Islamic Insurance Gains Good Prospects

Mar 18, 2015

With the inauguration of an advisory council that would advise on all Shariah matters regarding the takaful and also help direct implementation of set guidelines, the National Insurance Commission, NAICOM said it is now quite confident about the future, as Islamic insurance in Nigeria gains good prospects. The NAICOM Takaful Advisory Council (TAC) would ensure that Shariah governance which is an important and unique feature that makes Islamic financial services easier for self-regulation is followed through in takaful business across the country.

Takaful, an Islamic insurance concept grounded in Islamic banking and observes the rules and regulations of Islamic law, is a cooperative system of reimbursement or repayment in case of loss, paid to people and companies concerned about hazards. Compensations are pulled out of a fund to which they agree to donate small regular contributions managed on their behalf by a takaful operator.

At the inauguration of the TAC in Abuja, Fola Daniel, commissioner for insurance, said takaful was initiated to complement the Central Bank of Nigeria’s Financial System Strategy 2020 (FSS 2020) and national financial inclusion efforts through developing and strengthening the Nigerian financial markets. Daniel said this objective led to the establishment of the needed framework to exploit a viable takaful insurance sector that will follow the operational guidelines of 2013. The guidelines required the establishment of the advisory council to serve as a second layer of governance for the takaful operators’ Advisory Council of Experts (ACE).

“It is my personal conviction that the inauguration of the TAC is another step towards the implementation of the takaful guidelines,” Daniel noted. The newly inaugurated TAC, comprising four respected indigenous Islamic scholars, include Dawud Olatokunbo Shittu Noibi, a retired professor of the University of Ibadan who serves as the chairman. Other members are Bashir Umar Aliyu, Abdulrazak Abdulmajeed Alaro, and Abubakar Mohammed Sani. Bashir Yuguda, minister of state for finance, who also expressed confidence in the success of Islamic insurance in the country, said that takaful insurance is coming when the insurance sector is being repositioned to contribute more to the economy.

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