NEWS

Issue: 2 - January 2012

Receiving a Gift

Minister for Trade Hon. Chirau Ali Makwere

Pg3
Interview
with the CEO

Pg5
The Philosophy
of Insurance and Takaful

Pg6
Social Economic Benets

of the Takaful Model to the Society

Pg11
Insurance for all

Birth & Progress of Takaful in Africa

Pg22 Demystifying
Family Takaful

Motor Takaful

The motor comprehensive takaful cover is an all-inclusive cover available for motor private, motor commercial and motor cycle sub-classes. As a blanket solution, the TIA comprehensive cover is the best solution for all your motor needs and its what we call a full policy.

BENEFITS

Riot, strike & Civil Commotion Windscreen -upto Kshs. 30,000 free Personal accident for drivers Entertainment Unit upto Kshs. 30,000 free

www.takafulafrica.com

Issue: 2 - January 2012

This is the official Newsletter of Takaful Insurance of Africa Limited Editor-in-Chief: Abdirahman A. Omar Contributors: Steve Muia Abass Mohamed Ummi Bashir Abdifatah Sheikh Mohamud Abdiaziz Kassim Art & Layout Concept: Abdirahman A. Omar Concept Design: Gilbert Somek - Alko Creative Ltd Production: Alko Creative Limited
No part of this publication may be reproduced, stored in retrieval system or transmitted in any form by any means, without prior written permission of Takaful Insurance of Africa Limited. All rights reserved

Birth & Progress of Takaful in Africa

Although it is widely acknowledged that Takaful (mutual cooperation) existed among Communities and early Muslims in different forms, Takaful as we know it today started in the Sudan in 1979. Read more on Page 14 & 15

CONTENT

Pg 3-4 ~ Executive chat

Catch the story of TIA C.E.O inside

Pg 12-13 ~ Takaful Pictorials Pg 14-19 ~ Takaful Commentary Pg 14 - 15 ~ The Birth, Rise And
Progress of the Takaful Concept Conventional Set-Up Pg 19 ~ Prospect of Takaful in East Africa Region

Pg 5-7 ~ Takaful Analysis

and Takaful Pg 6-7 ~ Social Economic Benefits of Takaful

Pg 5 ~ The Philosophy of Insurance

Pg 16-18 ~ Takaful Regulation in a

Pg 9-11 ~ Takaful News Pg 9 ~ Our Fourth Branch is up and

Running

Pg 20-24 ~ Takaful Information Pg 20 ~ Claim Process Simplified Pg 22 ~ The concept of Family Pg 24~ Staying Safe on our Roads

Pg 10 ~ TIA Shines in this years Nairobi International Trade Fair Pg 11 ~ Insurance for All

Takaful

For any comment or feedback you can reach the editor on: abdirahman.omar@takaful.co.ke

Disclaimer: The views expressed in this Newsletter are those of the authors and do not necessarily represent those of Takaful Insurance of Africa Limited.

Editors Note

Endeavouring In The Takaful World With Confidence And Resilience

he perceived sustainability and attractiveness of Islamic insurance (Takaful) as an alternative risk management model in a post global financial crisis era continues to flourish. Takaful, as an alternative to Conventional insurance has emerged to provide risk management and insurance solutions that are void of Haram (prohibited) /non-Shariah compliant elements like Interest (Riba), Uncertainty (Gharar) and elements of Gambling (Maisir) The Takaful journey so far has been rapid and very impressive for the short period since the launch and roll-out of TIA. Barely 9 months in the insurance industry have we reached targets that not many in the industry have done on their initial stages of establishment. TIA has underwritten Kenya shillings 100million in its first 4months of operation. For this already saturated insurance industry, 100 million is considerably high compared to premium collected by new entrants in the industry and was a key monumental mark for Takaful. The uptake of Takaful products, the curiosity about the concept and interest of all the public in Kenya and beyond indicates that there is zeal for Takaful products in Kenya.

Abdirahman A. Omar
conventional industry, the takaful operators have to start from scratch in training staff, establishing branches and offices, educating regulators on Shariah aspect, and applying technology to what is a ultimately a fledgling industry. Many traditional investments used by insurers are out of bounds for takaful operators. This results in the risk being spread less diversely, and which can put the operator at loggerheads with the regulator. However, the Islamic investment market is growing, and there will be more opportunities for Takaful operator to hold a spread of Shariahcompliant investments and assuage any concerns a regulator may have. Regulation is another challenging area. With no national or regional Shariah boards in kenya other than the operators Shariah advisory board, the regulatory framework for the takaful industry can appear to be applied inconsistently. This can be challenging for operators and as well as impact the perception of the industry. Most Takaful operators in Africa reinsured to the conventional industry by necessity as there is little Takaful reinsurance capacity available. This is changing with the large global reinsurers creating Takaful capacity. Another challenge, not unique to new market is developing awareness and understanding of the model, its operations and products. The pervasive perception among many Muslim communities is that insurance is unlawful. The target market needs to be educated about takaful and its compliance with Shariah law in order for the market to be tapped to its full potential. Currently there is significant investment in developing technical expertise on Shariah compliance, training staff, and implementing the appropriate technology. Speaking of technology TIA has selected 3i InfoTech PREMIA Takaful and Collaborator solution. The PREMIA end-to-end Insurance Software Solutions suite encompasses PREMIA General Insurance, PREMIA Health, PREMIA family, PREMIA Property & Casualty and PREMIA Collaborator. 3i InfoTech has installed PREMIA at over 175 sites globally, and this software is leading the way among Takaful Insurance solutions. As a pioneering and dynamic Takaful operator in this region we endeavour to introduce a new and exciting ethical perspective to risk management in the Kenyan market. The rationale behind TIA is founded on the need to provide risk management and financial security, based on ethical principles and values and thus far we feel TIA is on the right track to providing our participants with the above solutions and excellent services.

