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Two Islamic insurance firms begin operations in Nigeria

Two Islamic insurance firms begin operations in NigeriaAbuja, (IINA) : Two Islamic (Takaful) insurance companies have commenced operations in the country, thus, becoming the first set of fully-fledged Takaful Insurance businesses in Nigeria, The Leadership newspaper reported.

The two companies are Jaiz Takaful Insurance Company, with head office in Abuja, and Noor Takaful Insurance Company Plc. based in Lagos State.

The newspaper earlier reported that two insurance firms would commence operation in the country, latest by 2017.

Takaful insurance guarantees profit sharing between the insurer and the policyholders, a trait that is absent in the conventional insurance business as the conventional insurer takes the whole profit made from its investment. However, the two Takaful operators are expected to rival conventional insurers for businesses, especially in the grassroots where this concept could sell faster.

With Takaful insurance selling faster in the North, investigation showed that the fully-fledged operators are targeting the North and the Muslim communities in the country for a start.

The newspaper’s findings showed that the two underwriters are mostly owned by foreigners, mainly, investors from the Middle East and Asia, who have the needed expertise in the area of Islamic insurance and had operated it to success in some parts of the world. They are now set to use the template to operate Takaful insurance business in the country.

The Takaful Guideline of 2013 put the capital base of any interested party willing to float Takaful insurance at N100million for either Family or General Takaful business. Although, there is still a misconception about Takaful Insurance that it is a scheme for the Muslims, the two operators believe that with increased awareness and education, they will correct this misconception, adding that this is a concept that could rival the conventional insurance in the nearest future, because there is a ready-made market for Takaful business to thrive.

The Chairman, Noor Takaful Insurance Plc., Ambassador Shuaibu Ahmed, said Takaful is about joint guarantee, whereby individuals in a community jointly insure themselves against any loss or damage. This function, he said, is undertaken by insurance companies whereby the ensuring public transfers their financial risks of loss or damage of their assets or lives to the insurance companies at a price called premium.

“In Takaful Insurance, claims are paid, and whatever that is left, some part of it comes to insurers. It is like mutual assurance, where a form of participants comes together and put funds together. At the end of the day, it is their money, not insurance firm’s money. Once claims are paid to some participants that record some calamities, whatever balance left in that funds belongs to participants,” he clarified.

Speaking on how his Takaful firm will make profits, he noted that “We make our profit from the contributions that are made by the participants. We, the company, normally takes an agency fees, because I want to play a role of managing those funds. We manage the claims, because if you don’t manage the claims, everybody will come and make claims, and some of them might not be genuine.

“So, we are supposed to invest those funds and also manage the claims. At the end of the day, we have an agency fee, and we also share in the profit that we are making the investment.”

On the other hand, the Managing Director/CEO of Jaiz Takaful Insurance, Momodou Musa Joof, said his company’s products are inspired by the need for customers to benefit from the contributions they pay as policyholders. He added that the concept is very transparent and practical, noting that Takaful has come to address all the objectionable about conventional insurance (Riba, Interest, Maysir).

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