Takaful: Let those who have the licence play up the market

With approval in principle granted to Cornerstone Takaful Insurance Company Ltd and Salam Takaful Insurance Company Ltd as composite takaful operators to transact both family and general takaful businesses in Nigeria, there are now four companies in the space with Noor Takaful and Jaiz Takaful having licensed in 2016.

All of these were yet to translate to any visible activity in that space, and closer interaction with potential consumers still show high level ignorance, not because there is reluctance but because they have not been engaged and no any strategic effort found in terms of awareness creation and enlightenment.

So, players in these space must lighten up the market with activities for awareness and education, and this is the only way efforts which the regulator, the National Insurance Commission(naicom) to deepen financial inclusion and penetration can make meaning and yield expected result, market observers have said.

Babatunde Omosola, of

the Oyo State Chapter of the CIIN had said SouthEasterners have embraced Takaful insurance products because of its simplicity, calling for strategic investment by operators.

He noted that though Takaful which means joint guarantee or share responsibility in Arabic, operates in according to Islamic laws, the products are designed to carter for Muslims and non- Muslims, adding that the products are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.

He said: “Under Takaful plan, you can save regularly for a fixed period that is convenient for you, and the accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage or hajj. It could also be used to meet other long term financial objectives, such as retirement, children education, travelling expenses as well as expected commitment.”

He noted that reports have shown that in many countries, Takaful products have been bought by non Muslims due to some of its attractive features, which are not offered under conventional products, adding that the implication of this trend is that there is a promising market and potential growth for takaful business in Nigeria.

The expert had noted that in the Eastern part of the country, the product is a hot cake. “The attraction of Easterners, he observed was the profit sharing characteristic as well as protection under the poll, which is nonexistent with the conventional insurance.

For the northern part of the country, he said the attraction is the cultural belief. The cultural belief of the north is another factor said to be driving the sales of the products, as investment of Takaful funds is done in compliance with sharia law, which prohibits gambling and profiteering and consumption of alcohol. The funds are not invested in economic activities that negate Islam and Sharia, including brewing alcohol.

NAICOM how has said says it’s planning to license more Takaful Insurance companies, as this is a major expansion and penetration strategy under its Market Development and Restructuring Initiative ( MDRI), targeted at reaching the uninsured population as well as those who avoid conventional insurance as result of their religious belief.

The Commission at the introduction of Takaful and Micro insurance in the Country said it was an attempt to reach the segment of the market that is either hitherto reached or not comfortable with the conventional insurance products.

The Commission therefore urges people across the country to embrace Takaful for their protection against risks, adding that Takaful is both ethical financing and cooperative risk protection methods that are superior alternatives, because they reinvigorate human capital, human solidarity, emphasize dignity, community self-help and economic self-development, generating manifold benefits which appeal not only to Muslims but all.

The Commission also said it’s elated at this positive development which is a bold step towards the growth and development of the Takaful market in Nigeria.

According to NAICOM, the development of Takaful operations in Nigeria could not have been achieved without the provision of an enabling framework for its takeoff, stressing that the Commission in collaboration with development partners such as Enhancing Financial Innovation & Access (Efina) and GIZ developed and released the Takaful Insurance Guidelines to enable smooth operation.

The Commission in March 2015 inaugurated the Takaful Advisory Council of Experts (ACE) saddled with the responsibility of review, endorsement of policies and guidelines related to the principles underpinning Takaful insurance operation. The ACE is made up of eminent scholars with deep knowledge of Islam and Sharia,” he said

The insurance product line which was awakened by the development of economic activities and establishment of Islamic banks in the seventies and known as joint guarantee or share responsibility in Arabic operates according to Islamic laws. The products are designed to carter for Muslims and non- Muslims, and are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.