Microinsurance, cooperatives and Takaful - PowerPoint PPT Presentation

Loading...

PPT – Microinsurance, cooperatives and Takaful PowerPoint presentation | free to view - id: ddc9c-ZDc1Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Microinsurance, cooperatives and Takaful

Description:

'Insurance is being recognized as an important tool for poverty alleviation' ... Fiqh Academy Resolution 1985. Commerical insurance is prohibited ... – PowerPoint PPT presentation

Number of Views:55
Avg rating:3.0/5.0
Slides: 25
Provided by: SaB96
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Microinsurance, cooperatives and Takaful


1
Microinsurance, cooperatives and Takaful
  • DFID Workshop May 22nd 2006

2
Overview of presentation
  • Insurance and Poverty Alleviation
  • Why is conventional insurance not allowed in
    Islam
  • Principles and models of Takaful
  • The possibilities for microtakaful

3
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

4
  • Insurance is being recognized as an important
    tool for poverty alleviation

5
Providing microinsurance The challenges
  • Coverage
  • Regulation
  • Moral hazard and Fraud
  • Adverse selection
  • Education and trust
  • Technical expertise
  • Affordability
  • Retention
  • Sustainability

6
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

7
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

8
Providing microinsurance The possibilities
  • The donor agent model
  • Access to expertise
  • Financial sustainability
  • Guiding hand

9
Why is conventional insurance not permissible in
Islam?
  • Uncertainty (Gharar)
  • Gambling (Maisir)
  • Interest (Riba)

10
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

11
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

12
Principles of Takaful
  • Solidarity and joint guarantee
  • Self reliance and self sustaining for community
    well being
  • Assist those that need assistance
  • Community pooling system
  • Shariah approved investments and products
  • Bear ye one anothers burden

13
Takaful models in practice
  • Not for profit model
  • Taawuni model cooperative insurance
  • Al Mudharabah model profit sharing
  • Al Wakala model agency agreement

14
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)

15
The Global Takaful sector

Source Bhatty (2001)
16
  • A cooperative and mutual scheme providing
    Shariah approved products and investments is
    permissible under Islamic Law.

17
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
    Shariah 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…..

18
Providing Takaful to the low-income sector
19
The need in Muslim countries
  • Social services inadequate or unavailable
  • Large sectors of poverty in many Muslim countries
  • Over half of worlds 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

20
  • Takaful is the second most important social
    institution to counter poverty and
    deprivation Omar Fisher,1999

21
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

22
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

23
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

24
Thank you www.icmif.org/takaful
About PowerShow.com