Some new Islamic Insurance Companies (Takaful)
will commence operations in the country in the next couple of months, thus
becoming the first set of fully-fledged Takaful Insurance companies in the
country.
Takaful insurance guarantees profit sharing
between the insurer and the policyholders, a trait that is absent in the
conventional insurance business as the conventional insurer takes the whole
profit made from its investment. Hence, when the three Takaful operators start
operations, they are going to rival conventional insurer, especially in the
grassroots where this concept would sell faster.
Our source gathered that five investors had
submitted applications to the National Insurance Commission (NAICOM) to float
Takaful insurance companies in the country; the regulatory body had only given
approval to three of them. The remaining two applications, it was learnt, are
still receiving attention from the insurance industry regulatory body.
Findings revealed that one of the three licensed
Takaful insurers, Noor Takaful Insurance Company Plc, is expected to officially
start operations next month (November) in Lagos, while the two others are
putting finishing touches to their setup and could commence operation latest by
next year.
Investigation revealed that the new insurance
firms are mostly owned by foreigners, especially investors from the Middle East
and Asia, who have the needed expertise in the area of Islamic insurance and
had operated successfully in some other parts of the world. They are now set to
use the template to operate Takaful insurance business in the country.
The local insurance firms, it was learnt, are not
ready to float Islamic insurance subsidiaries because of their modus operandi,
which allows profit sharing between the insured and the insurers, although some
of them are operating it at a window level (having a department or product for
Takaful insurance).
The likes of African Alliance Insurance, Niger
Insurance Plc, among others, are operating it on a window level, following the
launching of Takaful insurance guidelines in 2013 by NAICOM.
Although, there are still some misconceptions
about Takaful Insurance in Nigeria, being a Muslim scheme, experts said
increased awareness will correct these misconceptions.
Insider source disclosed that, currently, Takaful
insurance is selling fast in the northern part of the country, with the window
operators making their major profits from communities, while the three
fully-fledged operators are also targeting the North and the Muslim communities
for a start.
The Takaful Guideline of 2013 put the capital
base of any interested party willing to float a Takaful insurance at
N100million for either family or general Takaful business.
Speaking in an interview with Leadership at the
weekend, the director, Authorisation and Policy, NAICOM, Mr. Plus Agboola,
described Takaful insurance as a concept that will deepen insurance penetration
and acceptance, especially at the grassroots, explaining that Takaful insurance
is not restricted to a culture or religion.
‘‘It is a concept that preaches sharing of risks
and profits. One of the objectives of this insurance is to encourage savings.
So, it’s a programme that has both short and long term perspective: short term
perspective because within one year, whether you have claims or not, you still
share from the profit; long term perspective is that anytime you have a loss,
once you are a member of that scheme, in one to 10 years’ time, you will still
benefit from it,” he pointed out.
On how many applications the commission had
received since the launch of the scheme in 2013, he said: “For window
operation, we have so many applications, but for fully-fledged, we have about
five applications, but we have given licenses to about three.”
On his part, the chairman of one of the licensed
Takaful operators, Noor Takaful Insurance Plc, Ambassador Shuaibu Ahmed,
explained that 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 transfers its financial risks of loss or damage of their assets or lives
to the insurance companies at a price called premium.
‘‘In Takaful insurance, claims are paid, and
whatever is left, some part of it comes to insurers. It is like mutual
assurance, where a group of participants comes together and puts funds
together. At the end of the day, it’s their money, not insurance firm’s money.
Once claims are paid to some participants that record some calamities, whatever
balance is left in those funds belong to participants,” he clarified.
Speaking on how Takaful insurer makes profits, he
noted: “We make our profit from the contributions that are made by the participants.
We, the company, normally take an agency fees, because I want to play a role of
managing those funds. We manage the claims, because if you don’t manage the
claims, everybody will come and make claims, and some of them might not be
genuine.
“So, we are supposed to invest those funds and
also manage the claims. At the end of the day, we have agency fees and we also
share in the profit that we are making from the investment.”
The key essential driver of Takaful Insurance,
according to him, is transparency, as there must be full disclosure of the
terms from the company to the participants, and that claims must be paid as at
when due.
He added that once a claim has been verified and
its genuineness ascertained, the claimant get his claim within three days.
However, the managing director of
Riskguard-Africa Nigeria Ltd, Chief Yemi Soladoye, explained why some operators
are hesitant to leverage on opportunities in Takaful and micro-insurance.
He said: “Most operators are neck-deep in running
businesses the old style; they are faced with the challenge of meeting the
boards’ and shareholders’ expectation and this makes it difficult for them to
invest in future market developments like micro insurance and Takaful
insurance. They have not come together for united market development. And
whether we like it or not, retail insurance is key.”
Source: Leadership
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