The global financial crisis has provided an opportunity to address the weaknesses in the financial system and to build a platform for development and growth of the insurance industry, said a top banker.

"Regulators all over the world, especially in the Middle East and North Africa (Mena) region need to strengthen their regulatory framework so that the industry can capitalise on the growth opportunities," Central Bank of Bahrain (CBB) executive director of financial institutions supervision Abdul Rahman Al Baker was quoted as saying in the Gulf Daily News, our sister publication.

He was addressing delegates at the opening session of the ninth Middle East Insurance Forum which opened in Bahrain yesterday.

The two-day event being held in the Gulf Hotel is set to gather more than 500 international delegates representing over 150 leading organisations.

"The financial crisis has been a reminder that markets need effective regulation if they are to operate properly," said Al Baker.

"As a regulator, the CBB always believes in continual enhancement and improvement of its regulatory infrastructure for the growth and betterment of the industry.

"The CBB has always played an important role in launching new initiatives to develop the insurance industry both locally and regionally.

"The work towards revision of the existing takaful model is one such step in reaffirming Bahrain as the jurisdiction of choice for all the takaful and retakaful companies globally," he said.

"The objective of modifying the existing Takaful rules was to facilitate a faster growth of the takaful business in Bahrain while protecting the interest of all stakeholders, vis-ˆ-vis participants, shareholders, and takaful operators," he added.

"It is also expected that the changes to the model will attract new entrants to the market and will foster competition for the betterment of the consumers.

"The CBB has taken various steps to ensure that a stable insurance market continues to strive and prosper in our region," he said.

"One of the main regulatory priorities that a regulator should address is the protection of the policyholders.

"This objective has been clearly outlined in the CBB Law as well as through the rules that have been introduced to specifically deal with tied agents.

"These rules require a minimum level of qualification for those dealing with potential policyholders and recognise that the offering of insurance products must be made in a professional and ethical manner," he added.

"Maintaining adequate level of solvency that is in line with the best regulatory standards is another regulatory priority for the regulators in the Middle East insurance industry.

"Such solvency requirements should be helpful to provide early warning to regulators so that they could take the necessary measures should the capital of insurance firm falls below the required level," he said.

"Adequate solvency requirements enhance the confidence in the financial stability of the insurance industry and further improve the financial standing of insurance firms," he added.-TradeArabia News Service