The Shariah Supervisory Council of Labuan Financial Services Authority has passed a law that allows it to license takaful captives and reinsurance companies.
The Labuan Captive Takaful is licensed under Part VII of the Labuan Islamic Financial Services and Securities Act 2010. It states that: “The captive takaful operational business model based on the Shariah contract of tabarru’ is permissible and is concluded amongst the participants only.”
In addition, for retakaful arrangement, priority shall be given to retakaful operators or retakaful windows of reinsurance companies which have the “capacity to absorb the distributed risks and financial strength to cater for the requirements of the participants as assessed by the Labuan Captive Takaful.”
If the captive is unable to secure retakaful arrangements from retakaful operators or retakaful windows of reinsurance companies, conventional reinsurance may be utilised.
The Labuan FSA added that this arrangement should be reviewed on a periodic basis as may be determined by the Internal Shariah Advisory Board of the Labuan Captive Takaful.