American Journal of Business Management, Economics and Banking ISSN (E): 2832-8078 Volume 9, | Feb., 2023 P a g e | 123 www.americanjournal.org EVALUATION OF THE EFFICIENCY OF THE FINANCIAL PERFORMANCE OF THE ISLAMIC INSURANCE COMPANY IN JORDAN WITH A PROPOSED MODEL FOR THE ESTABLISHMENT OF AN ISLAMIC INSURANCE COMPANY IN IRAQ Zahra Khaled Rahim Al-Mustansiriya University, College of Administration and Economics Zahraakhalied96@uomustansiriyah.edu.iq Mother. Dr. Ahmed Sabih Attia Al-Mustansiriya University, College of Administration and Economics dr.ahmed_sabeeh@uomustansiriyah.edu.iq A B S T R A C T K E Y W O R D S The increasing risks to which man is exposed and what he owns necessitates that he seeks to find ways to mitigate the negative effects of these risks. He resorted initially to saving and mutual support, but with the development of economic and social measures, a new idea was launched based on collective solidarity, and its main goal is to cooperate in covering damages that afflict a member of the group and guarantee his safety, and financial institutions have been established to practice insurance work, which requires the availability of two things: a legal relationship built between the insurer (the insurance company) and the insured (the insurance applicant) and technical and legal foundations that allow the establishment of such a relationship. With this development, the scope of The work of these companies and the methods of covering them led to the idea of establishing Islamic insurance companies that seek to attract shareholders who refuse to resort to traditional companies for fear of falling into legal problems. The research aimed to identify the concepts related to the insurance sector and the mechanisms of work of the insurance companies as well as to focus on the Islamic insurance sector and propose mechanisms to activate the activity of the Islamic insurance companies in Iraq by proposing a model that simulates the traditional companies. One of the important sectors, whether commercial or Islamic, is one of the urgent necessities that protect members of society from various dangers or reduce them as much as possible, and then recommended a set of recommendations, the most important of which are: Encouraging the establishment of traditional and Islamic Iraqi insurance companies working side by side, with the aim of increasing competition between these institutions from In order to compete in providing the best insurance services in a way that enhances the preservation of economic projects and protects them from various risks. financial analysis, Jordanian Islamic insurance sector, a proposed model for an Islamic insurance company in Iraq. American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 124 www.americanjournal.org Introduction The insurance system in the world has witnessed great development in recent times, as it is among the most important foundations that work to achieve security and stability for the individual and projects and also contributes to supporting economic and social development, as insurance is the best way to protect property and individuals from the various risks to which they are exposed. The Islamic insurance system arose, which aims for cooperation and solidarity among the members of society as a complement and competitor to commercial (traditional) insurance, which in turn aims for profit and directs capital owners in investments in this sector. However, in the Iraqi insurance market there are no Islamic (symbiotic) insurance companies, trying to search making a comparison from the experience of the Kingdom of Jordan, which is similar to Iraq, being a developing country as well, in how Islamic side grows within its insurance sector, through analyzing and evaluating the efficiency of the financial performance and the Islamic insurance company within the insurance sector in Jordan, and accordingly, how to develop the Islamic insurance sector is suggested (symbiotic activity) and try to spread insurance culture and awareness in Iraq. 1- Research Methodology 1-2- Research problem The insurance sector in developing countries did not want to play a role similar to the performance of the insurance sector in developed countries, and this comes either because of the low levels of insurance culture or because of the decline in individuals contracting with insurance companies for religious reasons related to the Islamic religion, especially in Iraq, and the Iraqi insurance market is devoid of Islamic insurance companies. 1-3- The importance of Research The importance of the research lies in the fact that it examines the mechanisms of the insurance sector's work, the Islamic insurance is unique, and the possibilities of exploiting economic resources to be employed in Islamic insurance and solidarity companies. 1-4- Research Objective The research aims to deliver insurance service and insurance protection to a wider area than is currently in Iraq in order to achieve efficient exploitation of resources, reduce alternative opportunities, and evaluate the efficiency of the financial performance of commercial and Islamic insurance companies to know the most important strengths and weaknesses. 