Difference between revisions of "Takaful for Microfinance"

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        Takaful for
 
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      Microfinance
 
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  1st International Conference on
 
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Inclusive Islamic Financial Sector
 
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            Development
 
  
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    Overview of presentation
 
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 Insurance and Poverty Alleviation
 
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 Challenges providing microinsurance
 
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 Opportunities and need for microtakaful
 
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 Microtakaful in practice
 
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  Can insurance assist poverty
 
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              alleviation?
 
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 The poor are the most vulnerable
 
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 The impact of losses are more severe
 
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 They have minimum means of recovery
 
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 Success of microfinance schemes show
 
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  the poor can and want to save
 
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 Savings and credit are used
 
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  unproductively
 
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 The poor need a safety net to escape
 
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  poverty
 
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“Insurance is now
 
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recognized as an
 
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important tool for
 
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poverty alleviation”
 
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    Microinsurance products
 
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 Loan protection
 
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 Disability and Sickness
 
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 Savings
 
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 Health
 
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 Funeral
 
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 Property
 
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 Agriculture
 
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      Providing microinsurance
 
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              The challenges
 
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 Coverage
 
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 Regulation
 
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 Moral hazard and Fraud
 
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 Adverse selection
 
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 Education and trust
 
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 Technical expertise
 
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 Affordability
 
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 Retention
 
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 Sustainability
 
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 Penetration
 
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      Key success factors for
 
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    introducing microinsurance
 
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 Organized group
 
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 Existing financial infrastructure
 
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 Trust
 
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 Need
 
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 Understanding
 
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 External support
 
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    Providing microinsurance
 
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            The possibilities
 
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 The cooperative microinsurance model
 
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   History of organising the poor
 
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   Operate for the interest of members by
 
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    members
 
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   Trust
 
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   Ownership and loyalty
 
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   Peer pressure
 
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   Surplus reinvested or redistributed
 
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    Providing microinsurance
 
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            The possibilities
 
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 The partner agent model
 
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   No-risk fee for microinsurance provider
 
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   Better coverage for policyholder
 
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   Access to new market
 
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   Pooling of risks between informal and formal
 
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    sector
 
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    Providing microinsurance
 
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            The possibilities
 
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 The donor agent model
 
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   Access to expertise
 
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   Financial sustainability
 
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   Guiding hand
 
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Opportunities and need
 
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  for microtakaful
 
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        Principles of Takaful
 
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 Solidarity and joint guarantee
 
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 Self reliance and self sustaining for community
 
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  well being
 
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 Assist those that need assistance
 
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 Community pooling system
 
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 Shari’ah approved investments and products
 
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          “Bear ye one another’s burden”
 
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    The Global Takaful sector
 
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 1979 First Takaful Company established
 
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 1996 – 30 Institutions transacting Takaful
 
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 2002 – 50 Takaful operators and four Retakaful
 
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  providers
 
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 2004 – 80 Takaful operators, 200 Takaful windows
 
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  and 12 Retakaful providers
 
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Source: IBB Solicitors, UK – (2005)
 
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    The need for microtakaful
 
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 Social services inadequate or unavailable
 
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 Large sectors of poverty in many Muslim
 
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  countries
 
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 Over half of world’s lowest developed countries
 
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  have a majority Muslim population
 
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 Increasing inequality in Middle East and Gulf
 
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  countries
 
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 Religious considerations are important in villages
 
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  and small communities
 
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 Established Takaful sector neglecting low
 
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  income sector
 
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“Takaful is the
 
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  second most
 
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important social
 
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  institution to
 
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counter poverty
 
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and deprivation”
 
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          Omar Fischer
 
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        1999
 
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Possibilities for microtakaful
 
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 Establish community based microtakaful
 
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  schemes
 
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 Involvement of NGOs, zakat funds, donor
 
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  agencies
 
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 Support from Takaful sector
 
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   Technical expertise
 
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   Financial assistance
 
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   Partner-agent model
 
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    Microtakaful in practice
 
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 Agricultural Mutual Fund - Lebanon
 
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 Amana Takaful – Sri Lanka
 
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 Takaful Ikhlas
 
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 Takmin - Indonesia
 
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                  Summary
 
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 Microtakaful can succeed
 
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 Microtakaful can compliment microfinance
 
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 Microtakaful is imperative to ensure productive
 
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  use of assets for the poor.
 
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 It is key to ensuring the long-term self
 
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  sustainability of the individual and his family to
 
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  stay above the poverty line.
 
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 Existing Takaful operators have a responsibility
 
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  to take a lead in this area in accordance with
 
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  the basic principles and philosophy of takaful
 
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  which is to “bear one another’s burden”.
 
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  The case of a microtakaful
 
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              policyholder
 
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 Ibu Iwit, 50 years, farmworker, earning
 
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  one dollar a day.
 
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 Took out a 6 month loan of 55 USD from
 
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  local Baitul mal Wat Tamwil
 
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 Insurance premium was taken out with
 
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  Takmin at 0.16 USD
 
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 Ibu Iwit passed away a couple months
 
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  later
 
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 Her husband, Amad, age 60 years, no
 
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  income
 
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A Global reach for
 
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  local strength
 
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      Thank you
 
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    www.takaful.coop
 

Revision as of 00:41, 21 September 2016