As a reflection of our progress in the last 6 months and recognition of the concept locally and globally, TIA has already bagged 2 awards at the prestigious Marketing Society of Kenya Awards held in November 2011
These awards came in the categories of BEST MARKET ENTRANT number 2 and number 4 in the BEST LAUNCH. This is thus an overwhelming vote of confidence by our participants and industry at large. Globally, TIA has been nominated by Islamic Business & Finance Awards in the category Best New Takaful Operator. This also highlights our plights as a player in the global Islamic finance market. The performance of Islamic insurance or Takaful has shown remarkable growth from time to time. The Takaful industry has a huge potential to be emphasized. However, still, there are many people who do not know what takaful is, and the term Takaful itself seems not familiar since it is an Arabic term. Furthermore, this is one of the challenges which must be faced and answered by the Takaful industry, to be well known. In this edition of the Takaful news we are focusing on educating our participant and the general public on the concept Takaful, its unique mode of operation and the prospect ahead of us. There are also various challenges facing this industry. The chief constraint to this emerging market is the persisting view that there is no Shariah-compliant insurance product. There are cultural issues against savings and long-term protection products in many Muslim communities, in Takaful we have the Shariah advisory council/board which oversee all the dealings of the operator and ensure compliance from developing, pricing to packaging of the product and the general operations of Takaful operators. The board is independent from the direct influence of the company management. Lack of infrastructure for Takaful industry, Unlike the

Editor-in-chief

Takaful Insurance of Africa Limited

A bond beyond insurance

Executive chat
Describe your journey with Takaful Insurance My journey with Takaful started in the year 2002, that is when I came across the Takaful concept at that time I used to be in the conventional insurance industry. I realized over time that many people were not buying insurance products against risk but they did it out of friendship or for the sake of the law. I felt bad when I realized that my clients were not getting value for their money and thereby made me to start these journey to look for an alternative insurance model to the conventional insurance hence, the birth of Takaful in this region. It has been precipitous learning curve for me, the concept, the theories and the Takaful model, it wasnt hard for me dedicate my time to study. From the year 2002 to 2004 I used to go for two to three seminars and established a well-resourced home library, so to speak it was like preparing for my PH.D. thesis. How has been your experience at Takaful Insurance so far? TIA was registered as a company the year 2008, at that time we were expecting to get licensed to operate at least the following year. We had been engaged with the regulated (IRA) on a serious level. The regulators mandate at that time was to establish the viability of our business and of course to protect the interest of the consumers. From that time we built a young, energetic and strong team to work on the concept, study from all angles. We engaged lawyers, actuaries marketing research expert among others to build this Takaful that we have and I can proudly say that they all did marvelous jobs. Running back and forth from our offices to the regulator, afterwards we carried research on 20 towns in Kenya and interview approximately 2000 people and thereby led to us developing our business plan and subsequent submission of the papers to the regulator around mid-2009. Generally I can say the experience with TIA so far was positive and rewarding, it had been a great opportunity with various partners starting from scratch the Takaful concept and our young team that we had that time. It was a lifetime experience for all of us here in Takaful. What was your first job like? My first ever job was at the construction of young Muslim Centre in Garissa in the year 1975 during school holidays, I was in class three. My work in that site was to supply bricks (laughing) I used to carry one brick at a go since I was so tiny. At the end I was paid Kshs 150, with that money I paid my full fees for boarding and tuition at Dadaab Primary school for that year which was Sixty shillings, bought a full set of clothes (a shirt & trouser) and sent some to my father. It was really hard and rewarding at the same time but didnt wish that path to be my future career path. Do you see yourself doing this job for the rest of your life? Yes, am not saying I will be with TIA as the C.E.O for the rest of my life but I will be engaged in developing the Takaful concept in Kenya, East Africa and the larger African continent and beyond. The Takaful concept is a great concept which has equal respect for shareholders and customers and I would love to be engaged an initiative that has respect for all stakeholders.

TIA C.E.O Mr. Hassan Bashir

What exactly do you do on a normal working day? Mostly I plan my days the previous day, it usually starts at 5 in the morning, do my morning prayers, I leave the house by 6am. I like to start my office hours between 6:30 to 8:30 because those hours are peaceful times when I concentrate on important issues. With the current technological thread planning your day has become very easy and simple I do not need to rush to the office daily to plan my day using the dairy or even referring to my diary; my diary is most of the time with me in my phone, my computer or my Ipad. Despite all the pressure and negative sides of modern technology it has also simplified our daily activities. What do you enjoy most about your job?

I enjoy picking an average Kenyan and making out of them an excellent and successful entrepreneur. I feel contented with my
work when I see a young man/woman that I have nurtured through my leadership system becoming an important and successful person in the society despite all the hardships that they may go through. Where do you see yourself five years down the road? I see myself deeply involved in the industry in Africa and especially in the COMESA region. Growing the Takaful concept and industry to another level and make this industry give back to the society in a way that no any other insurance company has done ever before. I also see myself engaged in other important sectors in the economy among them; IT, pharmaceuticals, infrastructure development and also helping in community development from the grass root level to the national level.

Takaful Insurance of Africa Limited

A bond beyond insurance

Executive chat
What challenges have you had to overcome to get to where you are now? Generally life is full of challenges am not different from any other human being, I believe I had my fair share of challenges to be where I am today and will still have to live with challenges all through. Any person who has grown up in northern Kenya knows the challenges people face there including lack of formal schooling at the right time and lack of funds to pay for school fees. On overall I can say my path was guided by the Almighty who guided me to the right path, brought me where I am today and am thankful for that to the Almighty. Who is your mentor and why? Mentors, Mr. Mohamed Ali Salah and my primary school head teacher and Maalim Ragee. I owe my life to them. The two gentlemen stopped me in the middle of the wilderness of the current Wajir south district headquarters, Leheley and took me to school without the knowledge of my family. Every time I remember my life I remember about that fateful day, these two gentlemen I feel some sense of contentment and am very proud and grateful to them to this day. Why this career / this field and not any other? Insurance is one of the key sectors in the economy and necessary to engage in. The risk industry is an important part of our daily life and key sector for the growth of an economy, and I can say I was so lucky to join industry after I completed university and started a brokerage firm, I also did my masters degree thesis on risk management. I guess its because of fate that am in this industry, but all in all am very much happy and proud to be in this industry. What is your favorite meal? Fish and any other food with fish, but I also like chicken but fish comes first. Your favorite holiday destination Every time I think of a holiday two places compete that is Zanzibar and Mombasa. I usually go to one of these places when I need a holiday. My proudest career moment was.. The day when Takaful insurance of Africa was officially licensed by the (IRA) Insurance Regulatory Authority. And also in the year 2008 when I had HR meeting at Soliton Telmec and found out from the records that we employed 500 individuals across the East Africa region on permanent basis.

