With growing number of companies entering into Takaful market, this industry is estimated to expand to $44bn in the next three years, said an industry expert while addressing a webinar on Takaful sector.
Experts highlighted the importance of Family Takaful during the first SEIB Takaful webinar hosted by SEIB Insurance and Reinsurance, recently.
Saleh Imam, Takaful Director at SEIB Insurance and Reinsurance, made the introductory remarks during the webinar on ‘Islamic Insurance series of Family Takaful or the Group Life Insurance’.
Mufti Irshad Ahmad Ijaz, member, advisor and Chairman of the Shariah Supervisory Board of several banks, financial institutions said, the word ‘Takaful’ originates from the Arabic word kafala which means to look after each other.
He said, “The concept of Takaful is based on the concept of brotherhood and mutual solidarity. According to Shariah it is a community-pooling system in which participants contribute their savings into the common fund to help those who need it most in times of financial difficulty. For example: the concept of Takaful is manifested in the system of Bait-ul-Maal cooperative societies and joint family set-ups etc.”
Dr Mazen Abou Chakra, Managing Director of Gen Re Life and Health in Mena and East Mediterranean region, gave a presentation on the Group Life Protection and noted the differences and similarities between conventional insurance and Takaful companies.
Dr Mazen said Takaful markets are mainly in Malaysia, Saudi Arabia and Iran having around 80 percent of total Takaful assets. The annual average gross written premiums in 2020 was around $21bn worldwide and the industry is projected to grow $44bn by 2024 as number of Takaful companies in this sector continues to increase year after year.
He added that Group Insurance scheme is a plan under which persons are collectively insured as members of a group and not as individuals. It has unit rate that is single rate for the whole group and has limited or no individual underwriting. It has short term contracts (one to three years).
“Though Conventional and Takaful are different they still have common practices such as price methodology, protection related products, services, risk assessment, management and control, reinsurance or re-Takaful for risk transfer or sharing, compliance to regulations, financial credibility and corporate governance.”
Another industry expert, Nohra Chaghouri shed light on history, analogies and differences between Life insurance and Family Takaful. He said, “In 20th century the Takaful Insurance was created first in Sudan in 1979 and in 1984 due to increase in demand expanded in Malaysia and far east countries and in 1985 the Grand Council of Islamic scholars allowed use of Takaful as the Islamic alternative to conventional insurance.
“In the mid-1990s’ there were only seven Takaful companies in Sudan, Dubai, Saudi Arabia, Bahrain and Jordan and in 2016 this number increased to around 300 Takaful companies a growing industry up to $28bn in 2018,” he added.
