100
a) “To review the company’s applicable policies and procedures in respect of the
participation finance principles,
b) To authorize in order for buying participation reinsurance or reinsurance within the
framework of participation finance principles,
c) To review the company’s investment operations in respect of their compliance to the
participation finance principles and to confirm such compliance,
d) To consult the company’s board of directors and other related departments about the
principles and practices of participation finance and participation insurance,
e) To be involved in the in-house new product development processes,
f) To make comments in the company’s annual reports about conduct of company
operations according to the participation finance principles,
g) To provide necessary information or do necessary works, if requested by the Ministry,
h) To fulfil other duties and responsibility imposed by this Regulation’’.
Additionally, the same Article 8 regulates the governance of Shari'ah Advisory Committee
structure and resolutions. Besides, the Article 10 of the Regulation regulates the disclosure and
data sharing of the industry. Even though, putting a distinctive effort for regulating the
institution level Shari'ah Advisory Committee, the coverage of the operating business models is
limited. It only covers the wakalah, mudarabah, and wakalah-mudarabah hybrid models.
Therefore, the General Directorate of Insurance is widely open for proposals on developing new
models for the economy and amending the regulation for better expanding the Takaful industry.
For this reason, two new fully-fledged Takaful companies are officially registered and applied
for their licences with modified wakalah model with a plan to start their operation soon (Dinç,
2019).
The Turkish Islamic insurance market has difficulties in applying Takaful operations. The key
lacking point in the regulation is the surplus redistribution methodology that has got a hectic
situation in Turkey, even though, it has one specific article on the Regulation. Article 7 considers
it as a must to calculate the surplus amount, but the methodology is not given. The reasons
behind this are the lack of accounting standards and appropriate insurance software for TOs.
There are daily reporting and accounting requirements in Takaful, but the current standards
depend on monthly basis reporting in Turkey. In order to solve this problem, the effectiveness
of IFRS 17 Insurance Contracts standards that will enter into force in 2023 will be useful.
The Procedures and Principles of Participation Insurance Business regulation has a strategic
contribution to support TOs with its article which bans Takaful window. Window based
companies can start their operation by just informing Regulatory and Supervisory Authority.
They are subject to the same regulation with full-fledge operators. The period of operation by
window-based operators expires on 20 December 2020. This period can be extended by 2 years
until 20 December 2022 by the Ministry of Treasury and Finance. The 3-year rule of the
Regulation is expected to bring strength to Takaful companies in Turkey.