The Insurance Regulatory Authority of Kenya has issued a new set of takaful operational guidelines, heralding a new chapter in Islamic finance in that country.

Takaful is a type of insurance system devised to comply with Shari'ah law, in which money is pooled and invested. About one-seventh of Kenya's population is Islamic; the regulator has not said anything yet about any policy of attracting high-net-worth Islamic investors, but this is probably only a matter of time.

"Family takaful," in regulatory jargon, is the Islamic alternative for life or long-term insurance business. This means takaful for the  benefit of individuals, groups of individuals and their families. "General takaful" covers everything else, i.e. the alternative of general or short–term or non-life business. The "participant" is the contributing party to  the takaful policy who is covered through the mutual protection and solidarity of the takaful policy. He is the equivalent of a policyholder or insured party.

The "participants' investment fund" is an account to credit a portion of contributions from the participant for the purpose of investment and/or savings. It is also referred to as the "takaful fund." This is the equivalent of a risk fund where a portion of the participants' contributions are credited to assist participants who might suffer unexpected financial losses.

The shareholders' fund is also called the operating fund. This account holds the paid-up capital (i.e. seed money) provided by the company's shareholders. The start-up administrative expenses are paid from this account and the balance capital is invested. Any profits from those investments go back into this fund. In addition, takaful participants pay periodic management fees that are placed in the shareholders' fund to defray continual administrative expenses.

Each takaful operator is expected to have recourse to a Shari’ah Supervisory Council - a committee of Islamic scholars who are well-versed and competent in Shari'ah and its approaches to finance, appointed by the takaful operator to supervise and ensure that the operations of the operator are Shari’ah-compliant.