ON FIRE OUTBREAKS IN OUR MARKETS: A CALL FOR ISLAMIC INSURANCE (TAKAFUL )

ON FIRE OUTBREAKS IN OUR MARKETS: A CALL FOR ISLAMIC INSURANCE (TAKAFUL )

                By:
          Nurudeen Dauda 
       February 5, 2018
nurudeendauda24@gmail.com
nurudeendauda24@yahoo.com
nurudeendauda.blogspot.com

Islam is a complete way of life which deals with all aspects of our lives from economy, business, finance, administration and to politics etc. Muslims must be aware that there is a system of Insurance in Islam called "TAKAFUL" which provides a "fairer deal" to all its participants. The system just as the Islamic Banking system is open to all, both Muslims and Non- Muslims. We need financial inclusion. 

Our traders, car owners, companies, oil and gas businesses ,and artisans etc., should and or must embrace Takaful as an alternative. There is huge deficits in the  conventional insurance coverage due to ethical concerns by many Muslims.Takaful is not  discriminatory against anybody , it is open to Non-Muslims.

It is currently operational in more than 75 countries in the world. Takaful market is highly concentrated in the Middle East. According to the Islamic Financial Services Board (IFSB), three countries namely Saudi Arabia (37%), Iran (34%) and Malaysia (14%) dominate the market reporting 85% in premiums.

Takaful is already in majority Non- Muslim African countries of South Africa, Zambia, and Kenya. In Europe it is already in Great Britain, France, and Spain. In Asia, it is already in China, Hong Kong,Japan,Macau, Mongolia, North Korea, South Korea, and Taiwan.

Takaful is an Arabic word, which means to take care of one another’s needs, or guaranteeing each other. Takaful is a means in which the members or participants jointly agree to protect themselves against loss or damage. It is fully Shari’a compliant.It is  guided by Islamic principles. Under Takaful people or companies concerned make regular contributions ("donations") to be reimbursed or repaid to members in the event of loss or damage . It is a form of cooperative.

There are four major differences between Takaful and the conventional insurance:

 (1) In Takaful, the company belongs to the participants (clients), but in the conventional insurance, participants are just customers who have no stake in the business. In conventional insurance, the company belongs to shareholders and the management. 

(2) Takaful risk is shared among participants (clients), but in the conventional insurance, the company takes the risk alone, where a client suffers a loss or gets involved in an accident, he or she may be indemnified or compensated. But in the absence of a loss, he or she loses the premium paid in the past and must pay again to renew his policy. 

(3) In Takaful, surplus (profit) belongs to the participants (clients), but in conventional insurance, the company or shareholders take the profits alone, and

(5) In Takaful, profit generated or realised is shared among participants (clients), but in conventional insurance, the surplus profit is shared among shareholders only.

Let's take the advantage. May God bless us!

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