Takaful insurance gains 70% penetration in northern Nigeria

Chuks Udo Okonta

Takaful insurance is gradually being embraced by Nigerians as reports have revealed that it has attained about 70 per cent penetration in the northern region.

It was learnt that takaful products are doing well because they are designed to carter for the low income earners and that its simplicity, makes it attractive to the public. Investigations revealed that motor cyclist, teachers, farmer and more are the major buyers of the products.

The cultural belief of the north is another factor said to be driving the sales of the products, as investment of takaful funds is done in compliance with sharia law which prohibits gambling and profiteering and consumption of alcohol. The fund are not invested in economy activities that negates islam and sharia, including brewing alcohol.

The insurance product line which was awakened by the development of economic activities and establishment of Islamic banks in the seventies and known as joint gurantee or share responsibility in Arabic, operates in according to Islamic laws. The products are designed to carter for muslims and non- moslims, and are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.

The Vice-Chairman Chartered Insurance Institute of Nigeria (CIIN) Oyo State Chapter, Babatunde Omosola, said under takaful plan, people can save regularly for a fixed period that is convenient for them, adding that the accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage or hajj and that it could also be used to meet other long term financial objectives, such as retirement, children education, travelling expenses as well as expected commitment.

He noted that reports have shown that in many countries, takaful products have been bought by non muslims due to some of its attractive features, which are not offered under conventional products, adding that the implication of this trend is that there is a promising market and potential growth for takaful business.

Omosola, said claims in takaful business are paid to those unfortunate policyholders/shareholders who suffer some insured losses within the period of cover, noting that they are compensated from the pool and reinstated accordingly.