Micro takaful by capt. jamil ahmed
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International Conference onIslamic Microfinance
CENTER OF ISLAMIC BANKING & ECNOMICS
Organized By :
Held At:
Faisal Auditorium Islamabad - Pakistan
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MicroTakaful – the way forward
Presented by:Capt. M. Jamil Akhtar Khan ACII, MCIT, Master Mariner
Managing DirectorTHE UNIVERSAL INSURANCE COMPANY LTD.
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Contents
• Introduction• MicroTakaful defined• MicroTakaful schemes in other countries • Prospects in Pakistan• Incremental values – The Takaful advantage• The way forward• Conclusion
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Introduction
Micro-insurance defined:
“Risk-pooling products that are designed to be appropriate for the low-income market in relation to cost, terms, coverage, and delivery mechanisms”.
MicroTakaful refined:
“A mechanism to provide Shariah-based protection to the blue collared, under-privileged individuals at an affordable cost”.
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Introduction Cont’d. …• Microfinance can help people improve.
• Microtakaful will help them sustain their financial well being.
• Feeling of togetherness & security.
• Opens avenues for joint efforts for mutual benefits.
• Cooperative approach and outlook.
• Result – migration of individual level.
• Society benefits at large.
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Global Landscape
• Only eighty million out of the world's 2.5 billion poor are currently covered by some form of micro insurance.
• Only 3% of poor lives are insured in India and China.
• Only 0.3% of the poor are insured in Africa.
• In 23 of the poorest 100 countries in the world, there is currently no identified micro insurance activity.
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Prospects in Pakistan
• Serious efforts at national level only picked up
during the last decade.• Advent of Microfinance banks.• Large rural/urban divide (65% : 35%)• 40% population below poverty level.• Scope for extensive work.• Mushroom growth of NGOs.
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Prospects in Pakistan (Cont’d. …)• Government’s initiatives – Rural support programs.
• SMEDA.
• Financial Support from ADB, WB, etc.
• State Bank’s initiative – 20% branches of commercial banks required in rural areas.
• Agriculture/Crop & Livestock Finance and Takaful.
• Benefit of economies of scale to make these viable ventures.
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Construction of a House
Marriage
Death
Prolonged Illness
Education of Children
Business Failure/Loss of Job
Birth of ChildrenImp
ort
an
ce o
f R
isk/E
con
om
ic S
tress
Potential areas of action
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“ … they seemed satisfied with the convenience and affordability of the policy, but some thought that the
premium should be reimbursed if they do not file a claim”.
Excerpt from
The Demand for Micro insurance in Pakistan
by
ELIZABETH MCGUINNESS AND VOLODYMYR TOUNYTSKY
MARCH 2006
The Takaful Advantage
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InvestmentIncome
Operational Cost of Takaful
/ ReTakaful
Claims &Reserves Surplus
(Balance)
P A R T I C I P A N T S’ T A K A F U L F U N D (P.T.F.)
Mudarib’s Share of
PTF’s Investment
Income
Wakalah Fee
InvestmentIncome
Management Expense of
the Company
Profit/Loss
S H A R E H O L D E R S’ F U N D (S.H.F.)
Participant
WAQF
Takaful Operator
Share Holder
Investment by the Company
The Takaful Advantage
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The way forward
NO
?????
THEN
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The way forward• Tax incentives• Goodwill• Awareness• Extensive documentation• Distribution channels• Strategic alliances• Incentives & Awards
• Setting up a dedicated micro-Takaful
company!
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The way forward (Cont’d. …)
Setting up a dedicated micro-Takaful
company!• Initiative by DFIs, NGOs, and other interested
investors.• Ideal synergies with micro-finance institutions
and other lending organizations. • Govt. to prescribe lower paid-up capital. • Managed by dedicated professionals.
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Current scenario
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What is required?
Where there is will, there is a way!
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Thank You
CENTER OF ISLAMIC BANKING & ECNOMICS
Head Office: 192- Ahmad Block, New Garden Town , Lahore, Pakistan Ph: +92-42-35913096-8, 35858990, 38407850 Fax: +92 -42-35913056E-mail : [email protected]: http://www.alhudacibe.com