1-5- Research hypothesis The research stems from the hypothesis that the involvement of individuals in contracting with insurance companies of an Islamic nature would the increase insurance business, activate the levels of performance of the insurance sector, and enhance its role in keeping pace with economic development in the Islamic world. 1-6- Research Methodology In order to reach the validity of the hypothesis from which the research was launched, it relied on the use of deductive and inductive methods in the analysis. Starting with particles, down to the overall American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 125 www.americanjournal.org conclusions, through analyzing and evaluating the efficiency of the financial performance of the Jordanian Islamic Insurance Company, down to the extent of this company’s ability to influence economic activity in general and its ability to be financially sustainable. 1-7- Research Method The research adopted the descriptive method, as well as the use of the financial analysis method for the data. 1-8- Limitations of research A- Spatial boundaries: The Islamic insurance sector in Jordan (the Islamic Insurance Company) was chosen. B- Temporal limits: the period between (2011-2020). 2- Theoretical side of the research 2-1- Evaluate the financial performance 2-2- Evaluation of financial performance is defined as a knowledge of what has been accomplished based on work controls, as through evaluation criteria are set for evaluating financial performance based on the planning and strategic objectives of the organization, which depend on methods of performance evaluation as a guide, monitor and control of the efforts of workers in All administrative levels in order to achieve the company's strategic objectives (Poster & Streib, 2005, P;46). 2-3- The concept of Islamic insurance: Islamic insurance (Takaful) stipulates that it is a group insurance contract under which each subscriber undertakes to pay a certain amount with the intention of solidarity and solidarity with other participants to compensate those affected by them on the basis of a donation. The management of insurance operations is handled by a company specializing in insurance in the capacity of an agent. With a known wage. (Melhem, 2012: 12) 2-4- Elements of the Islamic insurance contract Elements of an Islamic insurance contract 1. The contracting parties, namely: A- The insurer (the company) B- The insured (the insurance applicant) The two parties are committed to fulfilling the requirements of financial contracts, including the ability to pay, as in commercial insurance the insurance company is the company, while in cooperative insurance the insurer is the association and in the current Islamic insurance the insurer is the insurance account, the group insurance fund for participants, and any insurance An Islamic licensee for companies, acts as an agent for such an account while the insured are either individuals or legal entities. (46:2012, Alhumoudi) 2. The insured risk: It is the contingent future event because it may or may not occur, without its occurrence or non-occurrence dependent on the will of one of the contracting parties (the insured and the company), such as the sinking of the insured goods. 3. Insurance premium: It is the subject of the insured’s obligation, and it means the financial amount that the insured pays to the Cooperative Insurance Fund under the insurance contract. The amount of the insurance premium is determined by an agreement between the company and the insured. The most important factors influencing the determination of the amount of the insurance premium: are the amount of insurance, the risk insured from, and the duration of the insurance premium. Insurance. American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 126 www.americanjournal.org 4. The amount of insurance: It is the subject matter of the insurance company’s obligation on behalf of the insured, and it is the responsibility of the company in the event of the occurrence of the insured risk, as the company undertakes, according to the insurance contract, to pay the insured, who is appointed by him on behalf of the insured, the insurance amount when the insured risk occurs. (Mulhem, 2012: 24-25) 3- The practical side of the research First: Profitability Ratio Profitability is the indicator that reflects the possibility and continuity of companies in the insurance market. In addition, this indicator motivates investors in making their decisions towards companies, as in the equation: Profitability ratio = net income / total assets x 100% Table (1): Profitability percentage in the Islamic insurance company (2011-2020) years net income Jordanian Dinar (1) the total assets Jordanian dinars (2) Profitability (%) 1/2 2011 558309 23396678 2.386 2012 725000 26829296 2.702 2013 1008184 30336874 3.323 2014 1080947 33635713 3.214 2015 1787628 37212247 4.804 2016 1863302 37817839 4.927 2017 2002246 39989660 5.007 2018 1114427 40339317 2.763 2019 1180916 39789389 2.968 2020 1732951 41552507 4.171 arithmetic average % 3.627% Source: Prepared by researchers based on the consolidated financial statements of the Islamic Insurance Company for the period (2011-2020). The