Addressing the issue on an international basis has been a bane, says Islamic banker. The following are excerpts from the interview. What are your expectations of IILM in addressing liquidity management? The objective and establishment of IILM is highly commendable.
Nnamdi Duru writes on the peculiarities of this highly specialised branch of insurance practice and the benefits The insurance regulator, National Insurance Commission NAICOM said it would soon put in place the necessary framework for the take-off of takaful insurance, a platform for the protection of lives and properties based on risk sharing in line with the principles and practice of Islam as against risk transfer as in conventional insurance.
Confirming this, Commissioner for Insurance, Mr. So, anytime from August and September, we should have a platform to do takaful, we will be in a position to issue licences to people to do challenge of sharia business plan 2012 insurance not as a window. So before end of September, we should be in a position to issue out licenses for takaful.
It is not about religion really. It is about a way of sharing risks and not transferring risks. Takaful is a kind of community risk sharing, it is fantastic, people will take it.
It does not matter whether they are Christians or Moslems. About Takaful Unlike conventional insurance, takaful complies with sharia principles of compensation and shared responsibilities in the community.
It has been expanded to cover general risks, health and family life plans for Muslim communities. Takaful is commonly referred to as Islamic insurance because of the similarities between the contract of kafalah guarantee and insurance.
It is founded on the principles of cooperation and separation between the funds and operations of shareholders, thus passing the ownership of the takaful insurance fund and operations to the policyholders.
Muslim faithful believe that insurance should be based on principles of mutuality and cooperation and this means shared responsibility, joint indemnity, common interest and solidarity. In takaful, the policyholders are joint investors with the insurer takaful operatorwho acts as manager for the policyholders.
The policyholders share in the investment pool's profits as well as its losses. A positive return on policies is not legally guaranteed, because in Islam, any fixed profit guarantee is equivalent to paying interest.
How it Works Policyholders or shareholders agree to guarantee each other and instead of paying premiums, they make contributions into a mutual pool, creating a takaful fund.
The amount of contribution that each participant makes is based on the type of cover they require and their personal circumstances. As in conventional insurance, the policy or takaful contract specifies the nature of the risk and period of cover.
The takaful fund is managed and administered on behalf of the participants by a takaful operator who charges an agreed fee to cover costs. These costs include the costs of sales, marketing, underwriting and claims' management.
Claims made by policyholders are paid out of the takaful fund and any remaining surpluses, after making provisions for likely cost of future claims and other reserves, belong to the policyholders or shareholders of the fund and not the takaful operator and may be distributed to the participants in the form of cash dividends or distributions, alternatively in reduction in future contributions.
Peculiarities Some of the peculiarities of takaful insurance are outlined below: Contributory Premium In conventional insurance, the customers pay premium in return for the insurance protection.
It is not so in takaful insurance. In this case, policyholders make contributions equitable with the risks they are bringing into the pool.
This is different from the premium which is based on ratings calculated by underwriters in the case of conventional Insurance. Investment Investment of takaful funds is done in compliance with sharia law which prohibits gambling and profiteering and consumption of alcohol. In addition, the funds should not be invested into economic activities that negate Islam and sharia, including brewing alcohol, etc.
This is contrary to conventional insurance where policyholders are just customers who buy cover while shareholders share profit or loss as the case may be.
They are compensated from the pool and reinstated accordingly. Claims experience is not disturbing as the volume is not such that would give any insurer sleepless nights but the problem lies in the frequency of usually small claims.
Retakaful or Reinsurance Sharia principles apply to takaful as much as it applies to retakaful. The reinsurance contract, for Islamic companies, must be contracted in conformity with the sharia. There is need for strong and credible retakaful operators to assist the growth and expansion of takaful business globally.
The shortage of retakaful capacity and the lack of companies in the market currently present great challenge to operators.The company was a winner of the Miami Herald's Business Plan Challenge in Emily Michot [email protected] Today, the cruise business accounts for percent of his total revenues.
It looks at the actors in Islamic finance especially the shari’ah auditors, the regulators and standard setters and the Shari’ah Supervisory Board (SSB). Furthermore, the paper highlighted four of the pressing issues and challenges as . In this way the application of Sharia throughout history can be comparable to the business protection plans used by defense, tax preparers and other industries, where the involved matters are made so complicated that they are needed by the society.
Though formats can vary, a business plan generally includes the following sections: executive summary, description of proposed business, industry analysis, mission statement and core values, management plan, goods or services and (if applicable) production processes, marketing, global issues, and financial plan.
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