Takaful in Nigeria living up to expectation: Sanusi

Published 24 Aug,2021 via The Nation - The introduction of Islamic financial services into the financial sector is a landmark in the history of finance, and a significant achievement for Nigerians in and Muslims in particular, Khalifa Muhammad Sanusi II, has said.

He spoke at the Noor Takaful Insurance Limited Surplus Distribution held at Ikeja, Lagos.

The Sharia-compliant firm is the pioneer composite Takaful Insurance firm in Nigeria.

Sanusi, who said he is honoured to be among those who played a leading role in the introduction of non-interest financial institutions, stated that it was during his tenure as Central Bank of Nigeria (CBN) Governor, guidelines that the first Islamic banks were licensed.

Describing Takaful as one of the Islamic financial services that is a recent entrant into the financial services sector, he said the governance organs of these institutions that set them apart from conventional ones were instituted and “today, we are witnessing the growth of Islamic finance as alternative and complementary system of financial intermediation for the benefit of Nigeria and the economy”.

He however noted that conventional insurance has not found penetration, especially among Muslims in Nigeria.

He said: “Takaful insurance is a part of the growth trajectory of Islamic finance that was influenced by the introduction of Islamic banks and Islamic capital market entities. Its introduction is a testimony to the responsiveness of the National Insurance Commission (NAICOM), the insurance regulator of Nigeria. Banking and insurance services are a measure of the development of a country’s financial services.

“Conventional insurance has not found penetration, especially among Muslims in Nigeria. This is despite that insurance as a concept is not foreign nor abhorrent to the teachings of Islam. But it was shunned by Muslims due to its operational model, which was the reason an alternative model was introduced about four and a half decades ago. Protection of wealth is one of the fundamental objectives and higher intents of the Shari’ah.

“Allah the Most High said: ‘Do not entrust your wealth to the feeble-minded. Allah has made it a means of support for you’. Many verses in the Qur’an and many hadiths of the Prophet attest to the fact that the protection of wealth is a higher intent of the Divine Law of Islam. Insurance is based on protection of wealth, therefore the need for it is the level of necessity (al daruriyyat).”

He stressed that based on this need and reflecting on the practice of mutuality and collectiveness that is firmly embedded in the teachings of Islam, Takaful insurance was recognised by Islamic jurists, economists and finance experts as an alternative to conventional insurance.

“This spirit of mutuality and collectiveness was given this praise of a high order by the Prophet because of its potentiality in developing several means of mutual support and guarantee based on that spirit. And one of those means is Takaful insurance. Another teaching of Islam that demonstrates the spirit of mutual guarantee is the practice of the Al‘Aqilah, the paternal relations that jointly support a member of the family that is guilty of manslaughter by underwriting the payment of the blood money to the family of the victim. This was a practice that was in existence before Islam and it was maintained in the Shari’ah of Islam because of what it has of the spirit of mutual guarantee that is central to Islamic social and economic life.

“Takaful is derived from an Arabic word meaning joint guarantee. It is an arrangement based on mutual assistance under which takaful participants agree to contribute to a common fund providing for mutual financial benefits payable to the takaful participants or their beneficiaries on the occurrence of pre-agreed events. Its operational model is based on equity, justice, goodness, cooperation and avoidance of any act, operation, service or product that contravenes the teachings of the Shari’ah.

“It provides an alternative to Muslims to protect their wealth and get the benefit of underwriting and investments offered by conventional insurance free from the prohibitions of interest-based transactions and excessive uncertainty that do exist in conventional insurance. So, it separates the grain from the chaff. An added value proposition of Takaful is the concept and practice of distribution of surplus, which we are witnessing today by Noor Takaful Insurance.

“This practice is non-existent in conventional insurance, which makes Takaful very advantageous to its patronisers. You do not have to be a Muslim to patronise Takaful. Takaful is an alternative to conventional insurance and it complements it to all classes of clients, without discrimination,” he maintained.

Former Commissioner for Insurance, Mohammed Kari, further attested to the benefits of Takaful Insurance.

Congratulating Noor and participants who received surplus, he testified that he was one of the customers who received surplus.

He urged Nigerians to key into Takaful insurance as it is highly beneficial.

The Chairman, Noor Takaful, Muhtar Bakare said the company would for the third year be distributing surplus (cashback) payment worth over N36 million to policyholders who did not make claims, in line with its commitment to promoting ethical insurance in Nigeria.

He said the surplus payment, which comes as a result of the Win-Win model of insurance operated by Noor takaful – an indigenous insurance company licensed by the NAICOM in 2016 thrives on the pool of funds provided by the participants.Takaful is the non-interest finance insurance that seeks to serve a large market of uninsured Nigerians spread across various parts of the country.

He added that the company has also launched a new product targeted at serving the varying insurance needs of its customers most especially in the retail market.

At the event, a total of 621 policyholders also known as participants, which include individuals, private and public organisations, banks and higher institutions of learning, received the surplus payment.

Some of the customers who received the highest amount Joint Admissions Matriculation Board (JAMB), which got over N2 million, Sterling Bank N2 million, Engee Pet Manufacturing N1.13 million, BUA Group N476,000 and NASFAT N77, 322.

Other customers include Engee Pet Manufacturing Limited, Kano Agric Supply, Modibbo Adama University – Yola, Jaiz Bank.

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