profitability ratio in table (1) shows that the lowest profitability ratio was (2.39%) in 2011, which is an acceptable rate, and the maximum was (5.00%) in 2017, which shows the efficiency of the financial investment policy of this company, which will lead to an increase in retained earnings and reflect The data of the table also indicates that the profitability rates decreased in the years 2018 and 2019, as they amounted to (2.76% and 2.97%), respectively, and the reason for this is due to the emergence of (Covid_19) in 2019, although they are acceptable rates and exceed the acceptable minimum of (2%), and in general the arithmetic average of the profitability ratios reached (3.637%) during the research period (2011-2020), which is a percentage that exceeds the acceptable limit and is considered a high percentage, as the company’s investment of 100 Jordanian dinars from its assets will generate a net income of 3.63 Jordanian dinars, which is what It indicates that this company has the ability to sustain its current and future work, increase its capital, pay shareholders profits and face losses, and based on the foregoing, this company has an efficient performance. Figure (1) indicates the percentage of profitability in the Islamic insurance company during the period (2011-2020). American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 127 www.americanjournal.org Source: From the work of the researchers based on the data of Table (1). Second: Liquidity Ratio It is the ratio that represents the amount of cash or assets that can be converted into cash within a short period, as this ratio is used as a tool for evaluating the company's credit position, which usually expresses the company's ability to fulfill its short-term obligations, and the liquidity ratio is calculated according to the following formula: Liquidity Ratio = Current Liquid Assets / Total Assets x 100% Table (2): Liquidity ratios in the Islamic insurance company for the period (2011-2020) years current assets Jordanian Dinar (1) the total assets Jordanian Dinar (2) Liquidity % ½ 2011 3217043 23396678 13.75 2012 3554881 26829296 13.25 2013 3943794 30336874 13.00 2014 4708999 33635713 14.00 2015 4727020 37212247 12.703 2016 5906579 37817839 15.618 2017 5653654 39989660 14.138 2018 6263231 40339317 15.52 2019 6476571 39789389 16.279 2020 6156058 41552507 14.815 arithmetic average % 14.307% Source: Prepared by researchers based on the data of the financial statements of the Islamic insurance company for the years of study. Table (2) shows that the liquidity ratios reached the lowest (12.703%) in 2015, which is the percentage of the decrease in the amount of current assets amounting to (4727020) Jordanian dinars, which is the lowest compared to the total assets amounting to (37212247) Jordanian dinars, and the liquidity ratio reached its maximum (16.279%) in the year 2019 as a result of the increase in the volume of current 0.000 1.000 2.000 3.000 4.000 5.000 6.000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 % p ro fi ta b ili ty r at io s the years Figure (1) Profitability ratios in the Islamic insurance company for the period (2011-2020) (%) American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 128 www.americanjournal.org assets amounting to (6476571) Jordanian dinars compared to the total assets amounting to (39784384) Jordanian dinars, and the liquidity ratio fluctuated between these two ratios, and the liquidity ratio in this company reflects that it does not prefer to keep a large percentage of liquidity in order to achieve safety and the policy of this company is reflected positively on its revenues by employing its money in order to achieve a greater return, and the arithmetic average of the liquidity ratio in this company indicates that it is a small percentage, as it constituted (14.307%) during the period (2011-2020) And investing money to achieve greater returns. Accordingly, this company is considered a company with good performance and efficient management. Figure (2) indicates the percentage of liquidity in the Islamic insurance company for the period (2011-2020). Source: The researcher's work, based on the data of Table (2). Third: Analysis of the financing structure of the company - financial leverage ratio (debt ratio) If companies are unable to pay their debts and do not find lenders, then they are exposed to bankruptcy, so financial leverage is used to measure the extent to which the company's assets are financed with debt and the formula that expresses the indebtedness ratio: Financial leverage ratio = total liabilities / total assets x 100% Table (3): The financial leverage ratio (indebtedness ratio) in the Islamic insurance company for the period (2011-2020) years total liabilities Jordanian Dinar (1) the total assets Jordanian dinars (2) indebtedness % ½ 2011 8036759 23396678 34.350 2012 10882430 26829296 40.562 2013 13475054 30336874 44.418 2014 14992081 33635713 44.572 2015 18681545 37212247 50.203 2016 18223319 37817839 48.187 2017 18077696 39989660 45.206 2018 19635532 40339317 48.676 2019 19257044 39789389 48.404 2020 19132920 41552507 46.045 average % 45.06 % Source: from the work of the researchers based on the data of Table (3) 0.000 5.000 