CEO INTERVIEW In Takaful Insurance, clients are shareholders – Jaiz Takaful CEO
Momodou Musa Joof joined Jaiz Takaful Insurance in January 2016 as Managing Director/CEO. He holds a Master’s Degree in management from the International Islamic University of Malaysia and diploma in insurance underwriting from West African Insurance Institute, Liberia. In this interview with he explains the concept of Takaful and how Nigerians can tap into its benefits.
Tell us briefly about your background.
My name is Momodou Musa Joof, I am the Managing Director and Chief Executive of Jaiz Takaful Plc. I am a Gambian by nationality and I have been privileged by Almighty Allah to establish the first Takaful company in West Africa known as Takaful Gambia, which is nine years old now. After six years of running it, I engaged other people to run it in my absence, when I left for Zambia. It is important to mention that in Gambia the population is about two million people, with 95 percent of them Muslims, but when I left to go and work for an international insurance company known as Phoenix Insurance Group, with operations in nine countries around southern Africa, including Tanzania, Kenya Botswana, Zambia and other countries around there, I went as the chief operation officer to establish Takaful in all the locations they operated.
That country, Zambia, has about 14 million in population with about 95 percent Christian, yet we were able, with Allah’s support, to establish a Takaful as a home name in Zambia. The motivation behind and confidence we have in being able to establish Takaful in any part of the world is all based on the transparency and fairness of it all: Takaful is introduced to address that outcry that the consumers of conventional insurance have continued to make; in fact for a very long time.
What are those things that made Takaful different?
Takaful has really come to address that concern that the consumers of conventional insurance have had unanswered for a very long time. That is to say if you want to insure your property, be it vehicle, be it house or any type of product and you went to a conventional insurance company - let say you went to insure your vehicle - the first question you are asked is what is the value of your vehicle. If you tell them that the vehicle is worth N50,000 for instance, it means that they will now charge you a premium based on that amount. Now when they do their calculation and ask you for instance to pay N4,000, the question you ask yourself now is, what have I really done? I have bought insurance, but what does that insurance mean to me? That is to say, with that N4000, when your vehicle incurred a loss through accident, if it is repairable they will repair it. If it cannot be repaired they will buy another vehicle but then what happens if there is no accident at all and you have a complete year and they said your insurance has expired, you have to renew.
So customers have been concerned that they paid their money for insurance but they are not getting their money’s worth. Because you insured that vehicle and you still go to church and pray against accident, the Muslims go to the mosque and pray against accident. Why? Because accident can cause you your life or the life of a loved one in addition to the vehicle. So, you prepare to pay them that premium without knowing the benefit. You really don’t want to enjoy their benefit since it will only come after a loss or accident. But then let’s be fair to them also; they have been doing good for the world economies, for instance, the 911 incident that destroyed the World Trade Centre, in New York, it was the insurance companies from all over the world that came together and paid the loss of lives and property.
Also if an insured building is destroyed by fire, all you need is to go to the insurance company to get your money to rebuild it. Then you see there is value in it. Therefore, it’s not true to say insurance is not good. But it’s true to say it is unfair. Islam or any religion will shy away from it since the true religions propagate fairness and transparency. For us, the best way to handle the system of insurance is through Takaful. Takaful which is an Arabic word denotes - mutual benefits or coming together.
Conventional insurance will tell you they have never used their money to settle any claim. They operate on the law of large numbers, where they collect from the larger group and settle the little claims and the rest of the money becomes profit. But since you were not the provider of the capital - you never produced the money - so why is it that when that money remains it becomes your profit and you limit it to yourself? That has been the question.
The unfairness is that you collected money from the people but you never consider them when it becomes profitable. Therefore, Takaful system says it’s in order to promote people coming together to protect each other for mutual benefits. It’s also important in Islam or other religions that your worker should be paid even before his sweat generated because of the work gets dry.
Therefore on that basis, even on the Takaful form, which is the application form for the insurance, there is a paragraph which tells you that for every N100 you are paying, N30 is for our management expenses. That is why the regulators of Takaful, be it in Nigeria or elsewhere in the world, would insist that you have two separate and distinctive accounts - a bank account for your management and a bank account for the participants.
When you buy Takaful you become a participant; you are coming to participate in the creation of a pool of wealth for the common good of members. This is contrary to the conventional insurance, where you are just a client. What you pay them is a premium to cover your risk but when you come to Takaful you are a participant. What you are paying may be the same as what you are paying for conventional insurance but it’s not called a premium but your contribution for the participation.
So with these two different accounts, one is management and the other one is participant’s account you can only use it to pay claims, reinsurance or pay commission to brokers, whatever remains in that account at the end of the year you invite your auditors to confirm that there is surplus and there is profit which will now be distributed to the participants who have not suffered losses.
So, you stand in the position of investors with shares when there is profit. The higher the risk you introduce to the Takaful pool, the more premium or contribution you pay but the more you contribute also the more profit you reap when sharing profit.
What of those contributors who suffer losses within the period?
When there is any incident, in fact we pay faster than the conventional insurance providers because we are paying from that pool which belongs to you forever and it is
meant for payment.
How old Takaful Plc?
The company was established in 2014 and got its licence from the Nigerian Insurance Commission (NAICOM) in 2016. The products we are operating now which include the life and general insurance were only approved this year 2017.
How do participation Nigerians? is Jaiz you see the in Takaful by
So far, so good. We thank Almighty Allah, that certainly Takaful for its transparency and enormous benefits is something that is irresistible. Moreover, we are saying that it is open to all - Muslims and non-Muslims; and even in the staffing of our company, there are Christians. It’s transparent, fair and open to all. The only thing is that we are guided by Islamic principles, you can’t call us to insure a brewery, or to insure a firm of pigs or a cigarette company.
How popular is insurance globally? Takaful
What we are seeing today, Takaful is growing at the rate of 35 to 40 percent globally as opposed to conventional insurance which is only growing at the rate of 5 percent. Takaful is available in London, Malaysia, Indonesia, Saudi Arabia, also in Africa, in Kenya, Gambia, Zambia, Sudan, Egypt and now Nigeria. So, all major economies view Takaful as an alternative to conventional insurance and also remember it encourages financial inclusion and deepening insurance penetration.
In Africa now, the penetration rate of insurance is very low with the exception of South Africa, people have always shied away from insurance for one reason or the other, mostly for religious reason but now for those type of people that are shying away from insurance because they do not have compliant products, we are now saying that we are here.
Mark you, we are not coming as a competitor to the conventional insurance, we have a niche, there are so many other people out there who only insure their vehicles to satisfy the law of the land but they don’t insure their shops, they don’t insure their houses etc. When there is a disaster they end up asking for assistant from government or aids or whatever. But now they have full Shari’a compliant products. All they need is to walk in or call us to see what we have and give them the opportunity to insure their property like any other person.
Remember, the most successful economies of the world are backed by the most successful insurance industry.
One of the popular insurance segment in Nigeria, as you mentioned, is vehicle insurance, are you participating in the sector and are you recognised by the authorities?
We are fully recognised and we are participating in vehicle insurance, most products in general life, and we are fully licenced and regulated by the same regulator, NAICOM. We are patronised by big institutions like the Asset Management Company of Nigeria (AMCON); we have also registered with the Nigerian Insurance Association that has a way of identifying vehicle that are insured to rightful companies.