TIA C.E.O Mr. Hassan Bashir working in his office

Do you have any regret is in life and if yes which is your biggest

I never had regrets in life. I believe everything that happens in our life has a purpose, we have to thank God for the good moments and learn from our mistakes
What are your hobbies? I like playing volleyball but I dont play that much this days due to commitments. I used to play football way back but I was never a good player. Whats your philosophy on life? Add more to the humanity than get from it. As an individual you do not have to look at what you can get from the society but rather look at the perspective of what you can add to the society. Ask yourself what can I change and do what is right to achieve that change. Remember also to do what is right always. What is the greatest lesson you have learned in life? Honesty, patience and hard work comes first everything else will come calling for you. What would be your advice to someone who wants to get to where you are? My advice to young people out there is focus on what you are doing, do it well and do it right. Get good education no matter how the situation is and God will reward you abundantly.

Takaful Insurance of Africa Limited

A bond beyond insurance

Takaful analysis

The Philosophy of Insurance and Takaful

he word Takaful comes from the Arabic root word kafala or joint guarantee. It means mutual protection and joint guarantee. Under the Takaful model, participants willingly contribute money into a pooling system in order to guarantee each other against loss or damage. This is where the concept of joint guarantee comes in. It is the members of the pool who own the funds and hence take responsibility for compensating pool members who suffer peril or loss.

Steve Muia Head of General Takaful

expects you to take precaution. You cannot leave your door open because you have faith that God will protect you.

Early Forms of Insurance

Society has had different mechanisms of mitigating losses since time immemorial. Different cultures had mechanisms of compensation in case of a loss or damage. Early methods of transferring or distributing risk were practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessels capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, 1750 BC, and practised by early Mediterranean sailing merchants.

You cannot fail to take medicine or go to hospital when sick because God will heal you, No religion forbids risk mitigation
What most religions lack is a credible model that is not exploitative. Takaful therefore presents the most friendly model that combines co-operative and Sharia principles to deliver a reliable risk management platform.

Insurance & Religion

Different religions treat insurance in varied ways. Generally religion looks at insurance as a concept that is not supposed to be mixed with religion. Every religion justifies this stand and it is important to understand where each major religion is coming from I spent a number of years educating church leaders on the need for insurance and the reception I would receive initially is that of suspicion and mistrust. I have been to radio stations to talk about the need for insurance and the response by the public has always been that the public cannot trust insurance. It is therefore a religious and societal problem that needs to be addressed through education. Muslim scholars have varying opinions about insurance. Insurance policies that earn interest are generally considered to be a form of riba (usury) and some consider even policies that do not earn interest to be a form of gharar (speculation). Some argue that gharar is not present due to the actuarial science behind the underwriting. Jewish rabbinical scholars also have expressed reservations regarding insurance as an avoidance of Gods will but most find it acceptable in moderation. Some Christians believe insurance represents a lack of faith and there is a long history of resistance to commercial insurance by different Christian groups. What all the religious groups fail to address is the fact that God

Why Takaful?

As noted elsewhere in this article, Takaful provides the most credible alternative to conventional insurance. It is the only model that provides ownership of the risk pool to policyholders. It is also free from riba (interest), gharar (uncertainty) and maisir (gambling). This makes the concept acceptable to Muslims. The model is not only highly recommended to Muslims but even to non-Muslims as it offers opportunities to the policyholders to exercise prudence when launching claims. Once of the unique features of Takaful is surplus sharing where policyholders become entitled to any profit that the company makes after meeting claims and other expenses.

Takaful Insurance of Africa Limited

A bond beyond insurance

Takaful analysis
Takaful vs Conventional Insurance
Some of the key differences between Takaful and conventional are as follows:

Conventional 1. It is a commercial contract 2. Presence of Gharar (uncertainty) 3. Has elements of riba (interest) 4. Has maisir (gambling) 5. Any surplus or profits belong to the company shareholders 6. Insurance is a business proposition that is profit driven and is capitalistic in nature

Takaful 1. This is a charity contract 2. No Gharar 3. No Riba 4. No Maisir 5. Surplus belongs to the participants/policyholders 6. Takaful is based on shariah and mutual co-operative principle

Conclusion

Our promise to our participants is to deliver world class service in line with our core values and will appreciate constant feedback. Takaful is a revolutionary concept that is expected to bring a lot of change in the way insurance is done in this market.

Social Economic Benefits of Takaful

anking system under the Shariah principles has definitely made considerable progress during the last two decades, however, Islamic insurance (Takaful) has yet to go a long way before it can acquire universal recognition. It is not suggested that Takaful does not have the potential to grow, but its development has been hampered by the general beliefs amongst Muslims, that Insurance particularly life insurance is not permissible under the Shariah. In response to the above negative phenomenon the contemporary Islamic scholars argue that Takaful does not amount to gambling, uncertainty nor does is it clashes with the general principles of the Shariah. This is because Takaful is a contract of indemnity or bail with mutual cooperation against the consequences of a specified event or risk. In other word, Takaful is a financial transaction base on the principles of co-operation, Mudarabah (profit and loss sharing) and al-Tabarru (donation) whereby the Takaful operator and the participants or the beneficiaries share profits made on the contributions accordingly. This is certainly in harmony with the Shariah principles. However, despite having some misconceptions against Takaful, there are about fifty Takaful companies in todays world of economy have so far been established and are located in various parts of the world.