10.000 15.000 20.000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 % li q u id it y ra ti o s the years Figure (2) Liquidity ratios in the Islamic insurance company for the period (2011- 2020) (%) American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 129 www.americanjournal.org Table (3) data indicates that the lowest indebtedness ratio amounted to (34.35%) in the year 2011, and its maximum amounted to (50.20%) in the year (2015), and the low ratio indicates that the company resorted to self-financing of its assets, as the total liabilities in this year amounted to (8036759) Jordanian dinars, and this ratio means, on the other hand, that the company is financially conservative and resorts to shareholders’ rights to finance its operations. As for the high value of this ratio, it means an increase in the company’s obligations, as these obligations amounted to (18,681,544) Jordanian dinars, and this increase indicates that the company resorts to funds It is noted from the data of the table that the fluctuation of the indebtedness ratio is low in this company, and as long as the arithmetic average of the indebtedness ratio has reached (45.06%), which is less than 50%, therefore, this company operates in a safe situation and works to achieve a balance between debts (the company's future obligations) towards its creditors and assets, and it has the ability to meet its future obligations. Chart (3) indicates the indebtedness ratio of the Islamic insurance company for the period (2011-2020). Source: from the work of the researchers based on the data of Table (3) 3-2 - Calculating the insurance surplus for the Jordanian Islamic Insurance Company The primary insurance surplus for the Islamic insurance company is calculated according to the formula (contributions or premiums - compensation). The insurance surplus represents the total profits of the company's insurance operations. Table (4) shows the insurance surplus and the annual rate of change for the Islamic insurance company. Table (4): Primary insurance surplus (insurance profits) for the Islamic insurance company for the period (2011-2020) Jordanian dinar years subscriptions rate of change % The compensation The rate of compensation the insurance surplus (Insurance profits) rate of change % 2011 10051275 - 6930634 - 3120641 - 2012 12207956 21.4 % 6156912 11.1% - 6051044 93.9 % 2013 13469229 10.3 % 7204394 17% 6264835 3.5% 2014 15125172 12.2 % 7941213 10.2 % 7183959 14.6 % 2015 15964840 5.5% 7887501 0.6% - 8077339 12.4 % 2016 16323539 2.2% 9907369 25.6 % 6416170 20.5% - 2017 16770902 2.7% 10877033 9.7% 5893869 8.1% - 2018 16686975 0.5% - 10369750 4.6% - 6317225 7.1% 2019 17086533 2.3% 11733026 13.1 % 5353507 15.2% - 2020 15385732 9.9% - 8949520 23.7% - 6436212 20.2 % 0.000 20.000 40.000 60.000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020In d e b te d n es s % the years Figure (3) The indebtedness ratio in the Islamic insurance company for the period (2011-2020) (%) American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 130 www.americanjournal.org Source: Prepared by researchers based on the consolidated financial statements of the Islamic Insurance Company for the period (2011-2020). It is noted from Table (4) that the total contributions gradually increased, as it exceeded (10) million Jordanian dinars in the year (2011), to record the highest value of contributions (17) million Jordanian dinars in the year (2019), at an annual rate of change of (2.3%) compared to the previous year. Also, the paid compensations recorded a gradual increase, as it amounted to (6.9) million Jordanian dinars in the year (2011), reaching the highest value (of 11.7) million Jordanian dinars in the year (2019), at a positive annual rate of change (13.1%), then it recorded in recent years a difference between rise and fall to amount to (8.9) million Jordanian dinars in the year (2020) at a negative annual rate of change of (-23.7%) over the previous year. As for the value of the insurance surplus, which is calculated from the difference between contributions (premiums) and paid compensations, it amounted to (3.12) million Jordanian dinars year (2011) to reach a maximum of (8) million Jordanian dinars in the year (2015), as the total contributions were greater than the paid compensations and the annual rate of change was (12.4%) positive from the previous year, to record after that a varying increase and decrease in the insurance surplus and the rate of change also varies annually. 4- The reality of Islamic insurance (Takaful) in Iraq - basis and ambition Recently, the importance of Islamic insurance (Takaful) has emerged as one of the types of insurance that are characterized by characteristics that commercial (traditional) insurance lacks. The framework for confronting risks, especially since it is an insurance system that does not violate the principles of Islamic law. The Islamic insurance industry in the world has witnessed remarkable growth and development during the past few years, as it enjoys a great place in the global insurance market and has become a strong competitor to commercial (traditional) insurance. The type of insurance in Islamic societies and the multiplicity of parties dealing with it, and its diversity, but this industry has not found its way into Iraqi society so far, despite the fact that Central Bank Resolution No. (66) of (2019) has included the position on issuing controls for organizing solidarity in order to support Islamic banking, and indeed it was decided to establish an Islamic Takaful company with a capital of (15) billion Iraqi dinars and with the participation of all Islamic banks, based on the provisions of Article (15) of Islamic Banking Law No. (43) of (2005). 