Roadshow Takaful.ICMAP MULTAN

8/8/2019 Roadshow Takaful.ICMAP MULTAN

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Zubair MughalChief Executive Officer

AlHuda : Centre of Islamic Banking & Economics

Editor in Chief.

Islamic Banking and Finance News , True Banking.

An Introduction to

Islamic Banking & Takaful

Awareness Road show on Islamic Banking and Takaful

From

Khyber to Karachi


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` Introduction to Takaful ( Islamic Insurance )

` Difference b/w Conventional Insurance & Takaful

` Takaful Through Time

`

General & Faimly Takaful Types` Re-Takaful

` Takaful Models Worldwide.

` Takaful - Target Market


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` Takaful is the Sharia Compliant brand name

for the Islamic alternative to conventionalinsurance. Its based on the principle of Taawan or mutual assistance.

` Takaful comes from the Arabic root-word

kafala guarantee.


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` Takaful means mutual protection and jointguarantee.

` Operationally, takaful refers to participantsmutually contributing to a common fund withthe purpose of having mutual indemnity in the

case of loss.


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Is Some thing wrong with Concept ?

` Risk Aversion` Assuring others

` Risk sharing


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The need for insurance is shown in the

following verse of The Quran.

Those of you who die and leave widowsshould bequeath for their widows a years

maintenance and residence (2.240)


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By Anas-bin-Malik, One day ProphetMuhammad(PBUH) notced a bedouin leaving

his Camel without tying it. He asked thebedouin, Why dont you tie down your

camel? The Bedouin answered, I put mytrust in Allah (SWT). The Prophet (PBUH) thensaid, Tie your camel first, then put your trust

in Allah(SWT)


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The contract between the insurer & insured is

technically wrong from the sharia perspective

because of

` Interest (Riba)` Gharar (Uncertainty))

` Gambling (Qamar & Maisir)

` Risk Transfer Issue


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` Mutuality and cooperation.

` Takaful contract pertains to Tabarru as against Aqd e-

muawadat in case of conventional insurance.

` Payments made with the intention of Tabarru (contribution)

` Eliminates the elements of Gharrar, Maisir and Riba.

` Wakalah/Modarabah basis of operations.

` Joint Guarantee / Indemnity amongst participants shared

responsibility.

` Constitution of separate ParticipantsTakaful Fund .

` Constitution ofShariah Supervisory Board.

` Investments as per Shariah.


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` Piety (individual purification)

` Brotherhood (mutual assistance)

` Charity (Tabarru or contribution)

` Mutual Guarantee

` Community well-being as opposed to profit maximization.


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Issue Conventional Insurance Takaful

Organization Principle Profit for shareholders Mutual Benefit for Participants

Basis Risk Transfer Risk sharing

Value Proposition Profits maximization Affordability and spiritual

satisfaction

Laws Regulations Sharia plus regulations

Ownership Shareholders are Owners Participants

Management status Managed by Company Management Operator

Form of Contract Contract of Sale Islamic contracts of Wakala or

Mudarbah with Tabarru

(contributions)

Investments Interest based Sharia compliant, Riba-free

Surplus Profit of Insurance Company. Distribution to Participants on

pro rata basis.


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` Poor Insurance penetration in the Muslim countries (


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` General Takaful offers all kinds of non-liferisk coverage. It is normally divided into

following classes:

x Property Takaful

x Marine Takaful

x Motor Takaful

x Miscellaneous Takaful


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` Term Life Takaful

` Whole Life Takaful

` Endowment Takaful

` Universal Takaful

` Marriage Plan

`

` Education Plan


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Currently few ReTakaful companies worldwide offering a relativelysmall capacity:

` Sudan (1979) National Reinsurance.

` Sudan (1983) Sheikhan Takaful Company.

` Bahamas (1983) Saudi Islamic Takaful and ReTakaful Company.

` Bahrain/Saudi Arabia (1985) Islamic Insurance and ReinsuranceCompany.

` Tunisia (1985) B.E.S.T. Re

` Malaysia (1997) ASEAN ReTakaful International.

` Dubai (2005) TakafulRe by ARIG.

` Lloyds of London to have a ReTakaful Syndicate in 2007.

` SwissRe has formed a separate ReTakaful Pool

` MunichRe set up ReTakaful Co. in Malaysia 2008


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` People who do not insure due to religious reasons.

` People who insure and are insensitive to religious reasons.

` People who currently do not insure at all.


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` Wakalah Based onWaqf Model : The participant's donate the

fund and operator charge an agency fee.

` Pure Mudarabah Model : The participants and operator enterinto modarabah Contract.

` Wakalah Model : An Agency Agreement is made between

participants and Operators on the basis ofWakalah ( Agency

agreements)


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InvestmentIncome

OperationalCost 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.)

MudaribsShare of PTFs

InvestmentIncome

WakalahFee

Investment

Income

ManagementExpense of

theCompany

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

Wakala-Waqf Model

Investment bythe Company


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Wakala -Waqf Model

It is a WAKALAH model with a separate legal entity ofWAQFin-between.

` The relationship of the participants and the Takaful Co. is directly

with theW

AQF fund.` The contributions received would also be a part of this fund.

` Losses to the participant are paid by the company from the same

fund.

` Operational expenses that are incurred for providing Takafulservices are also met from the same fund.


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Profits

attributable

to

Shareholders

Companys

Admin. &

Mangt.

Expenses

Takaful

Contribution

paid by

Participant

GeneralTakaful

Fund

GeneralTakaful

Fund

OperationalCost of

Takaful

Surplus

(Profit)

Participants

Share

from Surplus

Companys

Share from

Surplus

Investment

ByCompany

Profit

FromInvestments

Company

Participant

Mudaraba Model


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GeneralTakaful

Fund

OperationalCost ofTakaful/

ReTakaful

Surplus(Profit)

SurplusDistribution

toParticipants

Participants

Takaful Fund

Wakala Model

Takaful

Contribution

paid

by Participant

Company

(Capital)

Mudarib'sShare

ofPTFsInvestmentIncome

Management

Expense

of the Company

Profit/Loss

attributable to

Shareholders

Wakala

Fee

(30% to 35%)

ProfitFrom

Investments

Investment

IncomeReserves

Investment bythe Company Investment Income Sharingon Mudaraba Basis


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` Skepticism.

` Lack of uniformity in Models & Shariah decisions.

` Regulatory issues.

` Capacity constraints.

` Limited Investment avenues.

` H.R. issues.


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` Forum for the Development of Islamic Banking and Finance.

` Training & Education of Islamic Banking and Finance.

` Advisory Services & Shariah Certification.

` Publication & Research.

` Distance Learning Programs

For Further details

www.alhudacibe.com

www.sukuk.com.pk


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Roadshow Takaful.ICMAP MULTAN

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Transcript of Roadshow Takaful.ICMAP MULTAN