Takaful News Second Edition

8/2/2019 Takaful News Second Edition

1/28

NEWSIssue: 2 - January 2012

ThePhilosophyof Insurance and Takaful

Pg5

Interviewwith the CEO

Pg3

SocialEconomicBenefitsof the Takaful Model

to the Society

Pg6

Pg11

Insurancefor all

Pg22DemystifyingFamily Takaful

Minister for TradeHon. Chirau Ali Makwere

Receivinga Gift

Birth & Progress ofTakaful in Africa


2/28

BENEFITSRiot, strike & Civil CommotionWindscreen -upto Kshs. 30,000 free

Personal accident for driversEntertainment Unit upto Kshs. 30,000 free

Motor TakafulThe motor comprehensive takaful cover is an all-inclusive cover available

for motor private, motor commercial and motor cycle sub-classes. As ablanket solution, the TIA comprehensive cover is the best solution for allyour motor needs and its what we call a full policy.

www.takafulafrica.com


3/28

CONTENT

This is the ocial Newsletter ofTakaful Insurance of Africa Limited

Editor-in-Chief:

Abdirahman A. Omar

Contributors:

Steve MuiaAbass MohamedUmmi BashirAbdifatah SheikhMohamud Abdiaziz Kassim

Art & Layout Concept:Abdirahman A. Omar

Concept Design:

Gilbert Somek - Alko Creative Ltd

Production:

Alko Creative Limited

No part of this publication may be reproduced,stored in retrieval system or transmitted in any formby any means, without prior written permission ofTakaful Insurance of Africa Limited.All rights reserved

For any comment or feedback you can

reach the editor on:

[email protected]

Issue: 2 - January 2012

Although it is widely acknowledged that Takaful (mutual co-operation) existed among Communities and early Muslims indierent forms, Takaful as we know it today started in the Sudanin 1979. Read more on Page 14 & 15

Birth & Progress of Takaful in Africa

Pg 3-4 ~ Executive chatCatch the story of TIA C.E.O inside

Pg 5-7 ~ Takaful Analysis

Pg 5 ~ The Philosophy of Insuranceand Takaful

Pg 6-7 ~ Social Economic Benets

of Takaful

Pg 9-11 ~ Takaful News

Pg 9 ~ Our Fourth Branch is up andRunning

Pg 10 ~ TIA Shines in this yearsNairobi International Trade Fair

Pg 11 ~ Insurance for All

Pg 12-13 ~ Takaful Pictorials

Pg 14-19 ~ Takaful Commentary

Pg 14 - 15 ~ The Birth, Rise AndProgress of the Takaful Concept

Pg 16-18 ~ Takaful Regulation in aConventional Set-Up

Pg 19 ~ Prospect of Takaful in EastAfrica Region

Pg 20-24 ~ Takaful Information

Pg 20 ~ Claim Process SimpliedPg 22 ~ The concept of FamilyTakaful

Pg 24~ Staying Safe on our Roads

Disclaimer:The views expressed in this Newsletter are those of the authors and do notnecessarily represent those of Takaful Insurance of Africa Limited.


4/28

Takaful Insurance of Africa Limited A bond beyond insurance2

Endeavouring In The TakafulWorld With Condence AndResilience

The perceived sustainability and attractiveness ofIslamic insurance (Takaful) as an alternative riskmanagement model in a post global nancialcrisis era continues to ourish.Takaful, as an alternative to Conventionalinsurance has emerged to provide risk

management and insurance solutions that are void of Haram(prohibited) /non-Shariah compliant elements like Interest(Riba), Uncertainty (Gharar) and elements of Gambling (Maisir)

The Takaful journey so far has been rapid and very impressivefor the short period since the launch and roll-out of TIA.Barely 9 months in the insurance industry have we reachedtargets that not many in the industry have done on their initialstages of establishment. TIA has underwritten Kenya shillings100million in its rst 4months of operation. For this already

saturated insurance industry, 100 million is considerably highcompared to premium collected by new entrants in the industryand was a key monumental mark for Takaful. The uptake ofTakaful products, the curiosity about the concept and interest ofall the public in Kenya and beyond indicates that there is zeal forTakaful products in Kenya.

As a reection of our progress in the last6 months and recognition of the conceptlocally and globally, TIA has alreadybagged 2 awards at the prestigious

Marketing Society of Kenya Awards heldin November 2011

These awards came in the categories of BEST MARKETENTRANT number 2 and number 4 in the BEST LAUNCH. Thisis thus an overwhelming vote of condence by our participantsand industry at large. Globally, TIA has been nominated byIslamic Business & Finance Awards in the category Best NewTakaful Operator. This also highlights our plights as a player inthe global Islamic nance market.

The performance of Islamic insurance or Takaful has shownremarkable growth from time to time. The Takaful industry has ahuge potential to be emphasized. However, still, there are many

people who do not know what takaful is, and the term Takafulitself seems not familiar since it is an Arabic term. Furthermore,this is one of the challenges which must be faced and answeredby the Takaful industry, to be well known. In this edition of theTakaful news we are focusing on educating our participant andthe general public on the concept Takaful, its unique mode ofoperation and the prospect ahead of us.

There are also various challenges facing this industry. Thechief constraint to this emerging market is the persisting viewthat there is no Shariah-compliant insurance product. Thereare cultural issues against savings and long-term protectionproducts in many Muslim communities, in Takaful we have theShariah advisory council/board which oversee all the dealings of

the operator and ensure compliance from developing, pricing topackaging of the product and the general operations of Takafuloperators. The board is independent from the direct inuence ofthe company management.Lack of infrastructure for Takaful industry, Unlike the

conventional industry, the takaful operators have to start fromscratch in training sta, establishing branches and oces, educatingregulators on Shariah aspect, and applying technology to what is aultimately a edgling industry.Many traditional investments used by insurers are out of bounds fortakaful operators. This results in the risk being spread less diversely,and which can put the operator at loggerheads with the regulator.However, the Islamic investment market is growing, and there will bemore opportunities for Takaful operator to hold a spread of Shariah-compliant investments and assuage any concerns a regulator mayhave.Regulation is another challenging area. With no national or regional

Shariah boards in kenya other than the operators Shariah advisoryboard, the regulatory framework for the takaful industry can appearto be applied inconsistently. This can be challenging for operatorsand as well as impact the perception of the industry.Most Takaful operators in Africa reinsured to the conventionalindustry by necessity as there is little Takaful reinsurance capacityavailable. This is changing with the large global reinsurers creatingTakaful capacity.Another challenge, not unique to new market is developing awarenessand understanding of the model, its operations and products. Thepervasive perception among many Muslim communities is thatinsurance is unlawful. The target market needs to be educated abouttakaful and its compliance with Shariah law in order for the market tobe tapped to its full potential.

Currently there is signicant investment in developing technicalexpertise on Shariah compliance, training sta, and implementingthe appropriate technology. Speaking of technology TIA has selected3i InfoTech PREMIA Takaful and Collaborator solution. The PREMIAend-to-end Insurance Software Solutions suite encompassesPREMIA General Insurance, PREMIA Health, PREMIA family,PREMIA Property & Casualty and PREMIA Collaborator. 3i InfoTechhas installed PREMIA at over 175 sites globally, and this software isleading the way among Takaful Insurance solutions.As a pioneering and dynamic Takaful operator in this region weendeavour to introduce a new and exciting ethical perspective to riskmanagement in the Kenyan market.The rationale behind TIA is founded on the need to provide riskmanagement and nancial security, based on ethical principles andvalues and thus far we feel TIA is on the right track to providing ourparticipants with the above solutions and excellent services.

