Microinsurance, cooperatives and Takaful - Revision history

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Microinsurance,

cooperatives and Takaful

DFID Workshop May 22nd 2006

Overview of presentation

• Insurance and Poverty Alleviation

• Why is conventional insurance not allowed in Islam

• Principles and models of Takaful

• The possibilities for microtakaful

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 being 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

Why is conventional insurance

not permissible in Islam?

• Uncertainty (Gharar)

• Gambling (Maisir)

• Interest (Riba)

Earlier forms of Islamic insurance

• Dawania – Mutual indemnification amongst officers during

the rule of Umar Ibn Al Khattab (2nd Caliph)

• Diyyah and Aquilah – Blood money and concept of

removing hardship from victims family by payment of

Diyyah, on a mutual basis, by relatives of offender

• Marine Insurance – Early second century – mutual fund to

cover robberies and mishaps

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

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”

Takaful models in practice

• Not for profit model

• Ta’awuni model – “cooperative insurance”

• Al Mudharabah model – profit sharing

• Al Wakala model – agency agreement

The Global Takaful sector

• 1979 First Takaful Company established

• 1996 – 30 Institutions transacting Takaful

• 2002 – 50 Takaful operators and four Retakaful providers

• 2004 – 80 Takaful operators, 200 Takaful windows and 12

Retakaful providers

Source: IBB Solicitors, UK – (2005)

The Global Takaful sector

Source: Bhatty (2001)

”A cooperative and mutual scheme providing

Shariah approved products and investments

is permissible under Islamic Law”.

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…..”

Providing Takaful to the

low-income sector

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

• Religious considerations are important in villages and small

communities

• Established Takaful sector neglecting low income sector

“Takaful is the second most

important social institution to

counter poverty and

deprivation”

Omar Fisher,1999

How can microtakaful be

provided?

• Establish informal microtakaful schemes

• Encouragement of pro-poor organisations

• Education of government and donor

agencies

• Involvement of Takaful sector

Technical expertise

Financial assistance

Partner-agent model

The Agricultural Mutual Fund of

Lebanon

• Established in 1997

• Health insurance

• Available for Muslims and non-Muslims

• 23,000 beneficiaries

• Premium per family is ten dollars a month

Conclusions

• Insurance has an important role to play in poverty

alleviation

• Cooperative based microinsurance schemes are an

effective vehicle to provide insurance to the poor.

• There is a need for microinsurance to be provided to low

income sectors in Muslim countries and communities.

• A microtakaful scheme based on cooperative/mutual

principles is acceptable under Islamic Law

Thank you

www.icmif.org/takaful

← Older revision		Revision as of 15:30, 8 November 2017
Line 101:		Line 101:


−	[~~http~~://45.40.~~136.134~~/~~~hodhood~~/HodHoodDocuments/IslamicFinance/Takaful/Microinsurance,%20cooperatives%20and%20Takaful.pdf Read the Full Document]	+	[https://www.hodhood.com/en/HodHoodDocuments/IslamicFinance/Takaful/Microinsurance,%20cooperatives%20and%20Takaful.pdf Read the Full Document]

← Older revision	Revision as of 02:28, 21 September 2016
Line 1:	Line 1:

	+
	+
	+	== Top 20 FREQUENT WORDS ==
	+	insurance 16
	+	takaful 14
	+	microinsurance 9
	+	cooperative 8
	+	model 8
	+	mutual 7
	+	countries 6
	+	poverty 6
	+	sector 6
	+	islamic 5
	+	muslim 5
	+	providing 5
	+	alleviation 4
	+	important 4
	+	microtakaful 4
	+	possibilities 4
	+	principles 4
	+	agent 3
	+	established 3
	+	expertise 3
	+	schemes 3
	+
	+
	+
	+	== DOCUMENT KEY POINTS ==
	+	*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
	+
	+	*conclusions a c insurance has an important role to play in poverty alleviation a c cooperative based microinsurance schemes are an effective vehicle to provide insurance to the poor
	+	*a c there is a need for microinsurance to be provided to low income sectors in muslim countries and communities
	+
	+
	+	''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 ===
	+	24
	+
	+
	+	=== Published Date ===
	+	2016-09-17 01:18:29
	+
	+
	+	== Full Document ==
	+
	+
	+	[http://45.40.136.134/~hodhood/HodHoodDocuments/IslamicFinance/Takaful/Microinsurance,%20cooperatives%20and%20Takaful.pdf Read the Full Document]
	+
	+
	+	[[Category:Islamic Finance]]
	+
	+	[[Category: Takaful]]

