Takaful (ethical) insurance (20)
According to the World Bank report on (Nigeria Micro Insurance Diagnostic Country Report, covering November 2012 to July 2013,) Nigeria was “uninsured” by 67%. Putting our population at 167Million people, we have a figure of over 110million people who are either not insured or have no access to one form of insurance service in one way or another. This is a very huge market begging to be tapped. The report, at its abstract section, stated that, “the very low penetration of insurance, coupled with a very large and growing population and economy, represent an attractively large potential market.” The report recommended that “the top priority for creating an inclusive insurance sector in Nigeria is improving public confidence, trust and awareness.”
To set the stage for a level playing field and to open up the market for deeper penetration of insurance business, the National Insurance Commission NAICOM, released in March 2013, the registration and operational guidelines for investors who want to operate Takaful Insurance and Micro-Insurance businesses in Nigeria. This is a very commendable initiative by NAICOM as, this act, will be in tune with global best practices.
Since 1918, when the first insurance business was introduced to Nigeria, and close to a 100 years now, Nigerians have been patronizing insurance businesses either compulsorily (in the case of some personal line products) or purely as a business decision. Nobody ever complained of its origin or the source or its foundation. So the argument that introducing Takaful insurance in Nigeria has a faith or religious purpose, should not be a source of conflict of any sort. People should consider Takaful Insurance as another variant or model available to clients to make a business decision or choice. Giving the introduction of Takaful Insurance another meaning is highly misplaced.
The Commissioner For insurance Mr. Fola Daniel, at a recent gathering of insurance industry stakeholders, with the theme “New Synergy to deepen Insurance Market” informed the audience, among other things that, “Takaful insurance is a concept of insurance that allows the participants to put money together and is a commonwealth for all the participants.” He went further to say that “Takaful Insurance is a cooperative system of reimbursement in case of loss, paid to people and companies concerned about hazards, compensated out of the funds to which they agree to donate small and regular contributions, managed on their behalf by a Takaful operator.” He also allayed fears entertained in some sections that takaful has to do with Islam (rather its source stems from the way it is conducted - i.e ethical insurance). Mr. Fola Daniel went on to clarify that Takaful is an alternative form of insurance which is sometimes referred to as ethical insurance. According to him, Takaful Insurance is “usually based on social solidarity, cooperation and mutual indemnification of losses by the participants.” He said that Takaful insurance and Micro- insurance will be vigorously promoted in 2014 to lead to the industry’s stability and growth.”
The World Bank Review of Global Takaful Insurance market reported that the Takaful Insurance market by June 2012 reached about $1.2 trillion market and the level of risks (claims), compared with the conventional insurance is minimal.
Please note that Nigeria, with our huge population, has not been involved in this profitable and growing business. We have a challenge as a nation to encourage and allow Takaful Insurance to take its roots in Nigeria. We have the population, technology and professionals to our great advantage. The earlier we grab this opportunity offered by NAICOM to establish and operate Takaful insurance and micro-insurance, the better for us and the economy.
In opening Takaful Insurance offices throughout Nigeria, the operators, (with NAICOM’s approval) operate virtual business outlets (virtual business outlets mean reaching clients through supermarkets, universities and colleges, places of worship, any social gatherings and large markets, POS, Internet and hand held telephones), offering services the way an established office will offer, the number of clients that will have access to insurance products and services and thus become insured would be huge.
Also, by adopting the aforementioned strategies, cooperative and professional bodies like Medical and Health workers, mechanics, small scale entrepreneurs, students, market women, Small Scale farmers, Workers Unions and any group of people with common interest and objectives are approached and given opportunity to participate in Takaful Insurance business, the number of people that would be educated on the benefits of both Takaful Insurance and Conventional Insurance will be enormous. The positive impact on the economy will be enormous as well. Everybody, governments at all levels, will benefit from this. Governments will collect their tax, group of businesses will be empowered and the GDP and economy at large will improve.
Sharubutu is the Managing Director/CEO Skills Consult Ltd.