Brokers yet to see opportunities in Takaful Insurance

Chuks Udo Okonta

While the National Insurance Commission (NAICOM) is making frantic effort to institutionalised Takuful Insurance business in the country, a broker says the business is not suitable for them as there is nothing to maximise owing to the concept of profit and loss sharing, by the stakeholders.

The broker, who does not want to be named, said brokers may not be interested in obtaining licences being presently issued by NAICOM.

The source said: “I am not sure any broker has gone into takaful. I do not think takaful is brokers market. This is because of the low income and the sharing of profit and loss. Considering the profit sharing concept, I do not think there is more for brokers to share. But we would look at the possibilities as we explore the micro insurance business, which takaful belongs to.”  

Inspen learnt that operators seeking the licence to underwrite Takaful Insurance have continued to send their applications to NAICOM. 

It was gathered from a source in the commission, that applications have been received from many operators, adding that the commission would only consider those who meet the stipulated criteria.

Efforts to know the number of applications that have been received failed, as the individual said the process is still ongoing.

He noted that interests have been received from underwriters and the general public, adding that NAICOM would through the licensing demystify insurance practice, making it possible for operators to operate at the grassroots.

NAICOM, in April this year, released the guidelines on Takaful Insurance which it said is in line with the provisions of the 1997 Insurance Act, and aimed at complementing the current drive for financial inclusion to increase penetration.

A circular signed by Deputy Commissioner for Insurance (Technical) NAICOM Ibrahim Hassan, noted that with the guidelines, all intending applicants seeking license from the Commission to transact takaful-insurance business in Nigeria must possess the followings: Certificate of Registration as a full-fledge takaful-insurance company in accordance with International best practice, adding that such a company must have, as part of its name, words or terminologies that connote takaful operations.

Hassan said the interested companies must maintain a minimum deposit in a non-interest financial institution at all times and that the provision for the establishment of an Advisory Council of Experts (ACE) must be made in the articles of the Company and there should be establishment of investment policy for the participants’ Risk Fund.

Takaful means joint guarantee or share responsibility in Arabic, it operates in according to Islamic laws, the products are designed to carter for Muslims and non- Muslims. The products are meant to encourage saving culture and build capital, over a period of time to meet personal or business needs.

Under takaful plan, people can save regularly for a fixed period that is convenient for them. The accumulated targeted amount can be used to fund obligations such as purchase of land, house, marriage or hajj.  It could also be used to meet other long term financial objectives, such as retirement, children education, travelling expenses as well as expected commitment