Fola Daniel, Commissioner for Insurance
Insurance professionals have confirmed that, contrary to their expectation, consumers of takaful insurance, an Islamic financial product targeted at Muslims in the Northern part of the country, consist more of Christians from the South-East extraction.
The Vice Chairman of the Chartered Insurance Institute of Nigeria (CIIN) Oyo State Chapter, Mr. Babatunde Omosola, disclosed this at the 2013 Media Retreat, a programme hosted by the professional body for members of that National Association of Insurance Correspondents (NAICO) in Ibadan, Oyo State recently.
Takaful insurance, which started in Sudan, emerged following the establishment of Islamic Banks across some Arabic and Islamic countries across the world.
Omosola stated that, much to the surprise of the operators and insurance stakeholders, takaful insurance is being patronised more by non-Muslims, particularly Christians from the South Eastern part of Nigeria, because of the benefits that are not usually applicable to conventional insurance.
He also confirmed that takaful insurance products have been doing well in the market because they meet the needs of low income earners including motorcyclists, teachers and farmers, and very simple too.
Claims in takaful insurance are paid to unfortunate subscribers who suffer insured losses within the period of cover, who are compensated from the pool and reinstated accordingly, he added.
The vice chairman explained that unlike conventional insurance that has to do with pooling of risks presented by various policyholders, takaful insurance has to do with risk sharing or joint guarantee by subscribers in line with Islamic injunctions. Subscribers share in the profit and losses recorded by the group.
When profit are recorded, subscribers get their total amount saved plus their share of the profit while in the case of a loss, members get their total amount saved less their share of the loss suffered by the group.
However, in the event of death of a subscriber, his estate gets the total amount contributed to date, the share of profit or loss to date in addition to the amount of compensation, drawn from the compensation fund kept by the group.
According to him, 96 per cent of the amount contributed by individual subscribers is taken into the takaful fund while the remaining 4 per cent goes into the compensation fund, from which death benefits are paid to estates of deceased members.
He emphasised that takaful insurance funds are usually invested in line with Islamic injunctions, which prohibit gambling, profiteering and consumption of alcohol. It must not be invested in economy activities that negates Islam and Sharia injunctions, he stressed.
Omosola stated that takaful insurance products, which are meant to encourage savings and accumulation of capital for personal or business needs, are usually designed to cover risks individuals face in their day to day living, but with a bias for Muslims.
“Under the takaful plan, you can save regularly for a fixed period that is convenient for you. The accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage, religious pilgrimages 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 said.
Meanwhile, the President of CIIN, Mr. Wole Adetimehin, has reassured that the institute would remain focused in its support the industry by building the necessary human capital to grow the industry.