According to the continental insurance survey carried out by the Africa Insurance Barometer, 2017 edition, a publication of the African Insurance Organisation (AIO), Africa’s insurance penetration currently stands at 2.9 per cent, a figure less than half of the global average. This is no cheering discovery.
The Barometer noted lack of ‘trust’ between the consumers and conventional insurance firms as a leading factor debilitating insurance penetration on the continent. Africans have culture of premising their prosperity on luck and accidents or crisis on ill-fated, therefore, many people including some elites are imperceptive of mitigating risks and uncertainties.
Many conventional insurance companies in Nigeria, today, hide their financial books from the statutory regulator, National Insurance Commission (NAICOM), for the fear of accountability and assessment of their transaction uprightness. While some have been found to have violated the regulatory orders, some are facing internal squabbles, infighting, violation of corporate governance issues; solvency issues, mergers and acquisition issues and inability to pay claims timely.
While there is paucity of fairness in the contemporary insurance sector of the economies across the world, ‘Takaful,’ an insurance product which guarantees mutual benefits and sharing of profits among the participants, no matter eventuality, has emerged with robust business ecosystem (finance and know-how) in Nigeria and some countries in Africa to change the unpleasant narratives. Takaful is an Arabic word which denote “solidarity” and the business partnership for mutual benefits. It also guarantees wealth redistribution and poverty eradication as part of the profits made at the end of each business year is given out to the less privileged of the society, who are uninsured and poor.
The insurance product is a concept to change the public reservation about conventional insurance as a kitty in which few claims are paid to few losers while the insurance company pockets huge profits at the end of the year.
Unlike conventional insurance, in Takaful insurance arrangement, participants pay for insurance premium and when they suffer loss, they get pay without further ado and the profit generated by the insurance pool is given back to those who didn’t suffer loss in the year.
While some religious fanatics have been propagating falsehood and demonstrating hostility against Takaful insurance package, Nigerians, irrespective of religion or faith, must not welcome the idea of mischief makers to ensure attainment of wealth redistribution and financial inclusion of the citizenry which is among the targets of the Jaiz Takaful Insurance, an insurance firm growing at about 30-40 per cent against average 5 per cent annual growth rate common to conventional insurance firms in the country.
Given the operational principles which bordered on fairness, equity and transparency, the Takaful insurance is gaining huge acceptance in Nigeria as evidenced by Jaiz Takaful Insurance which generated about N100 million (in about four months) in premium income with big accounts like the Asset Management Corporation of Nigeria (AMCON) among others in its kitty, according to The Managing Director, Momodou Musa Joof.
Explaining the management principles, Joof said Jaiz only benefits 30 per cent from the premium paid, which it used to pay salaries and shareholders. “So whatever we collect from the insurer, we take 30 per cent for management expenses. The 70 per cent is paid into a separate account known as the participant account. This is used only in settling claims, reinsurance, and commissions to intermediaries – brokers and agents – and other statutory fees. So whatever is left, we share it proportionately among those who haven’t suffered losses” he noted.
The insurance luminary, Joof, added that “It is not about religion, but a fair way to do insurance. It is a product open to all. I took Takaful insurance to Zambia, a Christian dominated country and it is practiced in the Gambian, majorly a Muslim state where people of other faith are living in peace. It is in Malaysia and also found in China, composed mainly of people that neither belief in Islam nor Christianity. The essence of Takaful Insurance is in its transparency in profit sharing. It is an avenue where your risk is covered and you get a return when you don’t suffer a loss.’’
Jaiz Takaful Insurance is building the public confidence in insurance as the best risk mitigation, assuring Nigerians that medium to big projects could be insured. With its all-inclusive policies, Takaful is addressing the needs of the ordinary persons, knowing that insurance penetration in country could be a factor of how well consumers are doing.