Best Seeks Comments on ‘Takaful’ Insurance Methodology

A.M. Best Co. has published a request for comments from market participants in the insurance industry and other interested parties on a draft of its methodology, “Takaful (Shari’a Compliant) Insurance Companies.”

The draft document is currently available for down load in PDF format in the Methodology section Best’s web site at: www.ambest.com/ratings/methodology.asp.

“Takaful insurance, or insurance compliant with Islamic beliefs, is clearly on the rise, particularly in the Middle East and Malaysia,” Best noted. “While takaful insurers share many similarities with conventional mutual operating structures,” Best said it “believes that there are distinctive characteristics of takaful insurers that must be considered in the rating evaluation.”

The rating agency’s draft methodology outlines the main issues arising when applying Best’s core financial strength rating methodology to takaful insurance companies. The discussion includes: a review of the key principles of takaful; how these principles are incorporated into a takaful company’s business model; and, how Best’s rating methodologies are applied in the assessment of these organizations.”

Best said it “will consider feedback from any interested parties prior to publishing its methodology. Written comments can be submitted by email to: rating.methodology@ambest.com, no later than December 21, 2007.

Source: AM. Best