Abdifatah Sheikh
In Takaful, there are usually four parties involved namely: participant, operator, insured, and beneficiary. The nature of Takaful is that, anybody in the society who has the legal capacity may contribute a sum of money to mutual co-operative fund in view of ensuring material security for one against a defined-risk probably

Takaful Insurance of Africa Limited

A bond beyond insurance

Takaful analysis
encountered by anothers life or property. Thus, those who contribute to the mutual fund are known as participants while those who among the participants face the risk and are assisted by the fund are known as insured. Those who actually benefit from the fund are known as the beneficiaries to the cooperative fund. The monetary contribution made by the participants to the fund is known as mutual contribution. The fund, managed by a registered or licensed body or corporation is known as a Takaful operator, who binds himself bilaterally to manage the fund according to Shariah principles and also to provide a reasonable financial security for those who genuinely deserve it against the loss or damage suffered by them resulting from a defined-risk. The Socio-Economic Benefits of Takaful Takaful intends to provide the Muslim community and other interested parties with a five in one advantage as categorically spelt out as follows:-

Protection Benefits

Takaful provide cover in the form of mutual financial aid from payment of Takaful benefits to the policyholder. The various types of General Takaful scheme for both individuals and the corporate sector provided by a Takaful company among others are as follows: a) Fire Takaful scheme-basic fire, house owners, house holders, industrial all risks. b) Motor Takaful Scheme motor vehicle and motorcycle. c)Accident/miscellaneous Takaful scheme-personal accident/group personal accident, personal accident for pilgrims, all risk, workmens compensation, public liability, money equipment all risks, employers liability, plateglass Takaful, fidelity Takaful, Engineering Takaful scheme-machinery breakdown, erection all risks, boiler, pressure vessel, contractors all risk, bond.

akaful also invites Muslims, and non-Muslims for that matter, to participate in the developing the economy in the collective and systematic way. As indicated earlier, it refers to a group of people pooling their resources in the spirit of joint benefits and shared responsibilities By this illustration it shows one thing i.e. the need to collectively participate in the social activity organized by one fellow resident so that the burden can be minimized, while at the same time it is out of respect and love. Likewise if at the social-level, one can easily collectively help and protect another for the good cause, why not in the economic sphere as well. In addition, in Takaful, those fellow residents do not have to physically go into the industry him/herself but rather delegate that collective work to the company. In another words, by joining a Takaful scheme, every policy holder has already served the same function as the illustration above. Each policy holder has already collectively pooled their money in advance in anticipation that the money will be channelled to a good cause, i.e. to assist any person in need of help. In addition, Takaful does not only collectively help others, but also oneself. If one suffers misfortune, it will be a great relief if someone else could share in alleviating it. Ultimately, Takaful is meant for that purpose, i.e. financial, rather than emotional solace. Opportunity to perform good deeds and to do charitable works By joining takaful, one is indirectly involved in charity and welfare. In this challenging, by force or voluntarily, one is too busy with never ending routine pursuits for survival and convenience, to the extent that there is practically no time to physically be involved in charitable and social welfare, although by natural instinct is reflected in ones intention. So, by participating in a Takaful Scheme, that noble intention could be a reality as part of the contribution money (premium) is donated to the Special fund and will be used for any claim by other fellow participants (or the dependants) who are suffering from loss or misfortune. So, this portion of the money does not belong to the policyholder, as upon entering into the Takaful contract, he/she has already promised to donate it to this Special fund. As such, there will be no issue or objection raised if not given that portion of money when the Takaful policy expires or when the policy holder should survive after the expiration of the policy or in the case when he/she does not suffer from any loss from the defined risk stated in the policy. Furthermore, those who want to make a claim from this Special fund will have to do it in a bona fide manner, without any ulterior or hidden motives of self unjust enrichment as he/she should knows that the money that he/she might get from the Takaful operator is a donation exclusively designated to those who really suffer from misfortune. This is in view of the concept of fortunate many assists the unfortunate few, Stemming from this awareness and consciousness, there should be no unreasonable claims from the participants seeking the compensation money from the operator. As a result, Takaful operators have fewer claims and this will give more surpluses to be distributed to the policy-holder and the company at the end of the year. Abdifatah Sheikh Mohamed (LLB,Msc Islamic Finance) Shariah Compliance Manager Banking

Mobilisation of Savings

The birth of Takaful companies is complimentary to the establishment of Islamic banks. It adds to the colour of Islamic finance by giving more alternatives to people of different faith i.e. Christians and Muslims to save their money in a safe and more systematic manner. Previously, Muslims in used to park their money under the mattress, in the pillows, even in earthen jars and buried them for safety so as to avoid interest. With the existence of Takaful, a Takaful company can mobilize the savings in a safe and profitable manner. As such, Takaful intends to advocate the custom of regular savings for a fixed period with a view to creating a kind of retirement or long-term contingency fund. In sum, a Takaful company plays the role as savings institution and a custodian of money deposited in its custody to serve the future interest of the policy holders. Ethically approved (Halal) Investment Opportunity In connection to the above (savings tool), a Takaful company will mobilize the savings of the contributors in Islamicapproved investment avenues. In other words, by joining a Takaful plan, the policy holder gains the added benefit of a golden opportunity to invest the money in accordance with Islamic principles. Participate in the economy in a collective way. Takaful Insurance of Africa Limited

A bond beyond insurance

Marine Takaful
It protects your goods against various risk involved during transit for all types of cargo. Secure your goods from warehouse to warehouse

