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| − | Opportunities in Islamic
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| − | Insurance
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| − | Insurance Institute of London
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| − | November 14th 2006
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| − | Overview of presentation
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| − | • About ICMIF
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| − | • What is Islamic Insurance (Takaful)?
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| − | • Growth and outlook
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| − | • Takaful in Non-Muslim countries
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| − | • Potential in the United Kingdom
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| − | About ICMIF
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| − | • Established in 1922
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| − | • 174 members from 69 countries
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| − | • Member driven services
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| − | • 17 Takaful members since 2002
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| − | Why is conventional insurance
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| − | not permissible?
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| − | • Uncertainty (Gharar)
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| − | • Gambling (Maisir)
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| − | • Interest (Riba)
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| − | Earlier forms of Islamic insurance
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| − | • Dawania – Mutual indemnification amongst officers during
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| − | the rule of Umar Ibn Al Khattab (2nd Caliph)
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| − | • Diyyah and Aquilah – Blood money and concept of
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| − | removing hardship from victims family by payment of
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| − | Diyyah, on a mutual basis, by relatives of offender
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| − | • Marine Insurance – Early second century – mutual fund to
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| − | cover robberies and mishaps
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| − | Fiqh Academy Resolution 1985
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| − | • Commerical insurance is prohibited
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| − | • Alternative contract confirming to principles of Islamic
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| − | dealings is the contract of cooperative insurance, which is
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| − | founded on the basis of charitable donation and Shariah
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| − | compliant dealings
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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 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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| − | Takaful models in practice
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| − | • Not for profit model
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| − | • Ta’awuni model – “cooperative insurance”
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| − | • Al Mudharabah model – profit sharing
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| − | • Al Wakala model – agency agreement
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| − | Growth of the 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 providers
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| − | • 2006 – 80 Takaful operators, 120 Takaful windows,12
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| − | Retakaful providers and premiums of $3billion
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| − | Future growth factors
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| − | • High potential for growth of insurance sector
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| − | • Retakaful capacity being established
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| − | • Increase in Shariah compliant investment products
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| − | • Harmonization of models and regulation
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| − | • Increase in technical expertise and consumer awareness.
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| − | Future Outlook
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| − | • Ajmal Bhatty (2001) – USD$ 7.14 bn by 2015
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| − | • Dr Malaikah (2006) – Double digit growth over
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| − | next ten years
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| − | • Atlas Business Magazine (2006) – USD$ 12-14bn
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| − | by 2015
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| − | Islamic Insurance in Non-
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| − | Muslim countries
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| − | Takaful in Non-Muslim Countries
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| − | Is there a need?
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| − | Country Est. Muslim Country Est. Muslim
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| − | population population
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| − | Argentina 800,000 Italy 600,000
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| − | Brazil 1 million Japan 1.3 million
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| − | Canada 500,000 USA 10 million
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| − | France 4.8 million Netherlands 500,000
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| − | Germany 3 million UK 2 million
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| − | Takaful in Non-Muslim countries
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| − | Is there a need?
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| − | • Fasting growing immigrant population
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| − | • Belief in will of God
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| − | • Acceptance that insurance is not allowed
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| − | • First and second generations are
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| − | purchasing insurance
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| − | • Increased availability of information
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| − | • Growth of Islamic banking sector
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| − |
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| − | Potential for Takaful in the UK
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| − | • Established Islamic financial services providers
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| − | • Potential consumers are first and second generation
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| − | • Greater disposable income
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| − | • Growing awareness and demand for Takaful
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| − | • Regulatory openness
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| − | • Ethical positioning
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| − | • HSBC Property Takaful already launched
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| − | • British Islamic Insurance Holdings
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| − | • Lloyds syndicate
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| − | Challenges in the UK
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| − | • Dispersed population
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| − | • Capital requirements
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| − | • Investment restrictions
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| − | • First to market
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| − | • Credibility
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| − | • Technical expertise
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| − | • Competitive pricing and service
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| − | Possibilities for Takaful in the UK
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| − | • Affinity marketing of statutory products by cooperative and
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| − | mutual insurers.
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| − | • Takaful window by existing conventional insurers
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| − | Affinity Marketing by Cooperative and
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| − | Mutual Insurers
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| − | “… It is well known that in most non-Islamic countries there
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| − | are cooperative and mutual insurance companies. There is
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| − | no harm from the Shari`ah point of view to participate in
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| − | these services. So, it is unlawful for a Muslim living in a
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| − | country where there is such a cooperative insurance
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| − | company to make an agreement with a commercial
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| − | insurance company…..”
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| − | Ruling by the European Council of Fatwa and Research
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| − | Ruling by the European Council of Fatwa
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| − | and Research
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| − | Muslims are directed to purchase their statutory
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| − | insurance requirements from the cooperative and
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| − | mutual insurer if there is no Takaful company in the
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| − | country
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| − | The case of Folksam - Sweden
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| − | • 350,000 Muslim population
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| − | • Fastest growing immigrant community
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| − | • Collaboration with Swedish Muslim Council
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| − | • Marketing of Folksam products through
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| − | representatives of Council in communities and
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| − | mosques
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| − | • Insurance committee has been established
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| − | Takaful Window
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| − | • Separate division
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| − | • Shariah board
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| − | • Islamic compliant investments
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| − | • Surplus distribution
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| − | • Policy wording
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| − | Conclusion
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| − | There is a growing awareness and demand for Islamic
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| − | financial instruments including insurance in non-Muslim
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| − | countries. There is a great potential for established
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| − | financial institutes to set up Takaful windows. In particular
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| − | the Shari’ah ruling by the European council presents an
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| − | opportunity for cooperative and mutual insurers to be the
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| − | first to penetrate this niche market with minimal costs.
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| − | Thank you
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| − | www.icmif.org/takaful
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