Huge growth potential seen for Takaful market

| Friday, December 25, 2009
A leading industry expert has predicted a huge growth potential for Qatar’s Takaful (Islamic insurance) market, estimating its annual growth at 25%.

Dr Ali Mohayeddin al-Qaradaghi, a professor of Islamic jurisprudence at Qatar University, said that the local Islamic insurance market has lots of expansion opportunities since “every policy holders with the conventional insurance firms is willing to turn to the Takaful scheme”.

“I believe that the Takaful market is very active. Before ten years, we had only one Islamic insurer, now we have three big companies and other Islamic branches launched by local conventional insurers,” Dr al-Qaradaghi stated.

He was delivering a lecture on Monday for the staff and managers of the Al Khaleej Insurance and Reinsurance company, the recent conventional insurer to switch to the Islamic system.

Dr al-Qaradaghi said the Islamic Takaful scheme is “totally different” from the conventional insurance, which he said, involve prohibited practices by Islam.

“Securing the needs of people and reaching them out in difficult times like accidents and death is one of the Islamic principles.

This should be the responsibility of the country, but as countries do not do it, then individuals should take it over through Takaful companies,” he said.

About the Islamic insurance, the scholar explained that although policy holders at any Islamic insurance would pay a contribution, which he said was the equivalent of the premium in conventional system, they will be sharing the surplus made by the company at the end of the year.

“The big difference between the two schemes is that the surplus in Islamic system should be divided among the policy holders who retrieve an amount ranging from 1% to 20% of their earlier contributions,” he added.
He also hailed the decision of Al Khaleej insurance and reinsurance to switch to the Islamic system, saying that both shareholders and policy holders will benefit from the company’s step.

The Al Khaleej Insurance and Reinsurance’s chairman, HE Sheikh Abdullah bin Mohamed bin Jabor al-Thani said, in a speech, that his company, which is set to impark on its activities according to the Takaful system from January first next year, seeks to be a leading player in the Islamic insurance industry in the country.

“We promise our clients that we keep offering them the best products and services they need. In Islamic insurance, the main focus is not the profit, but rather to address risks and alleviate their impacts,”
The scholar also estimated the annual Zakat that should be given by banks and companies listed in region’s stock markets at $100bn, which he said, can tackle the poverty problem in the world if invested in aid programmes.

“Based on a recent study I made, I calculated the value of the Zakat due by companies and banks in Gulf and other Islamic states can make $200bn. If this amount was properly invested through a ten-year plan to eradicate poverty, there would be no more poor people who starved to death around the world,” he added.

Link: http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=333454&version=1&template_id=36&parent_id=16

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