Takaful Insurance allows profit sharing, experts say

Insurance experts are advocating for increased awareness on Takaful Insurance to increase the knowledge of Nigerians on it and how it is helpful to their well being.

The experts, who spoke at the Takaful Insurance Symposium organised by Noor Takaful Plc in Lagos, said Takaful insurance is an inclusive product and services that anyone can buy regardless of culture or religion, noting that there is the need for rigorous industry wide sensitisation and training on this form of insurance.

The Chairman, Noor Takaful Insurance Plc, Amb. Shuaibu Ahmed, said Takaful is about joint guarantee, whereby individuals in a community jointly guarantee themselves against any loss or damage. This function, he said, is undertaken by insurance companies whereby the insuring public transfer their financial risks of loss or damage to their assets or lives to the insurance companies at a price called premium.

According to him, “under a Takaful contract, the insuring public can make charitable donation, called Takaful premium to a common fund known as Takaful risk fund, from which they may draw funds whenever they are facing defined financial losses covered under the Takaful contract. Unlike an insurance company, a Takaful operator does not own the Takaful fund; it only manages the fund for a fees and share of the profits from the fund.”

While stating that the Takaful concept is a better concept compared to the conventional insurance, he noted that there is still a dearth of knowledge on Takaful, saying Noor Takaful Plc comes to contribute to the developments and deepening of this new concept, thus, becoming the first full-fledged Takaful operator in the country.

Earlier, the Commissioner for Insurance, Mr Mohammed Kari, said the commission issued a robust guideline on Takaful Insurance to facilitate transition to fully-fledged operation and also to provide a level playing field for all operators in the Nigerian insurance market.

In addition to the three Takaful window operators, he said the commission has licensed two fully-fledged Takaful companies of which Noor is one. Kari, who was represented by Director, Authorisation and Policy, NAICOM, Mr. Pius Agboola, said Takaful insurance is a new line of business that many people are completely ignorant of its operation, stating that the challenge of conventional insurance is equally applicable to Takaful Insurance with no understanding between operators and policy holders.

Saying that the growth of Takaful business in Nigeria requires a highly trained personnel to drive its operations forward, he added that building both human and financial capital within its jurisdiction is a key success factor for achieving the country’s objective of becoming the hub of insurance and Takaful in Africa.

The Director, Noor Takaful, Mr. Dato Mohd Yusof, said Takaful has yet to make the desired impact to the public as a viable and preferred alternative to conventional insurance, as it has not been able to attract capital from investors, calling for harmonization of conventional and Islamic laws and application of Maqasid Shariah to address legal and regulatory issues bedevilling this concept.

“There is the need for matured insurance industry and Takaful concept, while limiting new licenses to allow Takaful industry to grow,” he pointed out.

The Managing Director of the company, Mr. Won Zamri Ismail, had earlier said its Takaful Insurance firm provides a comprehensive range of competitive and innovative Takaful products  and services that caters for insurance need of all sectors of society, comprising of individuals, retail and commercial, associations, corporate and government sectors.