With Marine Takaful, your goods are secure on high seas

Takaful Insurance of Africa Limited

10 www.takafulafrica.com

A bond beyond insurance

Takaful News

Our Fourth Branch is up and Running

n our bid to make Takaful products and services more accessible to our existing customers and prospective ones alike, Takaful Insurance of Africa (TIA) has opened a new branch at the Nairobi Central Business District as part of expanding its branch network across the country. This brings to four the total number of TIA branches operating across the country, three in Nairobi and one in the coastal city of Mombasa. TIA is a pioneering and dynamic Takaful company which has introduced a new and exciting ethical perspective to risk management in the Kenyan market, which will benefit all irrespective of their ethnic or religious backgrounds. The new branch, which is strategically located at the 2nd floor of Rehani house at the Junction of Kenyatta avenue and Koinange street, is expected to offer Takaful insurance products to corporate, individual and small scale businesses in the central business district, and will also enable TIA, which is the only Islamic insurer in the country, to meet the demands of customers in Nairobi, thereby strengthening insurance penetration in the country. Our new branch is staffed with well experienced underwriters and customer service staff who have a good understanding of your particular needs in insurance. The branch will be operational from 8am to 5pm on weekdays and from 9am to 1pm on Saturdays to serve you. Takaful insurance of Africa offers General Takaful products which includes but not limited to motor Takaful, Fire Takaful including Domestic package, Burglary Takaful, Marine Takaful, Travel Takaful, Engineering Takaful, Personal Accident, Liability etc. and other custom made packages for individuals and small and medium-size enterprises (S.M.Es) and also the corporate clients. We hope that with opening of the new branch in the central business district we will be able to meet the demands of our clients and bring supreme service to our esteemed clients. TIA staff at all time will be readily available to advice you on all your insurance needs.

Rehani Branch Team

BASHIR A. OGLE Business Development Manager

SYLVESTER GAETANO Business Development Officer

FAHIMA S. BILLE Business Development Officer - Banca Takaful

KENNETH IRERI Branch Manager

JANE ONIMBO Underwriter

ANISA AHMED Customer Relation Officer

ABDIRAHMAN DEROW Administrative Officer

Takaful Insurance of Africa Limited

A bond beyond insurance

Takaful News

TIA Shines in this years Nairobi International Trade Fair

his year being our first year in the insurance industry, we had the opportunity to take part in Nairobi International Trade Fair which was held at the JAMUHURI park, Nairobi. The trade fair was partaken by most important sectors in the country among them; the insurance industry, agriculture, manufacturing industry and many more to showcases the best of Kenyas commerce and agriculture. Regional, continental and global exhibitors display and exhibit their services and products flanked with full entertainment programme. The theme for 2011 was

Driving Agribusiness in Attaining Food Sufficiency and Vision 2030.

The cradle of Nairobi International Trade Fair, Jamhuri Park, is situated in an indigenous forest and is among the most splendid and beautiful show grounds in the world. The stands at the show range from impressive stone pavilions to small semi-permanent buildings, prefabricated structures and tents. Among those stands were the insurance village which arguable among was the hotspots for many visitors, given the massive awareness banners by the association of Kenya insurers which were hanging on strategic location at the show. More than 30 insurance companies and health providers were exhibiting their products and service to Kenyans and international traders and exhibitors at the trade fair. With the presence of the key players in the insurance industry and its strategic position the insurance village has attracted many visitors given the presence of the famous zangalewa group of dancers at the entrance of the gate who charmed about the importance of insurance to the public and various products that are available for offer at the insurance village in a comic manner. At the village our stand did attracted
Takaful Insurance of Africa Limited

AKI Chairman Mr. Stephen Wandera, IRA C.E.O Mr Sammy Makove with TIA C.E.O Mr. Hassan Bashir at Nairobi International Trade Fair.
considerably many visitors given the uniqueness of Takaful model and being the only one in Kenya and East Africa insurance industry. Many people came to ask us important questions on how the model operates its origin and benefits. Many thought that the concept was an Arab invented concept but were so charmed to know that the concept originated from Africa and especially from Sudan. The Takaful concept generally works on the basis of an agreement made by the participant of the Takaful model, in the model each member agrees that they are insured by participating in the pool. Each participant contribute to the pool, the fund from the pool is used both to compensate claims and also invested in a shariah compliant investments. We were so privileged to be visited by dignitaries from the Insurance Regulatory Authority and the association of Kenya insurers (AKI) who were delighted to know more about the products that are on offer at our stand. Trade Minister Honorable Chirau Ali Makwere came to visit our stand at the village and was so captivated by the Takaful model and our products, the minister was accompanied Insurance Regulatory Authority C.E.O Mr Sammy makove and AKI C.E.O Mr. Thomas Gichuhi. The minister was so thrilled to hear from our dedicated team who were at hand to explain the uniqueness of the model and our custom made product for the Kenyan market.

10

A bond beyond insurance

Takaful News

Insurance for All in the Society

Takaful is of crucial importance to all human activities, it needs

t is clear that one of the main objectives in Takaful theory is to co-operate in mitigating risk. And Poverty being of the risk that is facing society needs the intervention of the important sectors in the economy. insurance products should not only be directed to the strong in the society but also the weak sectors in Societies so as to achieve this objective and to protect our Takaful experiment from Failing in what our prophet Mohamed (PBUH) prohibited. This should not be depicted in designing product for the fortunate in the society and exposing the poor masses to risks, the prophet peace be upon him (PBUH) prohibited the discrimination of poor from rich in all situations even in very personal issues such as Social occasions like wedding meals, and this principle need not be overlooked by the innovators and leaders of Takaful. The poors needs must be our base to progress for innovation in Takaful products so as to realize our vision and grow the trust in Takaful system from every sector of the society. The recent Takaful products may meet the needs of all people across the board, and also TIA is dive deep in research to develop products that will be beneficial to not alone the high and the mid income earners but also the poor, rekindle hope and ambition to our poor, and as well develop our country as a whole. It goes without saying that there are sectors in society which are more vulnerable to threats and poverty than others, among such sectors are the agricultural sectors especially the livestock industry, Surprisingly although many economic sectors are at risk, arguably the livestock sector is at a greater risk compared to others given how the situation is currently in Kenya especially in the pastoralists societies and the larger horn of Africa region. Currently there is adverse drought which is battering the larger northern Kenya which is inhabitants largely depend on livestock for livelihood. Pastoralist in northern Kenya who are currently suffering large losses in this droughts would have been in better position if they were offered livestock insurance for their animals. In some scenarios insuring livestock for pastoralist is proving to be nearly impossible due to difficulties in authenticating the validity of death of animals over a large and far-flung area. Currently the pilot scheme is being experimented with around a thousand farming households who are expected to pay between 3.25% and 5.5% of the value of their herds to insure them for a year and Payouts will depend on the predicted mortality levels. Pastoralists can use insurance both as a get around against