Editor-in-chief

Abdirahman A. Omar

Editors Note


5/28


Describe your journey with Takaful Insurance

My journey with Takaful started in the year 2002, that is

when I came across the Takaful concept at that me I used

to be in the convenonal insurance industry. I realized over

me that many people were not buying insurance products

against risk but they did it out of friendship or for the sake of

the law. I felt bad when I realized that my clients were notgeng value for their money and thereby made me to start

these journey to look for an alternave insurance model to

the convenonal insurance hence, the birth of Takaful in this

region. It has been precipitous learning curve for me, the

concept, the theories and the Takaful model, it wasnt hard

for me dedicate my me to study. From the year 2002 to

2004 I used to go for two to three seminars and established a

well-resourced home library, so to speak it was like preparing

for my PH.D. thesis.

How has been your experience at Takaful Insurance so far?

TIA was registered as a company the year 2008, at that me

we were expecng to get licensed to operate at least thefollowing year. We had been engaged with the regulated

(IRA) on a serious level. The regulators mandate at that

me was to establish the viability of our business and of

course to protect the interest of the consumers. From that

me we built a young, energec and strong team to work

on the concept, study from all angles. We engaged lawyers,

actuaries markeng research expert among others to build

this Takaful that we have and I can proudly say that they

all did marvelous jobs. Running back and forth from our

oces to the regulator, aerwards we carried research

on 20 towns in Kenya and interview approximately 2000

people and thereby led to us developing our business plan

and subsequent submission of the papers to the regulatoraround mid-2009. Generally I can say the experience with

TIA so far was posive and rewarding, it had been a great

opportunity with various partners starng from scratch the

Takaful concept and our young team that we had that me. It

was a lifeme experience for all of us here in Takaful.

What was your rst job like?

My rst ever job was at the construcon of young Muslim

Centre in Garissa in the year 1975 during school holidays, I

was in class three. My work in that site was to supply bricks

(laughing) I used to carry one brick at a go since I was so ny.

At the end I was paid Kshs 150, with that money I paid my

full fees for boarding and tuion at Dadaab Primary school

for that year which was Sixty shillings, bought a full set of

clothes (a shirt & trouser) and sent some to my father. It was

really hard and rewarding at the same me but didnt wish

that path to be my future career path.

Do you see yourself doing this job for the rest of your life?

Yes, am not saying I will be with TIA as the C.E.O for the rest

of my life but I will be engaged in developing the Takaful

concept in Kenya, East Africa and the larger African connent

and beyond. The Takaful concept is a great concept which

has equal respect for shareholders and customers and I

would love to be engaged an iniave that has respect for

all stakeholders.

What exactly do you do on a normal working day?

Mostly I plan my days the previous day, it usually starts at

5 in the morning, do my morning prayers, I leave the house

by 6am. I like to start my oce hours between 6:30 to 8:30

because those hours are peaceful mes when I concentrateon important issues. With the current technological thread

planning your day has become very easy and simple I do not

need to rush to the oce daily to plan my day using the dairy

or even referring to my diary; my diary is most of the me

with me in my phone, my computer or my Ipad. Despite all

the pressure and negave sides of modern technology it has

also simplied our daily acvies.

What do you enjoy most about your job?

I enjoy picking an average Kenyan andmaking out of them an excellent andsuccessful entrepreneur.I feel contented with mywork when I see a young man/woman that I have nurtured

through my leadership system becoming an important and

successful person in the society despite all the hardships that

they may go through.

Where do you see yourself ve years down the road?

I see myself deeply involved in the industry in Africa and

especially in the COMESA region. Growing the Takaful

concept and industry to another level and make this industry

give back to the society in a way that no any other insurance

company has done ever before. I also see myself engaged

in other important sectors in the economy among them;

IT, pharmaceucals, infrastructure development and also

helping in community development from the grass root level

to the naonal level.

Executive chat

TIA C.E.O Mr. Hassan Bashir


6/28


What challenges have you had to

overcome to get to where you are

now?

Generally life is full of challenges am

not dierent from any other human

being, I believe I had my fair share of

challenges to be where I am today and

will sll have to live with challenges allthrough. Any person who has grown

up in northern Kenya knows the

challenges people face there including

lack of formal schooling at the right

me and lack of funds to pay for school

fees. On overall I can say my path was

guided by the Almighty who guided me

to the right path, brought me where I

am today and am thankful for that to

the Almighty.

Who is your mentor and why?

Mentors, Mr. Mohamed Ali Salah

and my primary school head teacher

and Maalim Ragee. I owe my life to

them. The two gentlemen stopped me in the middle

of the wilderness of the current Wajir south district

headquarters, Leheley and took me to school without the

knowledge of my family. Every me I remember my life I

remember about that fateful day, these two gentlemen I

feel some sense of contentment and am very proud and

grateful to them to this day.

Why this career / this eld and not any other?

Insurance is one of the key sectors in the economy and

necessary to engage in. The risk industry is an important

part of our daily life and key sector for the growth of an

economy, and I can say I was so lucky to join industry

aer I completed university and started a brokerage rm,

I also did my masters degree thesis on risk management.

I guess its because of fate that am in this industry, but

all in all am very much happy and proud to be in this

industry.

What is your favorite meal?

Fish and any other food with sh, but I also like chicken

but sh comes rst.

Your favorite holiday desnaon

Every me I think of a holiday two places compete that

is Zanzibar and Mombasa. I usually go to one of these

places when I need a holiday.

My proudest career moment was..

The day when Takaful insurance of Africa was ocially

licensed by the (IRA) Insurance Regulatory Authority.

And also in the year 2008 when I had HR meeng at

Soliton Telmec and found out from the records that we

employed 500 individuals across the East Africa region on

permanent basis.

Do you have any regret is in life and if yes which is your biggest

I never had regrets in life. I believe everythingthat happens in our life has a purpose, we haveto thank God for the good moments and learnfrom our mistakes

What are your hobbies?

I like playing volleyball but I dont play that much this days due to

commitments. I used to play football way back but I was never a

good player.

Whats your philosophy on life?

Add more to the humanity than get from it. As an individual you do

not have to look at what you can get from the society but rather

look at the perspecve of what you can add to the society. Ask

yourself what can I change and do what is right to achieve that

change. Remember also to do what is right always.

What is the greatest lesson you have learned in life?

Honesty, paence and hard work comes rst everything else will

come calling for you.

What would be your advice to someone who wants to get to

where you are?

My advice to young people out there is focus on what you are

doing, do it well and do it right. Get good educaon no maer how

the situaon is and God will reward you abundantly.

Executive chat

TIA C.E.O Mr. Hassan Bashir working in his oce


7/28


expects you to take precaution. You cannotleave your door open because you have

faith that God will protect you.

You cannot fail to take medicineor go to hospital when sickbecause God will heal you, Noreligion forbids risk mitigation

What most religions lack is a credible

model that is not exploitative. Takafultherefore presents the most friendlymodel that combines co-operative and

Sharia principles to deliver a reliable risk

management platform.

Why Takaful?As noted elsewhere in this article, Takaful

provides the most credible alternativeto conventional insurance. It is the only

model that provides ownership of the risk

pool to policyholders. It is also free fromriba (interest), gharar (uncertainty) and

maisir (gambling). This makes the conceptacceptable to Muslims. The model is not

only highly recommended to Muslims

but even to non-Muslims as it oersopportunities to the policyholders to

exercise prudence when launching claims.Once of the unique features of Takaful

is surplus sharing where policyholders

become entitled to any prot that thecompany makes after meeting claims and

other expenses.

The Philosophy of

Insurance and Takaful

The word Takaful comes from the Arabic root word kafala

or joint guarantee. It means mutual protection and jointguarantee. Under the Takaful model, participants willingly

contribute money into a pooling system in order toguarantee each other against loss or damage. This is

where the concept of joint guarantee comes in. It is the members

of the pool who own the funds and hence take responsibility forcompensating pool members who suer peril or loss.

