Co-Operative Insurance and Takaful - Revision history

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Cooperative Insurance and

Takaful

Takaful Forum July 20-21 2005

Overview of presentation

• Cooperative and mutual insurance principles

• The global cooperative and mutual movement

• Similarities and differences with Takaful

• Opportunities for collaboration

Cooperative definition

”A cooperative is an autonomous association of

persons united voluntarily to meet their common

economic, social, and cultural needs and

aspirations through a jointly-owned and

democratically controlled enterprise”.

Source: International Cooperative Alliance (ICA)

Cooperative/mutual values

• Self-help, self-responsibility

• Democracy, equality, equity

• Solidarity

• Honesty, openness

• Social responsibility, caring for others

Cooperative principles

• Voluntary and open membership

• Democratic member control

• Member economic participation

• Autonomy and independence

• Education, training and information

• Cooperation among co-operatives

• Concern for community

Source: International Cooperative Alliance (ICA)

Cooperative v Mutuals

Cooperative principles Mutual principles

Open and voluntary membership Free association

One member, one vote User must be member

Limited interest on shares "Not for profit”

For the benefit of user-members Quality products

Cooperative education Personal development

Cooperation among cooperatives Solidarity

ESTIMATES

Worldwide importance of mutual insurers, 2001

Percent of total premiums

100% = 2416 bio USD

USA

32

EUR

21

CAN

25 19

JAP

16

KOR

14

Source: Swiss Re for worldwide total premium; ICMIF

VERY ROUGH

Europe, importance of mutual insurance sector*, 2002 ESTIMATES

Percentage of gross direct domestic** premium •Mut + Coop +

Joint Stock

written •Mut + Joint

Stock

Finland ~69 Luxembourg ~16 •Coop + Joint

Stock

Sweden ~45 Netherlands ~15

France ~40 Belgium ~15

Germany ~30 UK ~12

Austria ~22 Italy ~12

Slovenia ~21 Ireland ~8

Spain ~20 Hungary ~8

Czech Rep. ~17 Denmark ~8

* Mutual and cooperative insurers; mutual insurers controlled by mutual holding

** Except Luxembourg and Ireland: domestic and foreign

Source: National supervisory authorities; Industry associates; Company websites / annual reports, AISAM and ACME analysis

Similarities and differences

between Cooperative

Insurance and Takaful

Cooperative/mutual values

• Self-help, self-responsibility

• Democracy, equality, equity

• Solidarity

• Honesty, openness

• Social responsibility, caring for others

Principles of Takaful

• Solidarity and joint guarantee

• Self reliance and self sustaining for community well being

• Assist those that need assistance

• Community pooling system

• Shari’ah approved investments and products

“Bear ye one another’s burden”

Fiqh Academy Resolution 1985

• Commerical insurance is prohibited

• Alternative contract confirming to principles of Islamic

dealings is the contract of cooperative insurance, which is

founded on the basis of charitable donation and Shariah

compliant dealings

Takaful model in Sudan

• Surplus belongs to policyholders

– proportionally distributed

– special reserve

– invested on behalf of policyholders

• Policyholders represented on the board of directors

• Shareholders share of investment income

Differences between

Cooperative and Takaful

• Takaful is not insurance

• Shariah compliant investments and products

• Sharholder surplus participation

• Shareholder governance

”A cooperative and mutual scheme providing

Shariah approved products and investments

is permissible under Islamic Law”.

Opportunities for

Collaboration

Technical Cooperation

• Industry development

• 13 Takaful companies are members ICMIF

• Takaful Network

• Takaful Xchange

• Policyholder participation

• Disseminating information www.icmif.org/takaful

Retakaful

• Preferred reinsurance is proportional (quota share or

surplus)

• Non proportional permissible on a strict profit commission

• If takaful reinsurance is unavailable then it is permissible to

use a conventional reinsurer

Reinsurance capacity

“If there is a need to turn to the conventional

reinsurance market then the Takaful

operator should first try and obtain coverage

from the cooperative and mutual

reinsurance sector.”

Takaful for the low-income

sector

Can insurance assist poverty

alleviation?

• The poor are the most vulnerable

• The impact of losses are more severe

• They have minimum means of recovery

• Success of microfinance schemes show the poor can and

want to save

• Savings and credit are used unproductively

• The poor need a safety net to escape poverty

“Insurance is recognized as an

important tool for poverty

alleviation”

Providing microinsurance

The challenges

• Coverage

• Regulation

• Moral hazard and Fraud

• Adverse selection

• Education and trust

• Technical expertise

• Affordability

• Retention

• Sustainability

Providing microinsurance

The possibilities

• The cooperative microinsurance model

 History of organising the poor

 Operate for the interest of members by

members

 Trust

 Ownership and loyalty

 Peer pressure

 Surplus reinvested or redistributed

Providing microinsurance

The possibilities

• The partner agent model

 No-risk fee for microinsurance provider

 Better coverage for policyholder

 Access to new market

 Pooling of risks between informal and formal

sector

Providing microinsurance

The possibilities

• The donor agent model

 Access to expertise

 Financial sustainability

 Guiding hand

The need in Muslim countries

• Social services inadequate or unavailable

• Large sectors of poverty in many Muslim countries

• Over half of world’s lowest developed countries have a

majority Muslim population

• Increasing inequality in Middle East and Gulf countries

“Takaful is the second most important social

institution to counter poverty and

deprivation”

Omar Fisher,1999

How can microtakaful be

provided?

