Feb. 17, 2016

A. Rahman Moh’d Al Baker


A. Rahman Moh’d Al Baker

Exec. Dir. of Financial Institutions Supervision, Central Bank of Bahrain

"Our role is to ensure a healthy environment for the operations of the overall insurance sector."


A. Rahman Moh’d Al Baker is the Executive Director of Financial Institutions Supervision at the Central Bank of Bahrain, a position he has held since January 2006. He has been at the Bank for almost 30 years, holding a series of increasingly senior positions. He holds a degree in Accounting from Gulf Polytechnic (University of Bahrain).

What is your philosophy on the role of the regulator in this region, and how do you support the role of takaful?

Our role is to ensure a healthy environment for the operations of the overall insurance sector in Bahrain, specifically conventional and takaful. That will happen by ensuring there are proper regulations in conformity with the best international standards and with the existing development in the market overall. With respect to takaful, it represents almost 22% of the overall insurance premiums and is one of the growing areas whereby we see that the average growth during the past five years has been around 15%. It is a double-digit growth, which clearly shows that this industry has a great potential to grow and the appetite for takaful products has increased. We are also innovative with respect to the regulations governing takaful, because we have revamped the solvency ratios. It is different to conventional products, although we ensure that such changes are in line with the best international standards of calculating or evaluating risk. Based on that, we have come up with different solvency ratios that were introduced in January 2015, after working closely on this for a period of almost one and a half years. We also consulted religious scholars to ensure we were not deviating from the sharia principles on such calculations. They gave us the stamp of approval in terms of the solvency requirements for takaful. The main idea behind takaful is solidarity—that the two share the risk, and, at the same time, share the profit. The concept of Islamic finance is based on profit and loss sharing basis.

What do you see in terms of momentum and will among regional regulators to coalesce a single regulatory regime?

We are pro-GCC passporting. This is because of the belief that it will create a bigger market, be it insurance, investment, or even banking. You can observe this happening automatically in certain sectors, such as capital markets. Today, obviously the capital markets are open in a way that all GCC investors can invest in whatever market. Frankly, this has helped to boost the existing capital markets in several GCC countries due to the fact that investors are free to underwrite, invest, or buy and sell whatever GCC shares in the overall market. Thereby, it has created a larger market of almost $1 trillion in the capital markets. It shows that there are positive developments happening in the sector. If you apply this in a market such as insurance, then it will help to create a large insurance market, be it life, health, or other types of insurance services. It will also open the door for those markets with overcapacity to tap other markets in the region. If that happens, we could look at the area of passporting more closely. We in Bahrain are pro-GCC passporting for products, because we believe that is the way forward to attract more FDI to the region, as well as create a larger market that could be developed over the years. With this, there would be a greater possibility for a joint venture between companies and more consolidation for business.