Early Forms of InsuranceSociety has had dierent mechanisms of mitigating losses since time

immemorial. Dierent cultures had mechanisms of compensationin case of a loss or damage. Early methods of transferring or

distributing risk were practised by Chinese and Babylonian tradersas long ago as the 3rd and 2nd millennia BC, respectively. Chinese

merchants travelling treacherous river rapids would redistribute

their wares across many vessels to limit the loss due to any singlevessels capsizing. The Babylonians developed a system which was

recorded in the famous Code of Hammurabi, 1750 BC, and practised

by early Mediterranean sailing merchants.

Insurance & ReligionDierent religions treat insurance in varied ways. Generally religion

looks at insurance as a concept that is not supposed to be mixedwith religion. Every religion justies this stand and it is important to

understand where each major religion is coming from

I spent a number of years educating church leaders on the needfor insurance and the reception I would receive initially is that of

suspicion and mistrust. I have been to radio stations to talk about theneed for insurance and the response by the public has always been

that the public cannot trust insurance. It is therefore a religious andsocietal problem that needs to be addressed through education.Muslim scholars have varying opinions about insurance. Insurance

policies that earn interest are generally considered to be a form ofriba (usury) and some consider even policies that do not earn interest

to be a form of gharar (speculation). Some argue that gharar is notpresent due to the actuarial science behind the underwriting.

Jewish rabbinical scholars also have expressed reservations regarding

insurance as an avoidance of Gods will but most nd it acceptable inmoderation.

Some Christians believe insurance represents a lack of faith andthere is a long history of resistance to commercial insurance by

dierent Christian groups.What all the religious groups fail to address is the fact that God

Steve Muia Head of General Takaful

Takaful analysis


8/28

Takaful vs Conventional InsuranceSome of the key dierences between Takaful and conventional are as follows:

Convenonal Takaful

1. It is a commercial contract

2. Presence ofGharar (uncertainty)

3. Has elements ofriba (interest)

4. Has maisir(gambling)

5. Any surplus or prots belong to

the company shareholders

6. Insurance is a business proposi-

on that is prot driven and is

capitalisc in nature

1. This is a charity contract

2. No Gharar

3. No Riba

4. No Maisir

5. Surplus belongs to the parci-

pants/policyholders

6. Takaful is based on shariah and

mutual co-operave principle

ConclusionOur promise to our participants is to deliver world class service in line with our core values and will appreciate constantfeedback. Takaful is a revolutionary concept that is expected to bring a lot of change in the way insurance is done in

this market.

Banking system under the Shariah principles has

denitely made considerable progress during

the last two decades, however, Islamic insurance(Takaful) has yet to go a long way before it can

acquire universal recognition. It is not suggested

that Takaful does not have the potential to grow,but its development has been hampered by the general beliefs

amongst Muslims, that Insurance particularly life insurance is

not permissible under the Shariah. In response to the abovenegative phenomenon the contemporary Islamic scholars

argue that Takaful does not amount to gambling, uncertaintynor does is it clashes with the general principles of the Shariah.

This is because Takaful is a contract of indemnity or bail with

mutual cooperation against the consequences of a speciedevent or risk. In other word, Takaful is a nancial transaction

base on the principles of co-operation, Mudarabah (prot and

loss sharing) and al-Tabarru (donation) whereby the Takafuloperator and the participants or the beneciaries share prots

made on the contributions accordingly. This is certainly inharmony with the Shariah principles. However, despite having

some misconceptions against Takaful, there are about fty

Takaful companies in todays world of economy have so far beenestablished and are located in various parts of the world.

Social Economic Benets of

Takaful

In Takaful, there are usually four parties involved namely:participant, operator, insured, and beneciary.

The nature of Takaful is that, anybody in the societywho has the legal capacity may contribute a sum of

money to mutual co-operative fund in view of ensuring

material security for one against a dened-risk probably

Abdifatah Sheikh

Takaful analysis



9/28

encountered by anothers life or property. Thus, those who

contribute to the mutual fund are known as participantswhile those who among the participants face the risk and

are assisted by the fund are known as insured. Those who

actually benet from the fund are known as the beneciariesto the cooperative fund. The monetary contribution

made by the participants to the fund is known as mutualcontribution. The fund, managed by a registered or licensed

body or corporation is known as a Takaful operator, whobinds himself bilaterally to manage the fund according toShariah principles and also to provide a reasonable nancial

security for those who genuinely deserve it against the loss

or damage suered by them resulting from a dened-risk.The Socio-Economic Benets of Takaful

Takaful intends to provide the Muslim community andother interested parties with a ve in one advantage as

categorically spelt out as follows:-

Protection BenetsTakaful provide cover in the form of mutual nancialaid from payment of Takaful benets to the policy-

holder. The various types of General Takaful scheme

for both individuals and the corporate sector providedby a Takaful company among others are as follows:

a) Fire Takaful scheme-basic re, houseowners, house holders, industrial all risks.

b) Motor Takaful Scheme motor vehicle and motorcycle.c)Accident/miscellaneous Takaful scheme-personal

accident/group personal accident, personal accident

for pilgrims, all risk, workmens compensation, publicliability, money equipment all risks, employers

liability, plateglass Takaful, delity Takaful,Engineering Takaful scheme-machinery breakdown,erection all risks, boiler, pressure vessel, contractors all risk,

bond.

Mobilisation of SavingsThe birth of Takaful companies is complimentary to theestablishment of Islamic banks. It adds to the colour of

Islamic nance by giving more alternatives to people of

dierent faith i.e. Christians and Muslims to save theirmoney in a safe and more systematic manner. Previously,

Muslims in used to park their money under the mattress,

in the pillows, even in earthen jars and buried them forsafety so as to avoid interest. With the existence of Takaful,

a Takaful company can mobilize the savings in a safe andprotable manner. As such, Takaful intends to advocate

the custom of regular savings for a xed period with a view

to creating a kind of retirement or long-term contingencyfund. In sum, a Takaful company plays the role as savings

institution and a custodian of money deposited in its

custody to serve the future interest of the policy holders.Ethically approved (Halal) Investment Opportunity

In connection to the above (savings tool), a Takaful companywill mobilize the savings of the contributors in Islamic-

approved investment avenues. In other words, by joining a

Takaful plan, the policy holder gains the added benet of agolden opportunity to invest the money in accordance with

Islamic principles.

Participate in the economy in a collective way.

Takaful also invites Muslims, and non-Muslims for

that matter, to participate in the developing theeconomy in the collective and systematic way.

As indicated earlier, it refers to a group of people

pooling their resources in the spirit of joint benetsand shared responsibilities By this illustration it

shows one thing i.e. the need to collectively participate in thesocial activity organized by one fellow resident so that the

burden can be minimized, while at the same time it is out ofrespect and love. Likewise if at the social-level, one can easilycollectively help and protect another for the good cause, why

not in the economic sphere as well. In addition, in Takaful,

those fellow residents do not have to physically go into theindustry him/herself but rather delegate that collective work

to the company. In another words, by joining a Takaful scheme,

every policy holder has already served the same function as theillustration above. Each policy holder has already collectively

pooled their money in advance in anticipation that the moneywill be channelled to a good cause, i.e. to assist any person in

need of help. In addition, Takaful does not only collectively help

others, but also oneself.

If one suers misfortune, it will be a great relief if someone elsecould share in alleviating it. Ultimately, Takaful is meant for that

purpose, i.e. nancial, rather than emotional solace.

