“Takaful Insurance Does Not Have Anything To Do With Shariah Laws”

Posted by African Examiner Latest Headlines, News Thursday, December 5th, 2013

Kayode Adelowokan, Lagos

Although there are misconceptions that Takaful insurance can only exist in Islamic states, owing to the fact that the word Takaful was coined out Arabic word.

The Director, Islamic Finance Institute of South Africa, Sheik (Dr) Ziyaad Muhammad

The Director, Islamic Finance Institute of South Africa, Sheik (Dr) Ziyaad Muhammad, cleared that Takaful insurance has been proven in South Africa and some other Asia states that do not have Islamic environment.

Muhammad mentioned the objective of establishing Takaful insurance does not have anything to do with establishing Shariah laws rather it is to provide choice and a clean financial institution.

According to him, “It is very clear, if somebody wants to purchase a particular brand of fruit juice, it is logical that you can buy and stuck it because you can still sell it. Here, there is no force in entering into the transaction but if your client want it, why not give it out, it is not going to affect you except you will run out of profit from it.

“It important we see Takaful as a product, it does not have anything to do with Islamic state neither does it require one. It is truly a corporative; you did corporative in the past and you know how it operates, Takaful is not different the only thing is that Takaful is formal meaning it can operate within an act, that is, within proper risk guidelines. It is also an insurance that is acceptable by banks when you are taking out financing. That is the advantage of Takaful is organized and formal.”

The Sheik who is also a consultant to the National Insurance Commission (NAICOM) on Takaful insurance stressed that Takaful insurance also create a product of choice to the prospective policy holder.

Dr Ziyaad Muhammad however called on Nigerians to see Takaful insurance as a product and shun any religious attachment that might be accrued to the product.

“There is need for everyone to humbly understand the premise surrounding Takaful insurance, the premise is not different from what Christian and Muslim brothers have been doing in their families and communities. It is unfortunate that because there is Islamic connotation to Takaful which is an Arabic word, everybody backs off. The fact is, if you walk into country like Palestine, where Muslims and Christians live together in the same house, then, there is no issue in accepting whether Takaful is Islamic or Christian initiative. The truth is, if people can live in harmony, look at the benefit to the people and forget the religious connotation, the product will flourish.”

He however expressed optimism that with the recent guideline to Takaful insurance presented by the Federal Government of Nigeria, there will be an improvement in the level of insurance penetration in the country. Adding that the low level of insurance acceptance is because the industry is not offering the product that satisfy the needs of the people argued that Takaful insurance carries a potential that will create jobs and give room for a vibrant economy within the next few years.

Meanwhile, the Commissioner for insurance, Mr. Fola Daniel, noted that the essence of Takaful insurance is that the industry is poised to create financial inclusion with intention to include those who have been excluded from insurance in the time past.

The commissioner stressed that though many people see insurance as something that is meant for the elites; “they say it is only when you have a vehicle that you can insure therefore you must be a big man or that it is only when your life worth 10 billion naira that you can take life insurance, no, everyone must realize that everyone of us has one risk or the other. We fall sick, there is policy that takes care of that, we all burry our dead, there also a policy that caters for funeral and many more”, he added.

He also said that though Takaful insurance has been on table for the past three years unattended to but now, the commission is ready to accept application from any operator that is ready to sell Takaful insurance.

Mr. Fola Daniel, however said even if the 59 insurance companies in the country are not ready to sell the product, there are independent marketers in the country that are ready and eager to sell.

Similarly, the Commissioner for insurance, Mr. Fola Daniel, called on Nigerians to take advantage of the opportunity posited by Takaful insurance and Microinsurance which has been placed side-by-side so as to achieve higher market penetration.