Sunday, February 09, 2020 / 05.20PM / Bukola Akinyele for WebTV / Header Image Credit: WebTV
As the Takaful segment of the insurance market in Nigeria continues to gain traction, the Managing Director/CEO of Noor Takaful Insurance Limited, Mr. Aminu Tukur, in a recent interview on the Islamic Finance weekly program gave insight into how the company plans to deepen its penetration across the 36 states of the federation.
Noting the background of the Nigerian insurance industry that is experiencing low penetration of between 0.5% and 1.5%, the decision of the regulator the National Insurance Commission (NAICOM) to recapitalize is a step in the right direction, and Noor is poised to deepen insurance penetration in the country through the Takaful.
Takaful is the Non-Interest finance insurance market that seeks to reach a large market of uninsured Nigerians cutting across the six geo-political zones of the country.
Mr. Aminu Tukur, The Acting Managing Director of Noor Takaful Insurance Limited, said Noor Takaful is working on how to use technology to improve the distribution of products and make them available in all the 36 states including the Federal Capital Territory, FCT Abuja.
He acknowledged the fact that the current low penetration level of insurance in Nigeria is also affecting the Takaful operations in the country at the moment, which the company seeks to navigate through innovation and technology.
Tukur identified Social media as another key tool for deepening takaful in the country, connecting the millennials who constitute a dominant part of the country's population and are very active through their mobile phones and gadgets.
He said takaful rests on equity and fairness; if they don't make a claim, they will get something back, Takaful refers to ethical insurance. People want value for their money.
Speaking further, Mr. Tukur said in addition to technology, Noor Takaful will increase awareness on the benefits it brings by first addressing the notion that is strictly an "Islamic Product for Muslims." According to him, it covers a wider market, which includes Non-Muslims to increase the pace of financial inclusion in the country.
He stated further that the Takaful market is providing insurance solutions that are guided by shariah principles and on an ethical level, which is important for Nigerians to embrace.
Tukur noted that due to the low insurance penetration, people only tend to do compulsory insurance in the country, which is motor, marine, group life insurance, and so on. He said people are always worried about doing life when you to talk to them about the possible death.
Looking at the market so far, the Ag MD acknowledged that despite the challenges, the response has been encouraging. He committed to strengthening the education of prospective clients, 0n the benefits of the Takaful insurance market.
Tukur said a lot of enlightenment programmes had been arranged for individuals, corporate bodies and brokers; he said to a large extent Noor Takaful manages a lot of corporate organizations.
Speaking from an operational perspective, he said, "The first principle of takaful is managing funds on participant's behalf, and we are accountable to them. When there is a surplus at the end of the year, we must declare the surplus to the participants".
"The principle is very simple; for those participants who haven't made a claim, they can get something back from the surplus," He added.
Giving an overview of its activities since inception in 2017, Tukur said, based on the first year of operations, Noor Takaful distributed surplus to the participants and are now in the process of paying/distributing for 2018. The last policy taken in 2017 expired on December 31st, 2018.
"The last policy taken in 2018 expired on December 31st, 2018, but we have to wait till 1st,2019 January to start the process. The process involves actual valuation, approval of the shariah board, and regulatory approval. By the end of Q1 2020, we will be able to distribute surplus," Tukur said.
Tukur observed that Noor Takaful is one of the most reliable Insurance companies in the country in terms of the payment of claims due to the availability of funds.
In the area of regulations, Noor Takaful's Ag MD commended NAICOM for creating an enabling environment for the growth of the insurance industry and the Takaful segment of the market.
He, however, believed NAICOM would likely take further steps to regulate pricing. Pricing in insurance, according to him, decreases daily not only for Takaful but also for regular insurance. He decried the fact that due to the risks that are not adequately priced, the market keeps under-pricing itself.
Also, Tukur believed operators want NAICOM to ensure that conventional insurance and Takaful abide by the rules of pricing. In terms of major policies of the current Federal Government that could drive Takaful, he singled out the Agric sector as an opportunity for farmers to access Takaful cover and get insured against losses especially in the season of floods, movement of goods (Logistics) and other attendant risks in the sector.