Opportunity to perform good deeds and to do charitable works

By joining takaful, one is indirectly involved in charity andwelfare. In this challenging, by force or voluntarily, one is

too busy with never ending routine pursuits for survival andconvenience, to the extent that there is practically no time

to physically be involved in charitable and social welfare,

although by natural instinct is reected in ones intention. So, byparticipating in a Takaful Scheme, that noble intention could be

a reality as part of the contribution money (premium) is donatedto the Special fund and will be used for any claim by other fellowparticipants (or the dependants) who are suering from loss or

misfortune. So, this portion of the money does not belong to the

policyholder, as upon entering into the Takaful contract, he/shehas already promised to donate it to this Special fund. As such,

there will be no issue or objection raised if not given that portionof money when the Takaful policy expires or when the policy

holder should survive after the expiration of the policy or in the

case when he/she does not suer from any loss from the denedrisk stated in the policy. Furthermore, those who want to make

a claim from this Special fund will have to do it in a bona de

manner, without any ulterior or hidden motives of self unjust

enrichment as he/she should knows that the money that he/shemight get from the Takaful operator is a donation exclusively

designated to those who really suer from misfortune. This is inview of the concept of fortunate many assists the unfortunate

few, Stemming from this awareness and consciousness, thereshould be no unreasonable claims from the participants seeking

the compensation money from the operator. As a result, Takaful

operators have fewer claims and this will give more surpluses tobe distributed to the policy-holder and the company at the end

of the year.

Abdifatah Sheikh Mohamed (LLB,Msc Islamic Banking

Finance) Shariah Compliance Manager

Takaful analysis



10/28


Marine Takaful

With Marine Takaful, your goods are secure on high seas

It protects your goods against various risk involved during transit for all

types of cargo. Secure your goods from warehouse to warehouse



11/28

In our bid to make Takaful products and services more

accessible to our existing customers and prospectiveones alike, Takaful Insurance of Africa (TIA) has

opened a new branch at the Nairobi Central Business

District as part of expanding its branch network acrossthe country. This brings to four the total number

of TIA branches operating across the country, three in

Nairobi and one in the coastal city of Mombasa. TIA isa pioneering and dynamic Takaful company which has

introduced a new and exciting ethical perspective to riskmanagement in the Kenyan market, which will benet all

irrespective of their ethnic or religious backgrounds.

The new branch, which is strategically located at the2nd oor of Rehani house at the Junction of Kenyatta

avenue and Koinange street, is expected to oer Takafulinsurance products to corporate, individual and smallscale businesses in the central business district, and will

also enable TIA, which is the only Islamic insurer in the

Our Fourth Branch is up and Running

country, to meet the demands of customers in Nairobi, thereby

strengthening insurance penetration in the country.Our new branch is staed with well experienced underwriters

and customer service sta who have a good understanding

of your particular needs in insurance. The branch will beoperational from 8am to 5pm on weekdays and from 9am to

1pm on Saturdays to serve you.

Takaful insurance of Africa oers General Takaful products whichincludes but not limited to motor Takaful, Fire Takaful including

Domestic package, Burglary Takaful, Marine Takaful, TravelTakaful, Engineering Takaful, Personal Accident, Liability etc.

and other custom made packages for individuals and small and

medium-size enterprises (S.M.Es) and also the corporate clients.We hope that with opening of the new branch in the central

business district we will be able to meet the demands of ourclients and bring supreme service to our esteemed clients. TIAsta at all time will be readily available to advice you on all your

insurance needs.

Rehani Branch Team

Takaful News

SYLVESTER GAETANOBusiness DevelopmentOcer

ANISA AHMEDCustomer RelationOcer

FAHIMA S. BILLEBusiness DevelopmentOcer - Banca Takaful

ABDIRAHMAN DEROWAdministrative Ocer

BASHIR A. OGLEBusiness DevelopmentManager

JANE ONIMBOUnderwriter

KENNETH IRERI

Branch Manager



12/28


This year being our rst year

in the insurance industry, wehad the opportunity to take

part in Nairobi InternationalTrade Fair which was held at

the JAMUHURI park, Nairobi.

The trade fair was partaken by mostimportant sectors in the country among

them; the insurance industry, agriculture,manufacturing industry and many more to

showcases the best of Kenyas commerce

and agriculture. Regional, continental andglobal exhibitors display and exhibit their

services and products anked with fullentertainment programme. The theme for

2011 was

Driving Agribusiness in AttainingFood Suciency and Vision2030.

The cradle of Nairobi International Trade

Fair, Jamhuri Park, is situated in an

indigenous forest and is among the mostsplendid and beautiful show grounds in

the world. The stands at the show rangefrom impressive stone pavilions to small

semi-permanent buildings, prefabricatedstructures and tents. Among those stands

were the insurance village which arguable

among was the hotspots for many visitors,given the massive awareness banners by

the association of Kenya insurers whichwere hanging on strategic location at the

show.

More than 30 insurance companies andhealth providers were exhibiting their

products and service to Kenyans andinternational traders and exhibitors at the

trade fair. With the presence of the key

players in the insurance industry and itsstrategic position the insurance village has

attracted many visitors given the presenceof the famous zangalewa group of dancers

at the entrance of the gate who charmed

about the importance of insurance to

the public and various products that areavailable for oer at the insurance villagein a comic manner.

At the village our stand did attracted

TIA Shines in this years Nairobi

International Trade Fair

considerably many visitors given the uniqueness of Takaful model

and being the only one in Kenya and East Africa insurance industry.

Many people came to ask us important questions on how the modeloperates its origin and benets. Many thought that the concept was

an Arab invented concept but were so charmed to know that theconcept originated from Africa and especially from Sudan.

The Takaful concept generally works on the basis of an agreementmade by the participant of the Takaful model, in the model each

member agrees that they are insured by participating in the pool.

Each participant contribute to the pool, the fund from the pool is usedboth to compensate claims and also invested in a shariah compliant

investments.We were so privileged to be visited by dignitaries from the Insurance

Regulatory Authority and the association of Kenya insurers (AKI) whowere delighted to know more about the products that are on oer at

our stand.

Trade Minister Honorable Chirau Ali Makwere came to visit ourstand at the village and was so captivated by the Takaful model and

our products, the minister was accompanied Insurance RegulatoryAuthority C.E.O Mr Sammy makove and AKI C.E.O Mr. Thomas

Gichuhi.

The minister was so thrilled to hear from our dedicated team who

were at hand to explain the uniqueness of the model and our custommade product for the Kenyan market.

AKI Chairman Mr. Stephen Wandera, IRA C.E.O Mr SammyMakove with TIA C.E.O Mr. Hassan Bashir at Nairobi

International Trade Fair.

Takaful News


13/28


It is clear that one of themain objectives in Takaful

theory is to co-operate

in mitigating risk. AndPoverty being of the risk

that is facing societyneeds the intervention of

the important sectors in the

economy. insurance productsshould not only be directed

to the strong in the society

but also the weak sectorsin Societies so as to achieve

this objective and to protect

our Takaful experiment from

Failing in what our prophetMohamed (PBUH) prohibited.This should not be depicted

in designing product for the

fortunate in the society andexposing the poor masses to

risks, the prophet peace be

upon him (PBUH) prohibited

Insurance for All in the Society

Takaful is

of crucialimportance

to all humanactivities, it needsto cushions pastoralist

from the shock ofdisastrous losses

ensuing from insuredperils, Constitutes an

acceptable security

to the banks to oerrequired nancingand facilities; it gives

pastoralist greatercondence in making

additional investment.

Takaful News

the discrimination of poor from rich in all situations even in very

personal issues such as Social occasions like wedding meals,

and this principle need not be overlooked by the innovatorsand leaders of Takaful. The poors needs must be our base to

progress for innovation in Takaful products so as to realize our

vision and grow the trust in Takaful system from every sectorof the society. The recent Takaful products may meet the

needs of all people across the board, and also TIA is dive deep

in research to develop products that will be benecial to notalone the high and the mid income earners but also the poor,

rekindle hope and ambition to our poor, and as well developour country as a whole. It goes without saying that there are

sectors in society which are more vulnerable to threats and

poverty than others, among such sectors are the agriculturalsectors especially the livestock industry, Surprisingly although

many economic sectors are at risk, arguably the livestock

sector is at a greater risk compared to others given how the

situation is currently in Kenya especially in the pastoralistssocieties and the larger horn of Africa region. Currently there is

adverse drought which is battering the larger northern Kenyawhich is inhabitants largely depend on livestock for livelihood.

