Underwriters in the Nigerian insurance sector have shunned Takaful Insurance products due to a lack of confidence in the prospect for the business. Although the Nigerian National Insurance Commission, NAICOM, gave out the operational guidelines since 2013, insurers are still skeptical about venturing into it as there is a prevailing fear that most Takaful Insurance buyers reside in the Northern part of Nigeria. An operator who spoke to Vanguard on the condition of anonymity said,
“Takaful Insurance is an area we have not explored farther. Most Takaful Insurance buyers are Muslims. It is a value proposition to the Muslims; however, most Muslims reside in the Northern part of Nigeria. Hence considering state-by-state GDP, you have to be careful how you allocate available resources in pursuing opportunities. “In the Takaful space, we have not really done a lot of investment because we are still not convinced that the market is significant enough. “We have seen some organizations play there but we are yet to see the kind of results that would motivate us to go in,” he stated.
Another operator who also spoke on the condition of anonymity said, “Strategy says a lot about what you don’t do. You don’t have to do everything. The key thing for us is to be very good at what we do. What you find with a lot of companies is that they are doing everything and they are not particularly good at anything.” Takaful Insurance is a form of insurance that is compatible with the principles of the Shari’ah (Islamic Law). Takaful Insurance is based on two principles: Tabarru (donation/contribution) which is a donation covenant where all participants agree to mutually support each other and is the basis of participants’ contributions into Takaful Insurance Fund. The other is Ta’awun (co-operation) which is the established Islamic concept of mutual assistance and is the basis on which participants willingly agree for the Takaful Insurance fund to be used for the mutual benefit of all participants to meet eligible claims.
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