• Establish informal cooperative microtakaful schemes

• Encouragement of pro-poor organisations

• Education of government and donor agencies

• Involvement of Takaful sector

 Technical expertise

 Financial assistance

 Partner-agent model

Takaful in Non-Muslim

countries

Takaful in Non-Muslim Countries

Is there a need?

Country Est. Muslim Country Est. Muslim

population population

Argentina 800,000 Italy 600,000

Brazil 1 million Japan 1.3 million

Canada 500,000 Kenya 8.4 million

France 4.8 million Netherlands 500,000

Germany 3 million UK 2 million

Takaful in Non-Muslim countries

Is there a need?

• Fasting growing immigrant population

• Belief in will of God

• Acceptance that insurance is not allowed

• First and second generations are purchasing insurance

• Increased availability of information

• Development of Islamic financial sector

Takaful in Non-Muslim countries

The challenges

• Dispersed population

• Capital requirements

• Regulation

• Awareness

• Credibility

• Technical expertise

Ruling by the European Council of Fatwa

and Research

“… It is well known that in most non-Islamic countries there

are cooperative and mutual insurance companies. There is

no harm from the Shari`ah point of view to participate in

these services. So, it is unlawful for a Muslim living in a

country where there is such a cooperative insurance

company to make an agreement with a commercial

insurance company…..”

Ruling by the European Council of Fatwa

and Research

Muslims are directed to purchase their statutory

insurance requirements from the cooperative and

mutual insurer if there is no Takaful company in the

country

The case of Folksam - Sweden

• 350,000 Muslim population

• Fastest growing immigrant community

• Collaboration with Swedish Muslim Council

• Marketing of Folksam products through

representatives of Council in communities and

mosques

• Insurance committee has been established

The Possibilities in Non-Muslim countries

There is a growing awareness and demand for Islamic

financial instruments including insurance in non-Muslim

countries. There is a great potential for established

financial institutes to set up Takaful windows. In particular

the Shari’ah ruling presents an opportunity for cooperative

and mutual insurers to penetrate this niche market with

minimal costs.

Conclusion

“The Takaful sector is experiencing phenomenal growth

and is facing a multitude of challenges and issues in

its present development cycle. The similarities in

principles with the established cooperative and mutual

insurance sector provides an opportunity for

cooperation which will benefit existing and potential

policyholders in the Muslim world”

Thank you

www.icmif.org/takaful

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−	[~~http~~://45.40.~~136.134~~/~~~hodhood~~/HodHoodDocuments/IslamicFinance/Takaful/Co-Operative%20Insurance%20and%20Takaful.pdf Read the Full Document]	+	[https://www.hodhood.com/en/HodHoodDocuments/IslamicFinance/Takaful/Co-Operative%20Insurance%20and%20Takaful.pdf Read the Full Document]