Pastoralist in northern Kenya who are currently suering largelosses in this droughts would have been in better position if

they were oered livestock insurance for their animals.

In some scenarios insuring livestock for pastoralist is proving

to be nearly impossible due to diculties in authenticating the

validity of death of animals over a large and far-ung area.Currently the pilot scheme is being experimented with around

a thousand farming households who are expected to pay

between 3.25% and 5.5% of the value of their herds to insurethem for a year and Payouts will depend on the predicted

mortality levels.Pastoralists can use insurance both as a get around against

drought which is a threat that has become more common inthis region due to climate changes and also to increase their

earning potential.

To build the insurance model, which will cushion pastoralist

against such calamities is what they have been yarning for allthose years a model that will make them ll that they belong,

a bond that will take them beyond insurance for them to

secure their livestock from such calamities like drought anddiseases. For I believe now the takaful Model has plans to

develop such kind of products to help the pastoralist society

in Kenya. The takaful model has the capacity to develop suchkind of products that will surely surpass a bond beyond the

expectation of the pastorlist.Takaful is of crucial importance to all human activities, it

needs to cushions pastoralist from the shock of disastrous

losses ensuing from insured perils, Constitutes an acceptable

security to the banks to oer required nancing and facilities;it gives pastoralist greater condence in making additional

investment.

We have a responsibility to prove how we contribute in poverty

alleviation eorts with other nancial institutions. Introduceinnovative products that suites all social classs needs, and

on the other hand we are hoping that the Government toat least push for proper legislation for the Takaful industry

and also level platform for equal development and healthy

competition, we are also required to come up with accessibleand aordable products which can have a direct impact on

the livelihoods of the poor. Finally we are bound to satisfying

the needs of our client and also protect their property inethical manner.


14/28


Trade Minister Hon. Chirau Ali Makwere receiving a gift at our stand on therecently concluded Nairobi International Trade Fair.

IRA C.E.O Mr Sammy Makove signing the guest book at our standduring the Nairobi International Trade Fair, looking on is AKIChairman Mr. Stephen Wandera with TIA sta

Chief Guest Mr Issa Timamy receiving a gift from TIA ChairmanEng. Abdirahman Omar Sheikh, and C.E.O Mr Hassan Bashir atthe ocial launch of TIA Mombasa Branch.

A visitor signing the guest book at anawareness campaign held by our Mombasateam

Our mosque assurance campaign team aftercompleting the rst campaign at Parklands Mosque.Standing from left: Abdinoor Adan, AbdirahmanDerow, Mohamed Dahiye, Abdirahman A. Omar,Sylvester Gaitano and seated from left Fahima Billeand Asha Hassan

The chief guest Mr Issa Timamy cutting the ribbon during theocial opening of TIA Mombasa branch, looking on is formerChief khadi Sheikh Hammad Kassim.

Guest closely following the ocail opening of TIA MombasaBranch


15/28


Ocials from Transnep Insurance agency receiving certicate ofappreciation from our C.E.O Mr Hassan Bashir for being the No: 1agent for the rst 4months of T.I.A operation

T.I.A C.E.O Mr Hassan Bashir chatting with ABC Bank C.E.O. MrShamaz Savani at an Iftar Dinner held at Laico Regency Hotelby TIA for Muslim faithfuls during the Holy month of Ramadan.

Guests enjoying dinner held for our clients during the HolyMonth of Ramadhan at Laico Regency Hotel.

TIAs Halima Saadia explaining T.I.A product to a visitor at ourstand at the Nairobi Muslim Academy career exhibition.

T.I.As Mohamed Naji at a public awareness campaign inMombasa.

Takaful sta enjoying a celebratory dinner at Crowne Plaza Hotelafter collecting a premium 100milion for the rst four months ofoperation.

Rehani House Branch Manager, Kenneth Ireri talking to a clientin his oce.


16/28


Takaful is an Arabic word which is derived from theterm Taawun, or mutual assistance. It is a nounstemming from the Arabic verb Kafal which

means to take care of ones needs.

Takaful as a concept refers to a principle of Insurancethat is based on mutual co-operation, solidarity and togethernessamong the participants of a pool. Takaful participants cometogether in the spirit of brotherhood to safeguard and guaranteeeach other against dened perils and misfortunes. Risk sharingand communal ownership of the pool by all members is thetheme of Takaful.

Although it is widely acknowledged that Takaful (mutual co-operation) existed among Communities and early Muslimsin dierent forms, Takaful as we know it today started in theSudan in 1979. As a need driven concept, Takaful in Sudan wasnecessitated by the growth of Islamic banking and the objectiveto provide Shariah compliant and comprehensive Insuranceservices. Since Then Takaful Spread to Malaysia in 1984 which hasalso since been a pioneer market in Takaful developments by theenactment of the Takaful act of 1985- the rst such regulatory.A number of Fatwa rulings including the Fiqh academy ruling of1985 declaring that conventional insurance as haram (forbidden),while insurance based on cooperative principles, shariacompliance, and charitable donations are acceptable and havealso contributed to the progress of Takaful globally.

From this humble beginnings Takaful has grown to become aphenomena in the global economies with an estimated premiumof USD 1.5 Billion in 2010 and about 170 Takaful Companies, 200Takaful windows( conventional players oering takaful) and also20 Re-takaful Players.

Takaful trends in Africa

Despite being considered as the birth place of Takaful (by virtueof origin in Sudan), the development of Takaful in other Africancountries has been slow. This is a factor mostly attributed tolack of regulatory environments, low purchasing power and poor

perception of insurance in general in these markets.

Nonetheless the huge Muslim population in some of the countries,growth in technology and economies and the ideal principles ofTakaful is predicted as a revolution in this nascent markets andis thus projected as a big growth eld for Takaful players andconcept in general.

Takaful In Sudan

As the universally recognized birth place of Takaful, Sudan hasbeen a pioneer of both Takaful regulations and developments.

In 1992, the government decided to apply the Islamic principles(Shariah) in the countrys economy, all sectors including insurance,started operating under Islamic principles hence becoming therst country to enact such blanket legislation in appreciation ofthe tenets of Islamic nance.

The Takaful Model in Sudan

The Takaful system operated in Sudan was the basicmodel of co-operative Islamic insurance.

Under this system, policyholders pay contributions(tabarru) into a fund where they share risks based on theprinciple of mutual co-operation (Takaful). Any surplusof the fund must be reserved or distributed. More so thecompanies law number 1925 stipulates that there should

be shareholders to establish an insurance company inorder to ensure continuity.

Accordingly, takaful companies in Sudan are founded asshareholding companies, but operate the basic systemof Takaful. Shareholders, in addition to remunerationreceived for running the company, only have the right toreceive their return on invested capital.

The Sudanese Insurance market despite its historical

position as a pioneer of Takaful continues to face lowpenetration ratios and economic challenges. Low income

levels of the Sudanese, high inations, lack of competent

underwriting, among others continue to plague themarket.

Overall, the challenges facing the Sudanese market aresimilar to those in other Arab and African markets, and

it would take some time to be overcome. However,

with the local takaful industry experiencing signicantgrowth in recent years, the Sudanese market is

poised to participate actively in international takaful

development. Not surprisingly, Sudan was the countrychosen to base the headquarters of the Federation of

Islamic Insurance and Takaful Companies (FIITC). The VicePresident and Secretary General are from Sudan and are

based in the Sudanese capital.

The Birth, Rise And Progress of theTakaful Concept

Takaful Commentary

Abass Mohamed


17/28


Takaful in Kenya

Kenya is the biggest economy in the east

African Market and boosts of signicant

growth and uptake of the Islamic FinanceConcept. With a Muslim population

estimated at 10-20% of the 40 Million,

Kenya has signicant potential for Islamic

Finance. So far two fully edged Islamicbanks operate with a considerable number

of other conventional banks oering Islamicbanking on windows.The First Takaful operator in The Kenyan

Market was licensed in January 2011 andLaunched in March 2011 with a capitalizationof close of Kenya shillings 650 million. TakafulInsurance of Africa has a stable outlook andis one of the best capitalized companies inthe Kenyan Market.

