28 April 2010

Nigeria: Insurance is Not Against Islam - NCRIB President


Abuja — Alhaji Teslim Sanusi is the President, Nigerian Council of Registered Insurance Brokers (NCRIB), the umbrella body for all brokers in Nigeria. In this interview, he bars his mind on the challenges and prospects of insurance in Nigeria and specifically in the North.

Following the poor growth of insurance in the North, is the NCRIB partnering insurance companies to help deepen the market?

The NCRIB is deeply concerned with the poor acceptance of Insurance generally in Nigeria and more so in the North and is prepared to facilitate its better acceptance. Among other things, the Council is already fortifying its Northern Area Committee to take up the challenges of promoting insurance growth in the region. The Area Committee, which has its executives operating majorly in Kaduna and Kano, has designed strategies for propagating insurance in the region. Aside from the aggressive public awareness crusade being planned for major news media, it has also identified strategic targets like the religious organizations, market associations, road transport workers and other notable groups. The Area Committee is to be used as the arrow heads of the corporate awareness and publicity campaign of the Council under my tenure of office. These measures would not only assist our members but also the insurance companies who operate in the region.

Would you say, the marketing drive of insurance companies in the north is good enough compared to the efforts put in the south?

As you are aware, there is more concentration of insurance companies in the southern part of the country than in the North. This reason could be said to be historical as well as economic. Naturally, most of the companies concentrate their marketing efforts more in the southern part until most recently. The situation is now changing as more opportunities are unfolding for the industry in the North. But be that as it may I think more efforts have to be harnessed to prospect the Northern insurance market. Companies should begin to look at opportunities in the area of micro insurance as well as takaful insurance, to cater for the peculiarities of people in the region.

What would you say is responsible for the slow development of insurance in the North?

The same reason adducible for low insurance penetration in Nigeria generally could be approximated to that of the North. Specifically, however, one could identify traditional /religious belief and poverty as major hindrances.

Most people are uninformed about the place of planning or mitigating risk with insurance. They quickly rationalize that such venture were heretical to the doctrine of Islam. Similarly, the issue of pervasive poverty is another hindrance. In a situation where the disposable income is low or nonexistent, insurance is not likely to do well.

How can we develop the northern insurance industry?

We can develop insurance in the North first, if the people have a change of orientation. Insurance is not only for the rich. If anything, the poor needs insurance more. Also, insurance is not anti- Islam as it is popularly held and that is why you now have the takaful insurance. It is a testimony that even in Islamic Arab nations such as Egypt, Algeria and Tunisia, you have high insurance penetration. On the other hand, the insurance industry itself must be ingenious and creative about marketing insurance in the North in such a way that it will meet the peculiarities and challenges of the regions. We must understand the people as well as products that would suit them Takaful insurance should be well developed and publicized to counter anti- Islamic impression about the insurance.

But could you give insight into what takaful insurance is?

It is noteworthy that Islamic finance has developed mainly in two directions namely Islamic banking and Islamic insurance (Takaful). While information about Islamic banking is being increasingly disseminated, features, models and structures of Takaful are little known particularly in Pakistan.

All human beings are invariably exposed to the possibility of meeting catastrophes and disasters giving rise to misfortunes and sufferings such as death, loss of limbs, accident, destruction of business or wealth, etc. Notwithstanding the belief of all Muslims in Qadha-o-Qadr, Islam provides that one must find ways and means to avoid such catastrophes and disasters wherever possible, and to minimize his or his family's financial losses should such events occur. One possible way out is to buy an insurance cover as in the conventional system.

Different views have been expressed about the status of conventional insurance from the point of view of Islam. An overwhelming majority of the Shariah scholars believe that it is unlawful due to involvement of Riba (interest), Maisir (gambling) and Gharar (uncertainty).Takaful, the Islamic alternative to insurance, is based on the concept of social solidarity, cooperation and mutual indemnification of losses of members. It is a pact among a group of persons who agree to jointly indemnify the loss or damage that may inflict upon any of them, out of the fund they donate collectively.

The Takaful contract so agreed usually involves the concepts of Mudarabah, Tabarru´ (to donate for benefit of others) and mutual sharing of losses with the overall objective of eliminating the element of uncertainty.

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