While takaful has gained significant acceptance among Algerians, the sector still faces some hurdles that hinder its growth, including regulatory and technological obstacles and the lack of awareness campaigns, according to two academics.
Ms Loubna Boutemine and Ms Cheyma Mansouri, lecturers at the Higher School of Accounting and Finance and at the National Higher School of Islamic Sciences, respectively, thus proposed that the law governing takaful companies in Algeria, be revised, reported the newspaper, El Moudjahid.
Their proposals include:
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reducing the number of members required to create a takaful company;
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reducing the mandatory proportion (currently set at 50%) of investments in public treasury bonds, which pay out interest;
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issuing Islamic financial instruments, such as sukuk;
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establishing separate Islamic banks to ensure transparency, governance and genuine adherence to the principles of Islamic finance, thus promoting the successful development of bancatakaful in Algeria ;
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diversifying takaful products to attract more customers.
There are also suggestions that the supervisory role of regulatory bodies be expanded over the activities of takaful companies to include monitoring their compliance with legal standards and principles.
The academics propose attracting foreign takaful companies to invest in the Algerian market and can Algerian talent.
In addition, Algeria can support technological innovation, by offering incentives and subsidies to takaful companies, which use advanced digital solutions, such as artificial intelligence, blockchain, and data analysis.
Takaful, an emerging insurance branch gaining ground in Algeria, is expected to increase its share of the insurance market, in part due to the 2024 finance law that includes financial and management incentives in this start-up phase of Islamic insurance.
Takaful entities were established formally in recent years. Salama Assurances started offering takaful services in 2021 before the promulgation of the 2024 finance law. Société Générale Assurance Méditerranéenne (GAM) opened the first takaful window in Algeria in 2022.