4-1- The proposed application model for the Islamic insurance company The proposed company operates in accordance with the provisions of Islamic Sharia and its capital is (15) billion Iraqi dinars, as we assume that the volume of annual contributions and compensation increases by 10%, and assuming that the economic, political, and security conditions are stable and therefore the (primary) insurance surplus will be as in Table (5) the following: - Table (5): Proposal for contributions, compensation, and insurance surplus (initial) (Iraqi Dinar) years subscriptions compensation Primary insurance surplus (insurance profits) first 20000000 6000000 14000000 second 22000000 6600000 15400000 Third 24200000 7260000 16900000 fourth 26600000 7986000 18630000 Fifth 29282000 8780000 20497400 Source: The work of the researchers according to the proposed vision American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 131 www.americanjournal.org Table (5) shows the size of the proposed contributions and compensations, which increases gradually by 10%. Since the company started its work in the first year, we suggest that the volume of contributions is (20) billion Iraqi dinars and compensation is (6) billion Iraqi dinars, then it continues to increase in the subsequent years as it reached the volume of contributions in the fifth year is (29) billion Iraqi dinars, and compensation is (8) billion Iraqi dinars, in order to increase the number of participants in the types of insurance that it offers, such as insurance for the various types of Islamic insurance models. Expenses and provisions related to insurance operations, as we assume that the surplus in the first year is (14) billion Iraqi dinars to increase gradually to reach in the fifth year (20) billion Iraqi dinars, which is a relatively good proposed amount to achieve profits from cash surpluses with the Islamic insurance company at the beginning of its work It is derived from the percentage and proportionality of the compensation granted by the traditional insurance companies, as the company compensates those affected in accordance with the provisions of Islamic Sharia, and thus it has a surplus for insurance. An appropriate initial investment contributes a great deal to the survival of the company operating in a competitive market side by side with traditional insurance companies, and even attracts larger numbers of subscribers in the scope of its business as it operates in accordance with Islamic Sharia. 4-2- The size of the proposed investments and profits for the Islamic insurance company As a result of the size of the initial profits that will be achieved as a result of the primary insurance business practiced by the company, it will generate appropriate initial insurance profits, as in the previous table (5), and the desire of the company to expand and develop its capital, it will resort to aspects of investment in accordance with Islamic law, such as investing in Islamic deposits in Islamic banks or invest its resources in the investment aspects it deems appropriate, and assuming that the volume of profits it achieves increases annually by 10%, then the volume of total profits will be according to the following table: Table (6): The size of the proposed amounts and investments for the Islamic insurance company for a period of five years thousand Iraqi dinars years real estate sector the productive sector (industrial, agricultural) the banking sector The financial markets, the volume of investment The volume of profits the volume of investment The volume of profits the volume of investment The volume of profits the volume of investment The volume of profits first year 3000000 330000 2000000 220000 5000000 550000 6000000 660000 Second year 3350000 368500 2100000 231000 5200000 572000 6800000 748000 Third year 3510000 386100 2300000 253000 6200000 682000 6930000 762300 fourth year 3820000 420200 2550000 280500 6330000 693300 7640000 840400 Fifth year 4100000 451000 2870000 315700 6820000 750200 8707400 957814 Source: Prepared by researchers based on the proposed vision American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 132 www.americanjournal.org It appears from Table (6) that the size of the estimated profits is assumed to increase gradually by (10%) annually, assuming that they were invested in various profit-generating sectors such as the real estate, banking, production and securities sectors, whether the investment was entirely or through joint investment, since The total invested funds = the sum of the primary insurance surplus + a small part of the capital, noting that the volume of investment for the agricultural and productive sector was assumed in the first year at an amount of (3) and (2) billion Iraqi dinars, respectively, either, as for the estimated profit, it amounted to (330 ), (220) million Iraqi dinars, to raise the volume of investment significantly, as it reached in the fifth year by (4.1) billion Iraqi dinars, and the amount of estimated profit was (451) million Iraqi dinars for the real estate sector, while the productive sector increased the volume of investment in the fifth year to reach (2.8) billion Iraqi dinars, bringing the estimated profit for investment to (315) million Iraqi dinars. 