← Older revision		Revision as of 00:39, 21 September 2016
Line 1:		Line 1:
−	~~Microinsurance,~~
−	~~cooperatives and Takaful~~
−	~~DFID Workshop May 22nd 2006~~

−	~~Overview of presentation~~
−	~~• Insurance and Poverty Alleviation~~
−	~~• Why is conventional insurance not allowed in Islam~~
−	~~• Principles and models of Takaful~~
−	~~• The possibilities for microtakaful~~
−
−	~~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 being 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~~
−
−	~~Why is conventional insurance~~
−	~~not permissible in Islam?~~
−	~~• Uncertainty (Gharar)~~
−	~~• Gambling (Maisir)~~
−	~~• Interest (Riba)~~
−
−	~~Earlier forms of Islamic insurance~~
−	~~• Dawania – Mutual indemnification amongst officers during~~
−	~~the rule of Umar Ibn Al Khattab (2nd Caliph)~~
−	~~• Diyyah and Aquilah – Blood money and concept of~~
−	~~removing hardship from victims family by payment of~~
−	~~Diyyah, on a mutual basis, by relatives of offender~~
−	~~• Marine Insurance – Early second century – mutual fund to~~
−	~~cover robberies and mishaps~~
−
−	~~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~~
−
−	~~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”~~
−
−	~~Takaful models in practice~~
−	~~• Not for profit model~~
−	~~• Ta’awuni model – “cooperative insurance”~~
−	~~• Al Mudharabah model – profit sharing~~
−	~~• Al Wakala model – agency agreement~~
−
−	~~The Global Takaful sector~~
−	~~• 1979 First Takaful Company established~~
−	~~• 1996 – 30 Institutions transacting Takaful~~
−	~~• 2002 – 50 Takaful operators and four Retakaful providers~~
−	~~• 2004 – 80 Takaful operators, 200 Takaful windows and 12~~
−	~~Retakaful providers~~
−	~~Source: IBB Solicitors, UK – (2005)~~
−
−	~~The Global Takaful sector~~
−	~~Source: Bhatty (2001)~~
−
−	~~”A cooperative and mutual scheme providing~~
−	~~Shariah approved products and investments~~
−	~~is permissible under Islamic Law”.~~
−
−	~~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…..”~~
−
−	~~Providing Takaful to the~~
−	~~low-income sector~~
−
−	~~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~~
−	~~• Religious considerations are important in villages and small~~
−	~~communities~~
−	~~• Established Takaful sector neglecting low income sector~~
−
−	~~“Takaful is the second most~~
−	~~important social institution to~~
−	~~counter poverty and~~
−	~~deprivation”~~
−	~~Omar Fisher,1999~~
−
−	~~How can microtakaful be~~
−	~~provided?~~
−	~~• Establish informal microtakaful schemes~~
−	~~• Encouragement of pro-poor organisations~~
−	~~• Education of government and donor~~
−	~~agencies~~
−	~~• Involvement of Takaful sector~~
−	~~Technical expertise~~
−	~~Financial assistance~~
−	~~Partner-agent model~~
−
−	~~The Agricultural Mutual Fund of~~
−	~~Lebanon~~
−	~~• Established in 1997~~
−	~~• Health insurance~~
−	~~• Available for Muslims and non-Muslims~~
−	~~• 23,000 beneficiaries~~
−	~~• Premium per family is ten dollars a month~~
−
−	~~Conclusions~~
−	~~• Insurance has an important role to play in poverty~~
−	~~alleviation~~
−	~~• Cooperative based microinsurance schemes are an~~
−	~~effective vehicle to provide insurance to the poor.~~
−	~~• There is a need for microinsurance to be provided to low~~
−	~~income sectors in Muslim countries and communities.~~
−	~~• A microtakaful scheme based on cooperative/mutual~~
−	~~principles is acceptable under Islamic Law~~
−
−	~~Thank you~~
−	~~www.icmif.org/takaful~~