Takaful Insurance of Africa comes to the

Kenyan market as an alternative Conceptaimed at increasing insurance penetrationand improving the perception and image ofInsurance locally. The model is designed toserve people of all faiths and backgrounds,despite the reference to Shariah laws. We aresimply providing an ethical sound product.

Anyone willing to be managed under the fundamentals offairness, justice and responsibility is welcome. We believethese are the fundamentals that underline all religions.

Other countries in Africa with takaful

presence are, Senegal, Gambia,Algeria, Libya, South Africa with onetakaful provider each, Mauritania

with two takaful providers andEgypt with ve takaful players.

THE PROGRESS AND POTENTIAL OF TAKAFUL INAFRICA

The common denominator in the African economies ispoor masses and need for community and society/welfareimprovement. As seen recently African economies have alsobeen growing signicantly as shown by the interest fromboth East and West countries.

Micro Finance has been identied by many as a keyframework and program to end poverty and providelivelihood to many. Since its beginning in Bangladesh by theGrameen founders, Micronance has changed many livesand has been applauded as the best too for support and self-sustenance.

Takaful and Micro Takaful in particular, refers to and relates tothe mutual concept of safeguarding each other and ensuringsupport and indemnication at the moment of need.

This is done in the spirit of mutual co-operation and solidarityamong members.

This concept of Takaful and tailor made products of Micro-Takaful have the great potential to signicantly contribute togrowth of the African economies and support to the masses.

Through eective and eciently priced products that identifyand meet the needs of the low end and the poor people, Takafulis short-cut to progress and improves livelihoods of the lowincome earners. The concepts of takaful thus resonate withinsurance, where the bottom line is no prots for shareholdersand poor servicing of claims but one of clarity and transparencywith the welfare of members at heart coupled with surplussharing and distribution.

Thus, if properly packaged and presented to even the poorestof people, Takaful is a great concept that is set to promote thesafety and security of the people who needs it most. This isthe reason why Takaful is an alternative and the right idea of

insuring the poor and un-insured masses in Africa.

Abass Mohamed is theCorporate Risk and Research Manager

Takaful Commentary

Abass Mohamed explaining a point at a recent trainingconducted by TIA


18/28

Takaful is a concept of Insurance that is

based on the principles of mutual co-operation and togetherness among a pool

of people who safeguard and secure each

other jointly. Globally, Takaful refers to

the above co-operative Insurance under

Shariah guidelines that also abhor certain Insurance

operation including investing in interest bearing

instruments, underwriting non-ethical risks and ensuring

justice and equity as highlighted in contract and daily

operations.

Takaful, has grown phenomenally since its birth in Sudan

in 1979 as an alternative Shariah Compliant choice.Today more than 170 fully edged Takaful operators

and approximately 200 Takaful windows exist globally

with estimated gross written Premium more than Kenya

shillings 500Billion. This shows a phenomenal growth

and uptake of Takaful despite its humble beginnings and

slow start.

A Takaful window refers to where a conventional

Insurance company operates and runs a Takaful

department. The conventional insurer will be able

to operate both Takaful and Conventional Insurance

products side by side within its operations butmanaged dierently in accordance with the dierent

underlying principles. Takaful windows often segregate

the funds independently and are overseen by a Shariah

Advisory Board/Council that provide Shariah inputs and

ensure compliance.

Whether, it is a case of the rising number of the Takaful

windows or the set-up of fully edged Takaful companies,

takaful as a concept is growing fast in many countries and

parts of the globe. As the number of Takaful operators

increase in tandem with the awareness and appreciation

of the concept, more focused is going towards regulationof Takaful.

Established Takaful markets in Asia and Africa have put

in place laws that regulate the Takaful industry, thereby

solicit the question. Can Takaful be regulated under

conventional setup? Does this ensure proper regulation

and adequate protection for the participants? Do

regulators have enough knowledge and understanding

of the Takaful concept, operations framework and

Shariah guidelines? This and other concerns have led to

multiple discussions and debates about the regulation of

Takaful under conventional set-up and the viability and

or acceptability of such arrangements.

Operations of Takaful:

The operations of takaful are guided by the choice of model and

the contract between the takaful operator and the participant

(Policy holder). These operations must be transparent, clear

and free of any tenet that may render the Takaful contract null

as per laws of contracts in Islamic jurisprudence. Particularly for

Takaful, this laws include ensuring that Interest ( Riba) either

in investment or operations, Uncertainly and gambling isfreed from the process. It is worthy to note that the wisdom of

conventional insurance to pay for claims or keep the proceeds is

interpreted as transfer of risk and akin to gambling from Shariah

denitions.

Hence operationally, to achieve/ ensure proper regulation of

Takaful, The regulators need proper infrastructure that can

enable them supervise the operations of Takaful in a clear and

precise manner while adhering to the founding principles of the

concept?

Such enhanced regulation needs hands-on understanding ofthese operations to elevate the fears that Takaful operators are

just Shariah compliant on paper

Investment of funds and InvestmentIncome

Takaful operators can only invest in Shariah compliant

instruments. Where investment income is derived, depending

on the model, the investment income is either shared with the

policy holders or declared entirely to the policyholder without

sharing at all in the income as seen in the Wakala models.

Screening of Investment instruments for compliance needs

enhanced understanding of Shariah guidelines on investments

and calls for the regulators to have precise understanding of the

Takaful Regulation in a ConventionalSet-Up

Ummi Bashir

Takaful Commentary



19/28

portfolio mix and at what levels such portfolios become

Haram (prohibited). Further, where a limited number of

such instruments are available, a further development

of such frameworks in liaisons with the nancial market

need more open regulation that allows for signicant o-

shore investment and management is required.

The pertinent question here also remains, can regulators

achieve such understanding of the investment

frameworks and regulations needed. Further, can

conventional regulators ensure that depending on the

model, clarity and segregation of funds is achieved? With

respect to The Accounting and Auditing Organization

for Islamic Financial Institutions (AAOIF), The Islamic

Financial Services Board (IFSB) and other institutions

that have also developed reporting frameworks for

investment income, declaration and allocation, Can

conventional regulators also understand Islamic nancial

reporting?

Shariah Advisory Council/ Boards

A Shariah Advisory council is usually compromised of a

team of Shariah experts learned in qh-ul muamalat

(Islamic jurisprudence) and provide guidance and

supervision to Islamic Financial institutions. Its members

come from sharia, legal, economics and insurance

professions. This shows that the Shariah Boards/Councils

at supervisory levels play a critical role. As it is mandatory

in Takaful/Islamic nancial operators to establish

Shariah Boards of at least 3 members, Can conventional

regulatory Authorities provide adequate supervision

without such Shariah council Inputs?

Reporting and segregation of funds

This refers to ensuring the shareholder and risk fund

resources are not mixed in the operations of Takaful.

Segregation of funds ensures transparency and

ownership of the funds collectively by pool members.

Through segregation of funds, investment income,

wakalah fees, surplus/decit can all be analyzed properly.

Hence, without proper segregation of funds, the Takaful

concept is akin to the conventional principle and the

entire program will be compromised.

The segregation depends on characteristics of the

investment instruments and purposes of the investments.

Accounting treatments and disclosures that Islamic

nancial institutions have to carry out are to be based on

this segregation. Similarly, the new accounting guidance

note on First Time Adoption of AAOIFI Accounting

Standards provides Islamic nancial institutions with the

starting point for preparing nancial accounting records

and reports based on AAOIFI standards.