4-3- The total amounts of investments and proposed profits in the invested sectors of the Islamic Insurance Company Table (7) shows the total investments and proposed profits in all invested sectors of the Islamic Insurance Company for a period of five years. Table (7): Total investment amounts and proposed profits for the sectors invested in the Islamic insurance company for a period of five years (thousand Iraqi dinars) Years Investment profit First 16000000 1760000 Second 16400000 1919500 Third 18940000 2083400 Fourth 20634000 2234400 Fifth 22497400 2474714 Total 94471400 10472014 Source: Prepared by researchers based on the proposed vision. 4-4- The size of the total profits (insurance and non-insurance) proposed for the Islamic insurance company After calculating insurance profits (insurance surplus) and non-insurance profits as a result of investment in different sectors, we extract the size of the total profits (insurance and non-insurance) proposed for the Islamic insurance company for a period of five years. Table (8) shows the total profits of the proposed Islamic insurance company, as follows: Table (8): The total profits of the Islamic insurance company for a period of five years (thousand Iraqi dinars) years Insurance profits Non-insurance investment profits Total profits first 16,000,000 1760,000 17,760,000 second 16400000 1919500 18319500 Third 18940000 2083400 21023400 Fourth 20634000 2234400 22868400 Fifth 22497400 2474714 24972114 Source: Prepared by the researcher based on the activities proposed for the company American Journal of Business Management, Economics and Banking Volume 9 Feb., 2023 P a g e | 133 www.americanjournal.org It is noted from table (8) that the volume of total profits resulting from the sum of insurance profits (insurance surplus) and non-insurance investment profits in various aspects of investment in accordance with the provisions of Islamic Sharia law increases during the proposed five years with the increase in investments, and this indicates that the total profits will be feasible and the company is operating to develop and increase profitability at a relatively good level, and it will stimulate other Islamic insurance companies to enter this industry, and thus it will compete with traditional insurance companies, and this competition will create or develop the insurance service because of the competition, as insurance companies will seek to provide better services. Conclusions 1. Islamic insurance companies are a complimentary link to the Islamic economy represented by Islamic banks and Islamic banks, as the proliferation of Takaful insurance companies and their expansion in global markets and their fulfillment of their duties in risk management contribute effectively to supporting the wheel of the national economy. 2. An analysis of the financial performance of the Jordanian Islamic Insurance Company shows that it enjoys good financial performance, and this indicates that Islamic insurance companies are among the financial institutions that can compete in the insurance market. Recommendations 1. Activating insurance participation by individuals and the business sector, by spreading insurance awareness and demonstrating the importance of resorting to insurance companies for various economic activities in order to mitigate the severity of the risks that the individual may be exposed to personally. 2. Encouraging the establishment of traditional and Islamic Iraqi insurance companies working side by side with the aim of increasing competition between these institutions in order to compete in providing the best insurance services in a manner that enhances the preservation of economic projects and their protection from various risks. 3. Ensuring the development of the role of the Sharia Supervisory Board and the need to issue new regulations and laws that regulate the work of Islamic insurance companies in accordance with the principles of Islamic Sharia, whether internal or external. Sources 1- Melhem, Ahmed Salem, Islamic insurance, a legal study showing the perception of cooperative insurance and its practical practices in Islamic insurance companies, Dar Al-Thaqafa for publication and distribution, first edition, 2012. 1- Poster, Theodore H. & Sterib, Gregory, Elements of Strategic Planning and management in municipal Government Status after Two Decades, 2005. 2-Alhumoudi, Youssef Abdullah, ISLAMIC INSURANCE TAKAFUL AND IST APPLICATIONS IN SAUDI ARABIA, a thesis submitted for the degree of Doctor of Philosophy, Brunel University, 2012 2- Eling, M and Holzmuller, L, Capital Requirements, on Ask basis in U.S., the Insurance Institute, St. Gallen Switzer land, UNE, 2008.