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hybrid Takaful but we have to mention that the Turkish regulatory body is open for other
current or new models to regulate. The modified wakalah model may fit better to Turkish
market dynamics and culture. Turkey has experience in insurance for more than a century
(Baskıcı, 2002). Moreover, the sector is experienced for main insurance activities that can
generate income from reinsurance refunds, assistance, and recourse which can motivate the
operators on their businesses more than wakalah fee or investment income shares. The
policyholders focus on the quality of service more than the gains on investment, hence
compromising on such models as mudarabah model as well as the hybrid model. It can be
understood from the attitude of the Ministry of Treasury and Finance and from the 11th
Development Plan that soon Turkey will become a business model innovation hub for the
Takaful industry (SBB, 2019).
6.3.5 Issues and Challenges
There are many issues and challenges that stand as obstacles in the way of the development of
Takaful in Turkey. The following are examples to mention:
 Global Developments: Premium inflation caused by the increase of reinsurance costs
after the excessive appreciation of the US Dollar with the currency crash.
 Multinational Companies: Carrying out the effect of uncertainties arising from local
economies.
 Economic Outlook: The pressure of financial scarcity on growth in Turkey's economy.
 Interest Rate: Economic slow-down caused by a lack of long-term investment because
of interest rate fluctuations.
 Banking Sector Performance: Negative effect of low performance in the banking
sector, one of the main distribution channels for insurance, on policy production and
premium volume.
 MinimumWage Increases: Contingency inflation caused by uncorrelated increases in
the minimum wage with the growth rate.
 Verdicts: Unexpected contingency expenses caused by the court decisions which
increase the insurance coverage.
 Ageing Population : Increasing contingency expenses caused by social security
supplementary products.
 Legal Regulatory: Absence of Islamic finance act and central Shari'ah board.
 Taxation: Lack of proper taxation framework related to Takaful underwriting surplus.
 Academic: Dearth of academician in every academic sector, especially universities, lack
of enough research and publication, insufficient conferences, seminars, and
symposiums.
 Technical: Absence of Re-Takaful industry, accounting standard related to Takaful, and
main Takaful software.