to cushions pastoralist from the shock of disastrous losses ensuing from insured perils, Constitutes an acceptable security to the banks to offer required financing and facilities; it gives pastoralist greater confidence in making additional investment.
drought which is a threat that has become more common in this region due to climate changes and also to increase their earning potential. To build the insurance model, which will cushion pastoralist against such calamities is what they have been yarning for all those years a model that will make them fill that they belong, a bond that will take them beyond insurance for them to secure their livestock from such calamities like drought and diseases. For I believe now the takaful Model has plans to develop such kind of products to help the pastoralist society in Kenya. The takaful model has the capacity to develop such kind of products that will surely surpass a bond beyond the expectation of the pastorlist. Takaful is of crucial importance to all human activities, it needs to cushions pastoralist from the shock of disastrous losses ensuing from insured perils, Constitutes an acceptable security to the banks to offer required financing and facilities; it gives pastoralist greater confidence in making additional investment. We have a responsibility to prove how we contribute in poverty alleviation efforts with other financial institutions. Introduce innovative products that suites all social classs needs, and on the other hand we are hoping that the Government to at least push for proper legislation for the Takaful industry and also level platform for equal development and healthy competition, we are also required to come up with accessible and affordable products which can have a direct impact on the livelihoods of the poor. Finally we are bound to satisfying the needs of our client and also protect their property in ethical manner.

Takaful Insurance of Africa Limited

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A bond beyond insurance

Guest closely following the officail opening of TIA Mombasa Branch

The chief guest Mr Issa Timamy cutting the ribbon during the official opening of TIA Mombasa branch, looking on is former Chief khadi Sheikh Hammad Kassim.

Chief Guest Mr Issa Timamy receiving a gift from TIA Chairman Eng. Abdirahman Omar Sheikh, and C.E.O Mr Hassan Bashir at the official launch of TIA Mombasa Branch.

IRA C.E.O Mr Sammy Makove signing the guest book at our stand during the Nairobi International Trade Fair, looking on is AKI Chairman Mr. Stephen Wandera with TIA staff

A visitor signing the guest book at an awareness campaign held by our Mombasa team

Trade Minister Hon. Chirau Ali Makwere receiving a gift at our stand on the recently concluded Nairobi International Trade Fair. Takaful Insurance of Africa Limited

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Our mosque assurance campaign team after completing the first campaign at Parklands Mosque. Standing from left: Abdinoor Adan, Abdirahman Derow, Mohamed Dahiye, Abdirahman A. Omar, Sylvester Gaitano and seated from left Fahima Bille A bond beyond insurance and Asha Hassan

T.I.A C.E.O Mr Hassan Bashir chatting with ABC Bank C.E.O. Mr Shamaz Savani at an Iftar Dinner held at Laico Regency Hotel by TIA for Muslim faithfuls during the Holy month of Ramadan.

Guests enjoying dinner held for our clients during the Holy Month of Ramadhan at Laico Regency Hotel.

TIAs Halima Saadia explaining T.I.A product to a visitor at our stand at the Nairobi Muslim Academy career exhibition.

T.I.As Mohamed Naji at a public awareness campaign in Mombasa.

Takaful staff enjoying a celebratory dinner at Crowne Plaza Hotel after collecting a premium 100milion for the first four months of operation.

Officials from Transnep Insurance agency receiving certificate of appreciation from our C.E.O Mr Hassan Bashir for being the No: 1 agent for the first 4months of T.I.A operation

Rehani House Branch Manager, Kenneth Ireri talking to a client inTakaful Insurance of Africa Limited his office.

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Takaful Commentary

The Birth, Rise And Progress of the Takaful Concept

akaful is an Arabic word which is derived from the term Taawun, or mutual assistance. It is a noun stemming from the Arabic verb Kafal which means to take care of ones needs.

Takaful as a concept refers to a principle of Insurance that is based on mutual co-operation, solidarity and togetherness among the participants of a pool. Takaful participants come together in the spirit of brotherhood to safeguard and guarantee each other against defined perils and misfortunes. Risk sharing and communal ownership of the pool by all members is the theme of Takaful. Although it is widely acknowledged that Takaful (mutual cooperation) existed among Communities and early Muslims in different forms, Takaful as we know it today started in the Sudan in 1979. As a need driven concept, Takaful in Sudan was necessitated by the growth of Islamic banking and the objective to provide Shariah compliant and comprehensive Insurance services. Since Then Takaful Spread to Malaysia in 1984 which has also since been a pioneer market in Takaful developments by the enactment of the Takaful act of 1985- the first such regulatory. A number of Fatwa rulings including the Fiqh academy ruling of 1985 declaring that conventional insurance as haram (forbidden), while insurance based on cooperative principles, sharia compliance, and charitable donations are acceptable and have also contributed to the progress of Takaful globally. From this humble beginnings Takaful has grown to become a phenomena in the global economies with an estimated premium of USD 1.5 Billion in 2010 and about 170 Takaful Companies, 200 Takaful windows( conventional players offering takaful) and also 20 Re-takaful Players. Takaful trends in Africa Despite being considered as the birth place of Takaful (by virtue of origin in Sudan), the development of Takaful in other African countries has been slow. This is a factor mostly attributed to lack of regulatory environments, low purchasing power and poor perception of insurance in general in these markets. Nonetheless the huge Muslim population in some of the countries, growth in technology and economies and the ideal principles of Takaful is predicted as a revolution in this nascent markets and is thus projected as a big growth field for Takaful players and concept in general. Takaful In Sudan As the universally recognized birth place of Takaful, Sudan has been a pioneer of both Takaful regulations and developments. In 1992, the government decided to apply the Islamic principles (Shariah) in the countrys economy, all sectors including insurance, started operating under Islamic principles hence becoming the first country to enact such blanket legislation in appreciation of the tenets of Islamic finance.