Thus separation of shareholder and participant funds,ensuring proper accounting and reporting of such

funds segregation and providing for clear frameworks

is a fundamental in Takaful operation. The

key question is again under conventional

reporting and supervision can such

segregagation and separation of funds be

achieved? Will a mix and unclear reporting

be condoned? If such separation cannot be

achieved and enforced clinically, can Takaful

provide optimal value?

Treatment of Surplus/Decit

Surplus distribution and declaration plays afundamental role in Takaful. Through surplus

declaration elements of Uncertainty and

gambling are eliminated from operationand complete equity and mutual solidarity is

achieved. It is prudent that the distribution

framework is also regulated at supervisorylevels as this also has a further capacity to

either tilt the playing eld in favor of Takaful

or just act as an empty promise.

Can conventional players regulate and

monitor this process? What is the level of

involvement of regulator Actuaries and

Commisioners in the above?

Further, where a decit exists in the fund,

how is such decit managed? Is it fair that

the shareholders provide Qard input or can

the participants also share in such decit?

Where a Takaful operator goes down or winds up, how are funds

treated?

These are also further pertinent question that need takaful

regulatory frameworks with compromise/understanding of

certain guidelines specic to takaful

CONCLUSION

As noted in IFSB issues paper of 2009: The dierences between

Takaful and conventional insurance clearly have regulatoryimplications. For example:

A Takaful operator has an obligation to ensure that all aspectsof the insurance operations are compliant with Shariah rules

and principles. To do so, it will draw on in-house religious

advisers, commonly known as a Shariah board.

The Takaful operator will be representing to policyholders,

either explicitly or implicitly, that its operations are inaccordance with Shariah rules and principles. Some

regulators would consider they had a responsibility to

ensure that such representations are well-founded.

In a Family Takaful plan there are generally no guarantees

(i.e. they operate on a dened contribution rather than

a dened benet basis). This implies that the risk proleis dierent from the standard insurance product, where

guarantees are normally given in terms of maturity

Takaful,has grownphenomenallysince its birthin Sudan in

1979 as analternativeShariahCompliantchoice.

Takaful Commentary



20/28


benets, surrender benets and death benets. This hasimplications both for capital adequacy and for disclosure

to consumers.

The solvency regime needs to reect the location of risk.

For example, if there is a decit in the underwriting fund,

how strong is the obligation on the operator to give aninterest-free benevolent loan, and what account should

be taken of this in the solvency regime. This raises theissue in practice of whether liability can be extended to

policyholders investment accounts.

Because policyholders share in any surpluses and, inprinciple, meet any decits in the underwriting pool,

there is a need to determine how their shares should

be determined. At present dierent companies followdierent policies in this respect.

Because investments must be Shariah compliant, aTakaful rm cannot invest in conventional interest-paying

bonds, or in certain types of equity (brewers being anobvious example). There are also limitations on the use

of derivatives, for example to hedge currency risk. Theasset risk prole will therefore be dierent from that of aconventional insurer.

These are only examples, but they should be sucient toindicate that regulatory regimes developed for conventional

insurance cannot necessarily be applied uncritically to Takaful.

All the above points and factors highlight the need for proper

understanding of the Takaful framework by regulators.

It is inevitable that as the industry progresses and takaful

operations expand the need for proper guidelines on such

regulation will be needed especially form conventional

regulators who license Takaful and have to contribute to the

development of the concept.

As a beginning, most of the challenges regarding knowledge

and expertise will be faced, and many will mention Dharura asfactors in such regulations but it is paramount to understand

that certain aspects like establishment of Shariah Boards at

regulatory levels inform the core of ensuring compliance and

just for the policyholders and is thus a mandatory feature for all

regulators if takaful is to be recognized and properly regulated.

Such a Council/boards while carrying out the wider regulatory

function will provide impetus, research, development and

enhancement of the regulatory frameworks as markets

expand. It is thus notable thus, the formation of such a council

is critical to the conventional regulator for purposes of Takaful

regulation and development as a beginning point.

It thus is paramount for takaful understanding by regulators

as they are the masters and the ultimate supervisory

body that must enhance and safeguard the welfare of the

participants and the concept.

Ummi Bashir (LL.B & PG.D-Kenya School of Law)

Takaful Commentary


A New Dawn in East AfricaA New Dawn in East Africa


21/28


22/28

Secondly, another key dierentiator will be product pricing.

Conceptually, Takaful products are not necessarily cheaperthan conventional products; this may be a challenging factor

if not understood well by the market. Pricing strategy will

work well with the market segmentation that is adopted,where every segment is priced dierently. The assumption is

that corporate clients will have slightly dierent contributionas compared to the individual contributors. The individual

contributors can further be segmented along income level tohigh and low incomes.

Thirdly, Islamic nance is in its infantile stage in the EAC

market, with Kenya been the driving force given the presenceof three Islamic nancial institutions. The market requires

proper education and sensitization on the principles of

Islamic nance and its benets. It is without doubt that thelarger populace of the region may view Islamic insurance as

Muslims only venture which is not so, TIA will have to carry

out a wide awareness campaign to remove this misconceptionin order to reach out to the wider populace.

Fourthly, for TIA to succeed in any market, it needs to invest

in its human resources if it has to stand out from the crowd.Thus far, TIA is advantaged to have employees who have the

requisite Islamic nancial know-how in its ranks; however, a

more company knowledge creation hub will be quintessentialto the institutions future growth in the industry.

Finally, for TIA to be successful in the EAC region it will have to

develop its Kenyan market which is promising given the guresfrom the rst 6 months, a lot of work is required for the TIA

community to steer the company to start break-even point. Toreach there, the company will face several challenges including

lack of developed market for investments, informationasymmetry, suspicions from the Muslim consumers regarding

the Shariah aspect of takaful, among others.

Mohamud A. Kassim

Business Development Manager

Many people say that its almost impossible to

be compensated by an insurance company

when you have a claim, other believe thatInsurance contracts is like gambling. You

and the insurance company are betting on

the likelihood of you ling a claim and theamount of that claim. Submitting a claim on your home or

motor policy is very simple here in takaful. To make a claim

you dont have to wait until our oces are opened you canreport the claim on our emergency helpline which operates

24-hour. When you do make a claim you should expect to besent an accident report form, however well be happy to take

all of the details over the telephone if necessary.

It is important that you take the opportunity to ask us what

precisely we require you to do and what evidence we will be

expecting from you to support your claim.

Unfortunately, theres no cut-and-dried formula fordetermining when to involve your insurance company and

when to keep your problems to yourself. Not reporting

about an accident youve caused is a risky maneuver,however, if another driver was involved and there were

injuries, or you had a passenger. While youre legally

not required to make an insurance claim, you probablyshould notify Takaful of what happened if theres a chance

someone else could make a claim on your policy.

We would not wish be caught an aware by surprise claim

on a participant policy by a third party. Its good if you

could let us know your version of events on the record. In aworst-case scenario, your company could use your failure

to report the accident as a reason not to pay your defensecosts if you are sued. We encourage our entire participant

to report to us any accident or incident that may be involve

with a subject matter insured with us.

You can reach us on any claim that you may have through

our helplines 0737808010 or 0753808010 and you can alsosend an email at [email protected].

Claim Process Simplied

In the event of a loss you should report to us

immediately. Our ocers will ask youre toprovide the following documents:

Report to the police immediately and thereafter toTakaful through our helpline

Take any necessary measure to reduce the eect ordamage to property

Do not admit liability of any kind

Provide all the information to the police and make a

statement to the police if they ask how the accident

occurred, but do not admit fault. Fault for a motorvehicle accident is not always clear

Get Police Abstract Report

Motor Vehicle Inspection report (for third partyclaims)

Copy of the Drivers Driving licence

And any other information that our ocers may

ask for to help process the claim.

