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What you need to know about Islamic Real Estate Insurance

Islamic insurance (known as Takaful insurance) has been introduced as an alternative to conventional commercial insurance which is seen as violating Islamic restrictions on riba (interest), al-maisir (gambling), and al-gharar (uncertainty) all of which are in contravention of Shariah principles.

Generally a special wording is unnecessary but to demonstrate that it is Shariah compliant the wording should contain an Insurer Protocol which will demonstrate to the policyholder how the insurer complies with Shariah principals and also how it will discharge its obligations under the contract. This Protocol will usually take the form of an endorsement to the policy wording.

Policyholders agree to guarantee each other and make contributions to a mutual fund, or pool, instead of paying premiums. The pool of collected contributions creates the takaful fund. A takaful contract, like a conventional insurance, specifies the nature of the risk and period of insurance.

The fund is managed and administered on behalf of the participants by a takaful operator, who charges an agreed-upon fee to cover costs. Much like a conventional insurance company, costs include sales and marketing, underwriting, and claims management.

Any claims made by participants are paid out of the fund and any remaining surpluses, after making provisions for the likely cost of future claims and other reserves, belong to the participants in the fund and not the takaful operator. Those funds may be distributed to the participants in the form of cash dividends or distributions or via a reduction in future contributions.

Recently AXA Insurance have teamed up with Cobalt Underwriting to create a new Shariah-compliant insurance product for the real estate sector. The new product, which is available now, is an add-on to AXA’s existing real estate product. They have devised new premium payment and claims processes to ensure the product adheres to the key principles of Islamic insurance.  To see more details on the AXA product please click here.

At Arlington we specialise in Real Estate insurance and we have a team of friendly people who are immensely experienced at providing specialised risk solutions.

If you wish to know more about our Real Estate propositions, including Takaful insurance, our contact details can be found here.

Managing Property – GDPR and Tenant Databases

If you manage property assets have you considered that GDPR will apply to the information you hold relating to tenants?

Typically you will use and store tenants’ personal information and so will be legally required to comply with GDPR and you need to process and control this information in a transparent fashion, which includes explaining:

  • What personal information you collect.
  • Why you need their personal information.
  • How you might use their personal information (including who the information might be shared with), and ensuring you only use it in that way (unless there are overriding legal precedents requiring the information).
  • How long their personal information is retained for.

On a positive note GDPR is actually a good opportunity to take a look at how you’re organising tenancy documents in general and to improve your processes, making them more efficient and you may wish to issue an updated privacy notice. For more information on this topic click here for a recent article by DAC Beachcroft solicitors.

It is important to remember there is a risk of significant fines and penalties for any firms falling victim to a data breach and after a data breach, you will need to contact the Information Commissioner’s Office (ICO) within 72 hours, and, you will need a rapid plan of action for communicating to customers, suppliers and employees.

You are likely to incur costs for a combination of IT forensic investigation, legal assistance, communication logistics and, public relations and whilst risk management will help to prevent a cyber attack, even the best security does not always prevent an intrusion.

In the event that an incident does occur, cyber insurance provides a valuable safety net. Click here to learn more about Cyber Insurance.