Retakaful management and capital management of the takaful industry may be achieved by replicating the economic benefits of similar products. However, Alternative Risk Transfer (ART) is a conventional product which is not compliant with Shari?ah. For this purpose, this research is undertaken to explore the viability of introducing takaful securitization based on principles and practices of takaful and other relevant Shari?ah approved contracts for securitization, such as ?uk?k. This will also enhance financial intermediation through convergence of the takaful industry with the Islamic capital market. The researcher suggests that the products be termed as ‘Securitized Takaful and Retakaful’ (STAR). This is a qualitative and applied study which is undertaken in the context of Malaysia, a premier centre for Islamic finance; thus, a potential choice for the development of STAR. The primary data gathered from interview conducted with selected industry experts consisting of Shari?ah scholars, regulator, takaful and Islamic capital market practitioners, reveals a general lack of understanding on the subject. Secondary data is derived from published reports from various authorities on the subject. However, as a new innovation, there is an apparent dearth of literature and research on the subject. Hence, the investigation on the viability of STAR, is benchmarked with the conventional ART mechanism, that has a wide body of knowledge, experience and expertise on the subject. Data comprising of interview, published reports and literature is analyzed. Upon condensation of data, a proposed framework is formulated, that encompasses the major elements as a proposed blueprint for the implementation of STAR. This research achieves its objectives of highlighting the viability and the way forward to enhance retakaful and capital management by replicating the economics benefits of ART products through takaful securitization in the form of STAR solutions.
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