Takaful Commentary / Information



23/28

DOMESTIC PACKAGE

TAKAFUL


Domestic Package Takaful

Takaful gives you that

guarantee to safeguard your property

Our homes are pillars of identity and comfort, to have an ethical and

trustworthy partner for the security and stability of our homes is critical.



24/28

Family Takaful is a contract that protects individuals

against nancial losses resulting from death. Thus,contrary to common understanding or belief Family

Takaful refers to a procedure where individuals canengage in investment plans with multiple of eect

of nancial protection to osprings and dependents

at deaths or investment income.

Family Takaful provides Participants with a protection and

long-term savings. A participant of the Family Takaful poolor their beneciary will be provided with nancial benets in

case of a tragedy. At the same time, the participant will enjoy

a long-term personal savings because part of the contributionwill be deposited in an account for the purpose of savings. Thus,

one will be able to enjoy investment returns from the savingsportion based on a pre-agreed ratio.

Family Takaful seeks to administer one form of uncertainty

in our daily life called pure risk. Pure risk exists when thereis no potential gain, only possibility of loss. In daily Life, the

possibility of nancial loss to dependents and family in caseof death of bread winner is always pertinent. The role of

Family Takaful is to share in the risk of nancial and enable

members plan ahead and mitigate to safeguard dependentsfrom adverse eects. As such members of a family Takaful fund

both enjoy investment avenues and the ability to jointly pool

resources and help ease the burden of the family as a result of

the demise. This is a concept that is encouraged and upheld byShariah and Islamic teachings as the plight of widows, orphans

and families is always a priority.

Operations of Family Takaful

When you participate in family Takaful, you will contribute

a certain amount of money to a Takaful fund. Part of the

contribution will be placed in the form of participativecontribution (tabarru) and the other part for savings and

investment.

The contribution in the form of tabarru will be placed in a fund

(Participants Special Account or PSA) that will be used to fulll

your obligation of mutual help to the pool and other members,should any of the participants face a misfortune arising from

death or permanent disability. If you survive until the date

of maturity of the plan, you will be entitled to share the netsurplus from the fund.

The Takaful operator will invest your savings and investmentcontribution (Participants Account or PA) and the prot will be

shared between you and the Takaful operator according to a

pre-agreed ratio.

The concept of Family Takaful

Types of covers available under Family

Takaful Include:

Ordinary family

Family Takaful, depending on the needs of clients to achieve

investment linked protection and save for long term planslike education and mortgage.

Individual family Takaful (individuals) The plans includeeducation, mortgage, health and riders. You will receive

nancial benets arising from death or permanent disability,

as well as long-term savings (investment), and investmentprots that are distributed upon claim, maturity or early

surrender.

Group family Takaful (employers, clubs, associations

and societies) The plans include group education,

group medical, health and riders. A minimum number ofparticipants are required to qualify under these plans. You

will receive protection in the form of nancial benets arising

from death or permanent disability.

2) Annuity a plan that provides regular income upon

retirement of an individual who has a Family Takaful policy.The income could be disbursed on monthly basis or on lump

sum depending on the needs of the client

3) Investment-linked By virtue of a Family Takaful policy,

a participant could get access to investment opportunities

and bigger returns following membership into a big fund andpool resources managed by professional fund managers and

trustees in accordance with Shariah.

Conclusion

Globally, Family Takaful has provided Muslims with the

capacity to mitigate against risks, make long term plansfor education and mortgage, save for eventualities while

still ensuring Family wellbeing is placed under utmostconsideration and Shariah guidelines on Investments and

Inheritance is safe guarded,

Under a Family Takaful scheme, the plan is not to insureLife or Stop death but to emphasize on reducing nancial

implication to dependents and adverse eects on widows ororphans following deaths of family members. This is a noble

idea. Takaful Insurance of Africa does not currently provide

Family Takaful, but has plans to roll out such policies andbenets in the near future.



25/28


Burglary Takaful

Take Burglary Takaful and enjoy the peace of mind thatcomes with preparation.

The TIA Burglary cover provides insuranceagainst loss or damage of property insuredresulting from theft accompanied byforceful entry and exit from the premises.

Other contents damaged by thieves whilebreaking in or out of the premises are alsocovered.



26/28

Staying Safe on our Roads

The months of December andJanuary bring holiday parties,family gatherings and varioussocial events.

It is a time of celebration, but it is also a

dangerous time to be on the road. New Year, chrismas andtraditional holidaying time for families and many more

festivities come in these months. Statistics show that this

the time of the year when many accidents occur for variousreasons and many innocent lives are lost. Unfortunately, road

safety trends in Kenya are worsening with the reluctance of

the Michuki policy, which advocated for a maximum speedof 80 kph and that all vehicles must be tted with safety belts

and the failure of the alcoblow.

A new policy of reckless driving, complete dis regard for

trac rules and drink-driving in particular seem to unfoldingand taking over from the Michuki one. Amongst various

modes of transport, public service vehicles are responsible for

large percentage of the road accidents compared to privatecars and utility vehicles. A high percentage of accidents are

attributed to mass transport modes in Africa, while in the

rest of the world mass transportation is the safest means andaccidents are mainly due to speeding and drunken driving

common to passenger cars.

The Takaful family took time to compile for you tips on road

safety for pedestrians and drivers.

Safety tips for pedestrians Stop, Look, Listen and Think before crossing the road;

NEVER assume that a driver has seen you and will stop

for you. Before crossing the road. Think about whetherthe approaching driver can see you;

Always cross at a pedestrian crossing, trac signals or at

a pedestrian refuge;

If there is no pedestrian crossing facility, choose a location

where you have a clear view of approaching trac andwhere drivers can see you;

Be seen. At night wear reective clothing such as a wristband and clear colours

Always avoid crossing on a bend

Never let a child cross the road alone.

Children learn about safety by watching adults, so set agood example by observing road safety discipline.

Safety tips for drivers Buckle up with a properly fastened seat belt no matter

how short the journey is.

Protect children travelling in your vehicle. Use childsafety seats according to manufacturers instructions.

Make sure teenagers buckle up.

Keep your hands on the wheel and your mind on the task

at hand.

Never use your cell phone while driving. This is risky.

Never attend to make up or eat while on the wheels. Yourlife is more important.

Stay alert always. Check trac in all directions beforeentering an intersection and Watch for pedestrians,

bicyclists, motorcyclists and children playing.

Obey the speed limit Slow down when road and weather

conditions are poor and always obey speed limit

Give yourself a space cushion, Leave space around yourvehicle so that you have room to stop or maneuver in an

emergency.

Always check your blind spot, be aware of other driversblind spots. Can they see you?

Yield the right-of-way, be cautious when approaching

intersections.

Make the smart choice - Alcohol, medication, fatigue or

stress aect youre driving. Drive only when you are fully

alert.

Have your vehicle serviced regularly. A well-maintained

vehicle is a safe vehicle.

At Takaful Insurance of Africa, we well like to wish all

our esteem participants a happy and safe festive season.

Save a life and stay safe!

Takaful Information


D

RIVE

SAFE

STAYSAF

E


27/28


From all of us at

The Chairman, Board of Directors, Management and Staffof TIA wish all our esteemed participants a Happy FestiveSeason. We thank you for embracing Takaful and we areproud to be your preferred Insurer.

We wish you aHappy Festive Season


28/28

A Fresh Approach to Insurance

EASTLEIGH BRANCHMadina Mall, 1st Floor,General Waruinge StreetTel: +254 703281148

MOMBASA BRANCHOriental Building, Ground Floor,Nkrumah RoadTel: +254 (41) 2313435/6

NAIROBI CBD BRANCHRehani House, 2nd Floor,Koinange StreetTel: +254 (20) 2222744/5

HEAD OFFICECIC Plaza, 3rd Floor,Mara Road, Upper HillTel: +254 (20) 2725134/5

P O BOX 1811 00100 N i bi K E il i f @t k f l f i

Takaful News Second Edition

Documents

Transcript of Takaful News Second Edition