← Older revision	Revision as of 02:21, 21 September 2016
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	+
	+
	+	== Top 20 FREQUENT WORDS ==
	+	cooperative 26
	+	takaful 22
	+	insurance 18
	+	mutual 16
	+	muslim 14
	+	countries 10
	+	principles 7
	+	sector 7
	+	microinsurance 6
	+	population 6
	+	financial 5
	+	islamic 5
	+	model 5
	+	products 5
	+	providing 5
	+	reinsurance 5
	+	social 5
	+	community 4
	+	cooperation 4
	+	council 4
	+	development 4
	+	education 4
	+	insurers 4
	+	joint 4
	+	member 4
	+	members 4
	+	policyholders 4
	+	possibilities 4
	+	poverty 4
	+	responsibility 4
	+	source 4
	+	surplus 4
	+	technical 4
	+
	+
	+
	+	== DOCUMENT KEY POINTS ==
	+	*cooperative definition a cooperative is an autonomous association of persons united voluntarily to meet their common economic social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise
	+	*source international cooperative alliance ica
	+
	+	*very rough europe importance of mutual insurance sector estimates percentage of gross direct domestic premium a cmut coop joint stock written a cmut joint stock finland luxembourg a ccoop joint stock sweden netherlands france belgium germany uk austria italy slovenia ireland spain hungary czech rep
	+	*denmark mutual and cooperative insurers mutual insurers controlled by mutual holding except luxembourg and ireland domestic and foreign source national supervisory authorities industry associates company websites annual reports aisam and acme analysis
	+
	+	*technical cooperation a c industry development a c takaful companies are members icmif a c takaful network a c takaful xchange a c policyholder participation a c disseminating information www dot icmif
	+	*org takaful
	+
	+	*million netherlands germany million uk million
	+	*takaful in non muslim countries is there a need country est
	+
	+	*ruling by the european council of fatwa and research a it is well known that in most non islamic countries there are cooperative and mutual insurance companies
	+	*so it is unlawful for a muslim living in a country where there is such a cooperative insurance company to make an agreement with a commercial insurance companya
	+
	+	*the possibilities in non muslim countries there is a growing awareness and demand for islamic financial instruments including insurance in non muslim countries
	+	*in particular the shari ah ruling presents an opportunity for cooperative and mutual insurers to penetrate this niche market with minimal costs
	+
	+	*the similarities in principles with the established cooperative and mutual insurance sector provides an opportunity for cooperation which will benefit existing and potential policyholders in the muslim world
	+	*conclusion the takaful sector is experiencing phenomenal growth and is facing a multitude of challenges and issues in its present development cycle
	+
	+
	+	''Please note, This is an auto generated summary based on sentances position in the document and other factors''
	+	== DOCUMENT WORD ANALYSIS ==
	+	=== Main Category ===
	+	: AlHuda Material\takaful
	+
	+
	+	=== KeyWords ===
	+	taka islam insur malaysia productdeferred shariah countries muslim financial retakaful model growth custom partner developed service mutual bankable provided scheme
	+
	+
	+
	+	== RELATED DOCUMENTS ==
	+	:[[A Review of Takaful by Prof. Khawaja Ahmed Saeed]]
	+	:[[Agency Management,Training and Incentive Programme]]
	+	:[[Audit Issue of Islamic Banking]]
	+	:[[Banca Takaful by Faisal Shahzad Abbassi]]
	+	:[[Best Practices from e- Insurance to e-Takaful by Sami Guello]]
	+	:[[Calculated Risks, Measurable Results]]
	+	:[[Challenges & Issues Faced by Takaful Industry by Mr. Imtiaz ]]
	+	:[[Co-Operative Insurance and Takaful]]
	+	:[[Current Achievements of Takaful by Dr. S. J Malaikah]]
	+	:[[International Cooperative & Mutual Insurance Federation]]
	+	:[[Islamic Banking And Finance Malaysia’s Experience And Achiev]]
	+	:[[Islamic Finance & Investment Symposium by Sohail Jaffar]]
	+	:[[Islamic Insurance in 21st Century by Ahmad Feizal]]
	+	:[[Islamic Insurance Opertunities and Challenges]]
	+	:[[Issues and Challenges in Retakaful by Azman Ismail]]
	+	:[[Leveraging BancaTakaful as a Key Growth Channel by Mr. Rohai]]
	+	:[[Life Family Takaful by Mr. P Ahmed]]
	+	:[[Micro Insurance Co-Operative and Takaful]]
	+	:[[Micro Takaful by Shabir Patal]]
	+	:[[Microinsurance and Takaful]]
	+	:[[Microinsurance, cooperatives and Takaful]]
	+	:[[MicroTakaful – the way forward by Capt. M. Jamil Akhtar]]
	+	:[[Opertunities in Islamic Insurance]]
	+	:[[Present Scenario and Future Potentials of Takaful by Kazi Md]]
	+	:[[ReTakaful by Rohail Ali Khan]]
	+	:[[Syariah Compliant General Takaful Products by Sami Guellouz]]
	+	:[[Takaful and Mutuality by Mohd. Masua Billah]]
	+	:[[Takaful by Abdul Rahim]]
	+	:[[Takaful for Microfinance]]
	+	:[[Takaful Opperunities and Challenges By Azeem Pirani]]
	+	:[[Takaful Products Family Takaful Linked Investment Plans by S]]
	+	:[[Takaful World Prospective Middle East & North Africa]]
	+	:[[Takaful]]
	+	:[[Takful - Zubair Mughal]]
	+	:[[Takful Report]]
	+	:[[The Islamic Vision Presentation]]
	+	:[[The Success of Retakaful by Farid Benbouzid]]
	+
	+
	+
	+	== DOCUMENT REFERENCES ==
	+
	+
	+	=== Number of Pages ===
	+	40
	+
	+
	+	=== Published Date ===
	+	2016-09-17 01:17:34
	+
	+
	+	== Full Document ==
	+
	+
	+	[http://45.40.136.134/~hodhood/HodHoodDocuments/IslamicFinance/Takaful/Co-Operative%20Insurance%20and%20Takaful.pdf Read the Full Document]
	+
	+
	+	[[Category:Islamic Finance]]
	+
	+	[[Category: Takaful]]