Abass Mohamed
The Takaful Model in Sudan The Takaful system operated in Sudan was the basic model of co-operative Islamic insurance. Under this system, policyholders pay contributions (tabarru) into a fund where they share risks based on the principle of mutual co-operation (Takaful). Any surplus of the fund must be reserved or distributed. More so the companies law number 1925 stipulates that there should be shareholders to establish an insurance company in order to ensure continuity. Accordingly, takaful companies in Sudan are founded as shareholding companies, but operate the basic system of Takaful. Shareholders, in addition to remuneration received for running the company, only have the right to receive their return on invested capital. The Sudanese Insurance market despite its historical position as a pioneer of Takaful continues to face low penetration ratios and economic challenges. Low income levels of the Sudanese, high inflations, lack of competent underwriting, among others continue to plague the market. Overall, the challenges facing the Sudanese market are similar to those in other Arab and African markets, and it would take some time to be overcome. However, with the local takaful industry experiencing significant growth in recent years, the Sudanese market is poised to participate actively in international takaful development. Not surprisingly, Sudan was the country chosen to base the headquarters of the Federation of Islamic Insurance and Takaful Companies (FIITC). The Vice President and Secretary General are from Sudan and are based in the Sudanese capital.

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Takaful Commentary
Takaful in Kenya Kenya is the biggest economy in the east African Market and boosts of significant growth and uptake of the Islamic Finance Concept. With a Muslim population estimated at 10-20% of the 40 Million, Kenya has significant potential for Islamic Finance. So far two fully fledged Islamic banks operate with a considerable number of other conventional banks offering Islamic banking on windows. The First Takaful operator in The Kenyan Market was licensed in January 2011 and Launched in March 2011 with a capitalization of close of Kenya shillings 650 million. Takaful Insurance of Africa has a stable outlook and is one of the best capitalized companies in the Kenyan Market. Takaful Insurance of Africa comes to the Kenyan market as an alternative Concept aimed at increasing insurance penetration and improving the perception and image of Insurance locally. The model is designed to Abass Mohamed explaining a point at a recent training serve people of all faiths and backgrounds, conducted by TIA despite the reference to Shariah laws. We are simply providing an ethical sound product. Anyone willing to be managed under the fundamentals of This is done in the spirit of mutual co-operation and solidarity fairness, justice and responsibility is welcome. We believe among members. these are the fundamentals that underline all religions. This concept of Takaful and tailor made products of MicroTakaful have the great potential to significantly contribute to growth of the African economies and support to the masses. Through effective and efficiently priced products that identify and meet the needs of the low end and the poor people, Takaful is short-cut to progress and improves livelihoods of the low income earners. The concepts of takaful thus resonate with insurance, where the bottom line is no profits for shareholders and poor servicing of claims but one of clarity and transparency with the welfare of members at heart coupled with surplus sharing and distribution.

Other countries in Africa with takaful presence are, Senegal, Gambia, Algeria, Libya, South Africa with one takaful provider each, Mauritania with two takaful providers and Egypt with five takaful players.
THE PROGRESS AND POTENTIAL OF TAKAFUL IN AFRICA The common denominator in the African economies is poor masses and need for community and society/welfare improvement. As seen recently African economies have also been growing significantly as shown by the interest from both East and West countries. Micro Finance has been identified by many as a key framework and program to end poverty and provide livelihood to many. Since its beginning in Bangladesh by the Grameen founders, Microfinance has changed many lives and has been applauded as the best too for support and selfsustenance. Takaful and Micro Takaful in particular, refers to and relates to the mutual concept of safeguarding each other and ensuring support and indemnification at the moment of need.

Thus, if properly packaged and presented to even the poorest of people, Takaful is a great concept that is set to promote the safety and security of the people who needs it most. This is the reason why Takaful is an alternative and the right idea of insuring the poor and un-insured masses in Africa.

Abass Mohamed is the Corporate Risk and Research Manager

Takaful Insurance of Africa Limited

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Takaful Commentary

Takaful Regulation in a Conventional Set-Up

akaful is a concept of Insurance that is based on the principles of mutual cooperation and togetherness among a pool of people who safeguard and secure each other jointly. Globally, Takaful refers to the above co-operative Insurance under Shariah guidelines that also abhor certain Insurance operation including investing in interest bearing instruments, underwriting non-ethical risks and ensuring justice and equity as highlighted in contract and daily operations. Takaful, has grown phenomenally since its birth in Sudan in 1979 as an alternative Shariah Compliant choice. Today more than 170 fully fledged Takaful operators and approximately 200 Takaful windows exist globally with estimated gross written Premium more than Kenya shillings 500Billion. This shows a phenomenal growth and uptake of Takaful despite its humble beginnings and slow start. A Takaful window refers to where a conventional Insurance company operates and runs a Takaful department. The conventional insurer will be able to operate both Takaful and Conventional Insurance products side by side within its operations but managed differently in accordance with the different underlying principles. Takaful windows often segregate the funds independently and are overseen by a Shariah Advisory Board/Council that provide Shariah inputs and ensure compliance. Whether, it is a case of the rising number of the Takaful windows or the set-up of fully fledged Takaful companies, takaful as a concept is growing fast in many countries and parts of the globe. As the number of Takaful operators increase in tandem with the awareness and appreciation of the concept, more focused is going towards regulation of Takaful. Established Takaful markets in Asia and Africa have put in place laws that regulate the Takaful industry, thereby solicit the question. Can Takaful be regulated under conventional setup? Does this ensure proper regulation and adequate protection for the participants? Do regulators have enough knowledge and understanding of the Takaful concept, operations framework and Shariah guidelines? This and other concerns have led to multiple discussions and debates about the regulation of Takaful under conventional set-up and the viability and or acceptability of such arrangements.

