The world's second biggest re-insurance company, Munich Re, said Tuesday will conduct "Retakaful business" based on principles of Islamic law from its new office in Malaysia. Munich Re's branch in Kuala Lumpur will be "entirely devoted to Retakaful business," said a statement which explained that as the form of reinsurance based on Sharia, or Islamic law.
Under the system, "the insureds form a community which attaches great significance to mutual support and solidarity" and shuns payments of interest or investments in sectors such as gambling or alcohol.
"Munich Re sees this as an area with major growth potential," since Muslims comprise 20 percent of the global population, the statement said, adding that it would receive a fee for managing the funds.
Munich Re, which follows German rival Hannover Re into the Islamic market, offers General Retakaful policies as an alternative to non-life reinsurance, and Family Retakaful contracts instead of life reinsurance.
The offers would be extended "to other South-eastern Asian countries and beyond in the near future," the German group said. Board member Ludger Arnoldussen was quoted as saying: "We already enjoy very good relations with our clients in the Islamic world. Writing Retakaful business via our new branch will broaden and enhance those relations."