‘Takaful Insurance – Not Exclusively for Muslims’
Hassan Bashir, Founder and CEO Takaful Insurance of Africa (TIA), explains the thinking behind Islamic insurance and why the highly popular facility is all about honesty and trust. ROBIN OBINO reports
DIPLOMAT EAST AFRICA: What led to the launch of Takaful Insurance? HASSAN BASHIR: There was a need for the service. I have been involved in the insurance industry since 1997, and it was something that I had become aware of. For my MBA, I researched customer behaviour across the Kenyan insurance industry, and what came out were evidence of dissatisfaction and a need for honesty and ethics in the insurance products and services. I came across a lot of people who did not have insurance, or if they did they only had the basic statutory amount. They said that they did not feel comfortable with some aspects of insurance – that it did not accommodate their religious beliefs – and some people said they felt conventional insurance was a bit like gambling.
Q: What is the difference between conventional insurance and Takaful?
A: The big difference is that conventional insurance is a risktransfer model, whereas takaful is a risk-sharing model. In the case of takaful, it’s more like a joint fund, where the company and shareholders are paid a portion of the premiums. The risk remains partly shared and collectively based on all those taking part in the scheme. At the end of the insurance period there is a pay-out, not a ‘no-claims bonus’, more of a dividend.
Q: Why did you choose Kenya, which has a relatively small Muslim population?
A: I started in Kenya because I am Kenyan. This is the market I know. I saw there was an opening in the market here that needed to be sealed. I agree there are bigger markets, like Nigeria or Ethiopia, but that means there is potential to grow. Six months ago we opened an office in Somalia. We have made expressions of interest in Uganda, Djibouti and Tanzania, so we have big plans. Q: Is takaful only for Muslims? A: Not at all. Our products are not exclusively for people of the Muslim faith. We can serve anyone, and we do. Initially, people thought it was only for Muslims, but now around 15 per cent of our client base is non-Muslim and we are growing.
Q: How do customers perceive Islamic financial services in general?
A: Some people in our community are ill-informed. I’ve been asked – directly to my face – “If someone defaults on payments, will their hands be chopped off?” People are only like this because they do not have all the information, so it is our job to educate them. There are sensitivities, which I can understand, but I believe economic development will help change minds. Extremism thrives in spaces where there is poverty and lack of education, and where people are desperate and have nothing to do and no means of earning a livelihood. But I believe that Islamic finance can bring possibilities to many people by helping them get employment and access to finance.
Look at what we are achieving with the index-based livestock takaful. We are continuously educating people and especially pastoralists so that they understand that the cover is in line with their religious sensitivities. This is to cushion them against the harsh weather so that they can sustain their livelihoods despite the droughts that may occur from time to time. In the long run, this will answer the question you asked about the negative perceptions about Islamic finance.
Q: What is your take on the future of Islamic finance in Kenya?
A: Kenya wants to become an Islamic finance hub in the East and Central Africa region, and it is well placed to do so. We are looking at launching a Sukuk later this year since fixed income, interest bearing bonds are not permissible in Islam. Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibit the charging, or paying of interest. This is generally done by involving a tangible asset in the investment, such as by giving partial ownership of a property built by the investment company to the bond owner