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AlHuda CIBE,www.alhudacibe.com
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Takaful( Islamic Insurance )
Zubair MughalRegional Head
Takaful Pakistan Limited.
Introduction
“Takaful” is the Sharia Compliant brand name for the Islamic alternative to conventional insurance. Its based on the principle of Ta’awan or mutual assistance.
Origins of Takaful
In the event of death caused by someone from another tribe, the member of the offender’s tribe would share the “ blood money” (Khoon Baha) to provide for the family of the victim.
Why Insurance ?
Is Some thing wrong with Concept ?
Risk Aversion Assuring others Risk sharing
From the Holly Quran
The need for insurance is shown in the following verse of The Quran.
“ Those of you who die and leave widows should bequeath for their widows a year’s maintenance and residence” (2.240)
From the Hadiths By Anas-bin-Malik, One day Prophet
Muhammad(PBUH) notced a bedouin leaving his Camel without tying it. He asked the bedouin, “Why don’t you tie down your camel”? The Bedouin answered, “ I put my trust in Allah (SWT)”. The Prophet (PBUH) then said,” Tie your camel first, then put your trust in Allah(SWT)” <Tirmidhi>
What wrong with practice ?
The contract between the insurer & the insured is technically wrong from the sharia perspective because of
Gharar (Uncertainty)) Gambling (Qamar & Maisir) Interest (Riba)
Riba in Insurance
Direct RibaExcess on one side in case of exchange
between the amount of premium.
Indirect RibaThe interest earned on interest based
investments
Gharar
Lexically it means uncertainty and technically it means the uncertainty of the counteract or the subject matter.
Different Models of Takaful Pure Mudarabah Model : The
participants and operator enter into modarabah Contract.
Wakalah Model : An Agency Agreement is made between participants and Operators on the basis of Wakalah ( Agency agreements)
Wakalah Based on Waqf Model : The participant's donate the fund and operator charge an agency fee.
InvestmentIncome
Operational Cost of Takaful
/ ReTakaful
Claims &Reserves Surplus
(Balance)
P A R T I C I P A N T S’ T A K A F U L F U N D (P.T.F.)
Mudarib’s Share of PTF’s
Investment Income
Wakalah Fee
InvestmentIncome
Management Expense of
the Company
Profit/Loss
S H A R E H O L D E R S’ F U N D (S.H.F.)
Participant
WAQF
Takaful Operator
Share Holder
Wakala-Waqf Model
Investment by the Company
Shariah Compliance Shariah compliance is an essential
element in Takaful . It is ensured through a Shariah
Supervisory/ Advisory Board at the level of each Takaful company.
The role of the Shariah Board is vital in meeting the specific demand of a public who would not insure otherwise.
General Takaful Types General Takaful – offers all
kinds of non-life risk coverage. It is normally divided into following classes:
Property Takaful Marine Takaful Motor Takaful Miscellaneous Takaful
Types of Family Takaful
Term Life Takaful
Whole Life Takaful
Endowment Takaful
Universal Takaful
Marriage Plan Education Plan
BANCATAKAFUL Background Range of Products
Savings → Personal Accident, Homeowners’ Comprehensive, Credit Cards, etc.
Financing, Individuals → Car Ijarah, Housing Musharika, Mortgage Takaful.
Financing, SMEs → Trade Credit Takaful, Business, Office, Equipment, Assets.
E-Commerce
BANCATAKAFUL (…Cont’d.)
Advantages of BancaTakaful: Facilitation Desk / Equipment. Fast Turnaround Time. One-Stop shop for Clients. Concept of Islamic Financial Supermarket. Value Added Services. Law of Large Numbers.
Lower Contribution Rates. Attraction for Depositors.
ReTakaful Currently few ReTakaful companies
worldwide offering a relatively small capacity:
Sudan (1979) National Reinsurance. Sudan (1983) Sheikhan Takaful Company. Bahamas (1983) Saudi Islamic Takaful and
ReTakaful Company. Bahrain/Saudi Arabia (1985) Islamic Insurance
and Reinsurance Company. Tunisia (1985) B.E.S.T. Re Malaysia (1997) ASEAN ReTakaful
International. Dubai (2005) TakafulRe by ARIG. Lloyds of London to have a ReTakaful
Syndicate in 2007.
Takaful Pioneers
Takaful started some 27 years ago in the Middle East with the launching of two companies: The Islamic Arab Insurance Co. (IAIC)
in the UAE and The Islamic Insurance Co. of Sudan
But it took some time for the movement to take shape.
Takaful Pioneers
Later in 1984, Malaysia played a pioneering role in setting the first Legal framework specific to Takaful (Takaful Act).
This was instrumental in the successful launching of the Takaful movement in Malaysia and in other countries of South East Asia.
Takaful Operators The number of Takaful operators worldwide is
now estimated at: 179 Takaful companies 11 Retakaful companies In 48 Countries. Average growth rate higher than
conventional insurance companies (around 25%).
Non–Muslims increasingly opting for Takaful products for commercial benefits.
Takaful Premium Takaful is one of the fastest
growing segments in insurance (at around 20% pa. on average)
World Takaful contributions are conservatively estimated at around US$ 3billions, of which: 60% General Takaful 40% Family Takaful
People who do not insure due to religious reasons.
People who insure and are insensitive to religious reasons.
People who currently do not insure at all.
TAKAFUL - TARGET MARKET
Main Markets
Malaysia Indonesia Iran GCC countries Other Arab countries Other Asia Pacific Pakistan ( Emerging Market )
Takaful Best Practices Regional Takaful institutions and
organisations need to come together internationally in order to promote and standardise best practices within the industry: Islamic Financial Services Board (IFSB) ASEAN Takaful Group (ATG) International Takaful Association (ITA) Accounting and Auditing Organization of
Islamic Financial institutions (AAOIFI)
Growth Outlook
World Muslim population is estimated at 1.5 billions,
A two-digit growth in the range of 15% to 20% can be reasonably sustained for at least the next 10 years in the existing markets (Far and Middle East).
Takaful Prospects in Pakistan
97% Muslim population.
Demand for insurance increasing with increase in per capita income.
Personal lines insurance business (leasing, health, Medicare) growing at a higher rate than other conventional classes.
Islamic banking on sound footing with support of the Govt.
Introduction toTAKAFUL PAKISTAN LIMITED
TAKAFUL PAKISTAN LIMITED Takaful Pakistan is a joint venture of
prestigious local & foreign institutions, including:
House Building Finance Corporation. Emirates Global Islamic Bank. Arif Habib Securities. Sitara Chemicals. Emirates Investment Group (Sharjah). Al-Buhaira National Insurance Co.
(U.A.E.)
Large initial paid-up Capital.
TAKAFUL PAKISTAN LIMITED … (Cont’d.) Managed by dedicated professionals, committed
to the cause.
ReTakaful arrangements with a consortium of
internationally reputed ReTakaful operators.
Shariah Board comprises of eminent scholars.
BancaTakaful and MicroTakaful products.
We intend to be the trend-setter for excellent
Clients’ Servicing, Operational bench marks and
prudent Underwriting practices.
General Takaful Types General Takaful – offers all
kinds of non-life risk coverage. It is normally divided into following classes:
Property Takaful Marine Takaful Motor Takaful Miscellaneous Takaful
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