Experts Canvass Islamic Insurance to Deepen Industry Growth

The search for tools to deepening insurance penetration has continued to attract the intelligent contribution of experts. This is not unexpected considering that almost a decade after insurance was first introduced into Nigeria its growth rate is still far below 5 percent.  Even traditional areas of strength such as motor vehicle insurance are still enveloped in crisis. In the past months, many experts have brain stormed on the way forward.  However one recent contribution which stakeholders have advocated for is Islamic insurance, otherwise known as Takaful insurance. The concept of Takaful insurance is not very popular in Nigeria. This is not strange as even the conventional insurance is still struggling for recognition..  Takaful insurance is a form of insurance which is deemed permissible for muslims under the sharia law.  The major difference between it and the conventional insurance is the restrictions it places on investments and its enlarged flexibility on capital formation. 
In countries with large concentration of muslims such as Nigeria, conventional insurance operates but their services are mainly limited to commercial needs and that of elite members of the society.
According to Dr. Mike Ikupolati, Head of Mission, West African Insurance Institute, while presenting a paper on the issue, he expressed sadness that insurance penetration is still very low even in many I slamic countries.  The reasons for this low penetration have to do with muslims’ belief that “conventional insurance policies contain elements that are contradictory to islamic principles, namely uncertainty (Gharar) gambling (Maisir) and interest (Riba) (Sigma 2001).”
However, insurance is not entirely new to islam as historical records have it that it existed “since the early secured century of the islamic era when muslim Arabs expanding trade into Asia mutually agreed to contribute to a fund to cover mishaps or robberies along the numerous sea voyages”.
He explained that according to works done by  notable scholars like fisher in 1999, Yusof, 1999 and Shakir, also in 1999, insurance in Islam is allowed but it has to be based on the “principles of mutuality and cooperation and encompasses the elements of shared responsibility, joint indemnity, common interest and solidarity.”
The insurance expert reiterated that islamic insurance is also one credible form of alleviating poverty, especially when viewed against the backdrop of muslims’ population put conservatively at 23percent of the total world population. Of this number, he said, over half of the population is Asia and Africa. He stressed that in Africa, for instance, muslims account for about 47percent of the population whereas in Asia, muslim population is put at 27percent, 7percent in Europe and 2 percent in North America.
Corroborating the works of the Islamic scholars, Ikupolati identified poverty as one of the greatest impediments to expected insurance growth level. Interestingly, the work of Sabbir Patel in 2002 revealed that muslims around the world are faced with low-income levels. Mr. Fidel Agbokona, chairman, Akofad Consulting Group agreed that at the present low level of insurance in Nigeria, all measures must be taken to deepen insurance penetration. He asked Nigerians to embrace Islamic insurance irrespective of religious inclination, if it is capable of moving the industry forward. He regretted that while a lot could be gained by some insurance products like this insurance awareness is still unbelievably poor in Nigeria.
Arising from this, Nigerians are said to also lack access to social security systems, health care, education, sanitation and employment opportunities. He expressed dismay that there is “growing inadequate infrastructures in Nigeria as in other islamic countries including the rich Arab nations, due to the increasing population and wave of cheap immigrant labour” This unfortunate  situation, he said, calls for some risk protection mechanism  in order to lower the vulnerability of the muslim population and the society at large.
The history of Takaful insurance could be traced to Sudan where the first Tafaful Insurance Company of Sudan was established in 1979.
Presently, there are over 100 Takaful Insurance companies scattered around the world.  Also, there are a number of conventional insurance companies who have created reasonable grounds for islamic insurance.  In Nigeria, for instance, one of such insurers is UnityKapital Insurance Company which has strengthened its service-delivery in Islamic insurance alongside its conventional insurance business. There are indications that some insurance companies are bracing up to extend their services to include Islamic insurance.
Since Takaful may be useful in cushioning the effect of the middle and working class and assisting in the event of a large loss, micro-takaful’ is therefore desirable to bring service-delivery to the grassroots.
“Takaful insurance can assist in achieving greater equality and empowerment of the poor by protecting them against unforeseen losses and giving them the courage to improve their productivity and livelihood through access to education, healthy care and employment.” Ikupolati said.