Difference between revisions of "Microinsurance and Takaful"
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Revision as of 13:48, 17 September 2016
combinations
1st Asian Conference on
Microinsurance
July 25-26 2007
Overview of presentation
About ICMIF
Overview of the cooperative and mutual
sector
Microinsurance through cooperatives
Opportunities and need for microtakaful
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”
Cooperative/mutual values
Self-help, self-responsibility
Democracy, equality, equity
Solidarity
Honesty, openness
Social responsibility, caring for others
Cooperative vs. Mutuals
Cooperative principles Mutual principles
Open and voluntary Free association
membership
One member, one vote User must be
member
Limited interest on shares "Not for profit”
For the benefit of user- Quality products
members
Cooperative education Personal
development
Why a cooperative/mutual?
Cooperatives and Mutuals: the
hidden giants of the world
economy
The largest 300 cooperatives
and mutuals have a turnover
of
1 trillion USD
Worldwide importance of mutual insurers, 2001
ESTIMATES
Percent of total premiums
100% = 2416 bio USD
USAUnited States of America
32
EUR
21
CAN
25 19
JAP
16
KOR
14
Source: Swiss Re for worldwide total premium; ICMIF
Providing microinsurance
The challenges
Coverage
Regulation
Moral hazard and Fraud
Adverse selection
Education and trust
Technical expertise
Affordability
Retention
Sustainability
Penetration
Potential for cooperatives to
provide microinsurance
History of organising the poor
Operate for the interest of members by
members
Trust
Ownership and loyalty
Peer pressure
Surplus reinvested or redistributed
Cooperatives providing
microinsurance
CARD MBA – The Philippines
Sanasa Insurance Company – Sri Lanka
Centre D’Innovation Financiere – West
Africa
Columna - Guatemala
Torreon - Mexico
Challenges
for microinsurance cooperatives
Regulatory requirements
Accessing reinsurance
Technical and financial investment
The way forward?
Maintain informal operations
Merge with other providers
Enter into a partner-agent agreement
Lobbying regulators
Microtakaful:
Opportunities and need
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”
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 need for microtakaful
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
“A noticeable lack of microinsurance
in North Africa and the Middle East.
In no other region is the absence
of microinsurance so evident”
Source: The Landscape of
Microinsurance
(The Microinsurance Centre)
second most
important social
institution to
counter poverty
and deprivation”
Omar Fischer
1999
“A cooperative and mutual scheme
providing Shari’ah approved
products and investments is
permissible under Islamic Law”
Possibilities for
microtakaful
Establish community based microtakaful
schemes
Involvement of NGOs, zakat funds,
donor agencies
Support from Takaful sector
Technical expertise
Financial assistance
Partner-agent model
Microtakaful in practice
Agricultural Mutual Fund - Lebanon
Amana Takaful – Sri Lanka
Takaful Ikhlas
Takmin - Indonesia
The case of a microtakaful
policyholder
Ibu Iwit, 50 years, farmworker, earning
one dollar a day.
Took out a 6 month loan of 55 USD
from local Baitul mal Wat Tamwil
Insurance premium was taken out with
Takmin at 0.16 USD
Ibu Iwit passed away a couple months
later
Her husband, Amad, age 60 years, no
income
Summary
Cooperatives have for many years being
providing insurance to the underserved
population.
There is a need to find avenues to facilitate
the sustainable growth of the informal sector
operators.
The philosophy and principles of Takaful are
similar to cooperatives.
Takaful requires the needy to be given
protection.
There is a need for microtakaful in many
A Global reach for
local strength
Thank you
www.takaful.coop
