Takaful presents unique ALM challenges for insurers in Asia

The takaful market presents unique challenges to the insurance industry, but the rewards up for grabs are huge given its potential size. How are insurers managing their assets and liabilities in the risk funds embedded in the insurance products? And how does the industry strike a balance between competitive but equitable underwriting standards for takaful agents? Harry Thompson reports

Mosque in Malaysia

Meeting sharia requirements means the role of an insurer in the takaful market is a very different animal from conventional insurance. "We're not really insurers, we're operators. We operate the takaful fund on behalf of the policyholders," says Bert Paterson, chief executive of Sun Life Financial's Indonesian operations in Jakarta.

What Paterson refers to here is that the insurer effectively becomes a takaful administrator - arranging unit-linked vehicles, which are typically composed of

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