Friday, September 11, 2020 / 1:00 PM /
Bukola Akinyele for WebTV / Header Image Credit: WebTV
The Guidelines for Takaful Insurance in Nigeria are overdue for review and reforms to make the industry more effective and robust.Mr. Abdullah Abdulrasaq, a lecturer in the Department of Islamic Banking, Insurance & Finance at the Islamic Finance College, Ilorin Kwara State made the point in a recent interview on WebTV's Islamic Finance Weekly Program.
According to Abdulrasaq, the National Insurance Commission (NAICOM) the key regulator in the industry is yet to review its guidelines for Takaful. He believed the Takaful industry which in 2019 had a total size of about $24bn globally, could deepen Nigeria's risk protection business.
Speaking on the impact of the COVID-19 Pandemic on the growth and development of Islamic Insurance, the scholar said that it had adversely affected critical sectors of the Nigerian economy.
He decried the fact that nations known as the leading centers for Takaful like Malaysia and Sudan have been adversely affected by the pandemic including Gulf countries, resulting in knock-on effects in frontier markets like Nigeria.
Abdulrasaq highlighted the fact that Islamic Insurance was designed for members to contribute money into a pool system to guarantee each other against loss or damage. Takaful-branded insurance is based on sharia or Islamic religious law, which explains how individuals are responsible to cooperate and protect one another. It covers policies like health, life, and general insurance needs.
The scholar noted that an improved regulatory environment was critical for the growth of Takaful in Nigeria.
Looking at the opportunities from Islamic Insurance, he identified the agriculture sector as a key driver of economic activities in the country, and the need to ensure there are insurance products for the sector.
"There should be a concept on Islamic Microfinance for Agriculture as an alternative funding platform. The only sector that continues to navigate the pandemic is Agri-business" he said.
He added, "The Agricultural sector needs major attention as an alternative for Islamic Insurance so that farmers will be helped and motivated by elevating them and by sharing their risk".
"There are not up to 10 professors of Islamic Insurance in Nigeria, the academic area of study lacks deeper scholarly learning and contributions. Islamic Insurance and Islamic Banking in Nigeria are still poorly understood and operated. NAICOM as a regulator needs to work on the growth of Non-Interest-related Insurance" Abdulrasaq said.
He decried the relatively small number of Islamic Finance teaching institutions in Nigeria. He cited Bayero University, Kano as the only University that offers a postgraduate course on Islamic Insurance and the Islamic Finance College, Ilorin, Kwara State.
"We have Islamic Insurance and Islamic Banking in less practice in Nigeria while the conventional alternatives continue to flourish. The preliminary level of Islamic Finance education should be focused on the syllabus and curriculum changing it to suit what the country needs. From OND, NCE to BSc Level, Islamic insurance is among the fastest-growing areas of study in the world".
The finance expert tasked Islamic Insurance practitioners to invest in sensitizing and creating more awareness of Takaful to the insurance business, especially in rural areas. "In Islamic Insurance, the premium is refundable to the participant. Monitoring and Evaluation (M&E) is very important to Takaful Insurance" he said.