An Opportunity for ICMIF Members to Provide Islamic Insurance (Takaful) Products
Muslim jurists have concluded that insurance schemes encompassing the elements of shared responsibility, joint indemnity, common interest and solidarity are acceptable. The fundamental philosophy of Islamic insurance or Takaful is therefore the same as that of the cooperative and mutual. While the first Takaful company was set up in 1979, it has only been in the last few years that the industry has experienced rapid growth in Muslim countries. Increasing awareness, globalisation and the spread of Islam across the world will lead to Takaful becoming a real and identifiable sector of the world insurance market in the next decade. The following paper analyses the differences in Takaful and conventional insurance, and the ideology behind the Takaful scheme. It also looks at how cooperative and mutual insurance companies operating in countries with large Muslim populations can take advantage of the similarities between their operations and those deemed acceptable under Islam.
The UNDP 2002 Arab Human Development Report covers 22 countries from the Magreb to the Gulf. It states that there are over 65 million adults who are illiterate and ten million children out of school (which is envisaged to increase by 40% by 2015). High population growth is adding six million labour force entrants every year but with average unemployment across Arab countries at 15%, job creation is not matching the growth of the work force. While Arab countries do not have lowest levels of dire poverty it is estimated that one in every five person is still living on less than $2 per day.
The following paper looks at the need for “microtakaful” schemes and how the experiences and expertise of ICMIF could be utilised. In particular the study proposes the use of the partner-agent model and encourages the transfer of expertise and resources from the established takaful movement. The cooperative model has been successful in delivering products and services to the poor for many decades, and it is therefore appropriate that microtakaful schemes should be based on a “not-for-profit” basis.