions;
12. Verify that the Actuary has carried out his role in terms of reviewing the actuarial aspects in the family Takaful insurance;
13. Maintain that the Zakat Fund is established in the company in accordance with the provisions of the Regulations;
14. Ascertain the nature of clients and properties to be insured, to what extent they are compliant with Islamic Shari’ah provisions, and whether the approval of the Shari’ah Supervisory Committee is acquired;
15. Prepare periodic reports and submit them to the Shari’ah Supervisory Committee and the Board of Directors on the extent to which the company’s operations are compliant with the Shari’ah Supervisory Committee’s decisions and opinions;
16. To attend the Shari’ah Supervisory Committee’s meetings and to present their report in the general assembly of the company;
17. Be responsible for any other matters affecting the Company’s compliance with the Islamic Shari’ah provisions and the related legislation;
18. Collect clarification, interpretation or Fatwa for issues in order to be introduced to the Shari’a Supervisory Committee at its periodic meetings to take the necessary action to issue Fatwa concerning them; and
19. Clarify violations and deficiencies for Takaful insurance operations and inform any corrections to the general manager of the Company.

Takaful insurance companies have been advised to regularise the positions of Shari’ah Controllers in accordance with the provisions of the decision herein within six months from the date of issuance.