Ummi Bashir

Operations of Takaful:
The operations of takaful are guided by the choice of model and the contract between the takaful operator and the participant (Policy holder). These operations must be transparent, clear and free of any tenet that may render the Takaful contract null as per laws of contracts in Islamic jurisprudence. Particularly for Takaful, this laws include ensuring that Interest ( Riba) either in investment or operations, Uncertainly and gambling is freed from the process. It is worthy to note that the wisdom of conventional insurance to pay for claims or keep the proceeds is interpreted as transfer of risk and akin to gambling from Shariah definitions. Hence operationally, to achieve/ ensure proper regulation of Takaful, The regulators need proper infrastructure that can enable them supervise the operations of Takaful in a clear and precise manner while adhering to the founding principles of the concept? Such enhanced regulation needs hands-on understanding of these operations to elevate the fears that Takaful operators are just Shariah compliant on paper

Investment of funds and Investment Income

Takaful operators can only invest in Shariah compliant instruments. Where investment income is derived, depending on the model, the investment income is either shared with the policy holders or declared entirely to the policyholder without sharing at all in the income as seen in the Wakala models. Screening of Investment instruments for compliance needs enhanced understanding of Shariah guidelines on investments and calls for the regulators to have precise understanding of the

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Takaful Commentary
portfolio mix and at what levels such portfolios become Haram (prohibited). Further, where a limited number of such instruments are available, a further development of such frameworks in liaisons with the financial market need more open regulation that allows for significant offshore investment and management is required. The pertinent question here also remains, can regulators achieve such understanding of the investment frameworks and regulations needed. Further, can conventional regulators ensure that depending on the model, clarity and segregation of funds is achieved? With respect to The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIF), The Islamic Financial Services Board (IFSB) and other institutions that have also developed reporting frameworks for investment income, declaration and allocation, Can conventional regulators also understand Islamic financial reporting? is a fundamental in Takaful operation. The key question is again under conventional reporting and supervision can such segregagation and separation of funds be achieved? Will a mix and unclear reporting be condoned? If such separation cannot be achieved and enforced clinically, can Takaful provide optimal value?

Treatment of Surplus/Deficit
Surplus distribution and declaration plays a fundamental role in Takaful. Through surplus declaration elements of Uncertainty and gambling are eliminated from operation and complete equity and mutual solidarity is achieved. It is prudent that the distribution framework is also regulated at supervisory levels as this also has a further capacity to either tilt the playing field in favor of Takaful or just act as an empty promise. Can conventional players regulate and monitor this process? What is the level of involvement of regulator Actuaries and Commisioners in the above? Further, where a deficit exists in the fund, how is such deficit managed? Is it fair that the shareholders provide Qard input or can the participants also share in such deficit?

Shariah Advisory Council/ Boards

A Shariah Advisory council is usually compromised of a team of Shariah experts learned in fiqh-ul muamalat (Islamic jurisprudence) and provide guidance and supervision to Islamic Financial institutions. Its members come from sharia, legal, economics and insurance professions. This shows that the Shariah Boards/Councils at supervisory levels play a critical role. As it is mandatory in Takaful/Islamic financial operators to establish Shariah Boards of at least 3 members, Can conventional regulatory Authorities provide adequate supervision without such Shariah council Inputs?

Takaful, has grown phenomenally since its birth in Sudan in 1979 as an alternative Shariah Compliant choice.

Where a Takaful operator goes down or winds up, how are funds treated? These are also further pertinent question that need takaful regulatory frameworks with compromise/understanding of certain guidelines specific to takaful

Reporting and segregation of funds

This refers to ensuring the shareholder and risk fund resources are not mixed in the operations of Takaful. Segregation of funds ensures transparency and ownership of the funds collectively by pool members. Through segregation of funds, investment income, wakalah fees, surplus/deficit can all be analyzed properly. Hence, without proper segregation of funds, the Takaful concept is akin to the conventional principle and the entire program will be compromised. The segregation depends on characteristics of the investment instruments and purposes of the investments. Accounting treatments and disclosures that Islamic financial institutions have to carry out are to be based on this segregation. Similarly, the new accounting guidance note on First Time Adoption of AAOIFI Accounting Standards provides Islamic financial institutions with the starting point for preparing financial accounting records and reports based on AAOIFI standards. Thus separation of shareholder and participant funds, ensuring proper accounting and reporting of such funds segregation and providing for clear frameworks

CONCLUSION
As noted in IFSB issues paper of 2009: The differences between Takaful and conventional insurance clearly have regulatory implications. For example: A Takaful operator has an obligation to ensure that all aspects of the insurance operations are compliant with Shariah rules and principles. To do so, it will draw on in-house religious advisers, commonly known as a Shariah board. The Takaful operator will be representing to policyholders, either explicitly or implicitly, that its operations are in accordance with Shariah rules and principles. Some regulators would consider they had a responsibility to ensure that such representations are well-founded. In a Family Takaful plan there are generally no guarantees (i.e. they operate on a defined contribution rather than a defined benefit basis). This implies that the risk profile is different from the standard insurance product, where guarantees are normally given in terms of maturity

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Takaful Commentary
benefits, surrender benefits and death benefits. This has implications both for capital adequacy and for disclosure to consumers. The solvency regime needs to reflect the location of risk. For example, if there is a deficit in the underwriting fund, how strong is the obligation on the operator to give an interest-free benevolent loan, and what account should be taken of this in the solvency regime. This raises the issue in practice of whether liability can be extended to policyholders investment accounts. Because policyholders share in any surpluses and, in principle, meet any deficits in the underwriting pool, there is a need to determine how their shares should be determined. At present different companies follow different policies in this respect. Because investments must be Shariah compliant, a Takaful firm cannot invest in conventional interest-paying bonds, or in certain types of equity (brewers being an obvious example). There are also limitations on the use of derivatives, for example to hedge currency risk. The asset risk profile will therefore be different from that of a conventional insurer. It is inevitable that as the industry progresses and takaful operations expand the need for proper guidelines on such regulation will be needed especially form conventional regulators who license Takaful and have to contribute to the development of the concept. As a beginning, most of the challenges regarding knowledge and expertise will be faced, and many will mention Dharura as factors in such regulations but it is paramount to understand that certain aspects like establishment of Shariah Boards at regulatory levels inform the core of ensuring compliance and just for the policyholders and is thus a mandatory feature for all regulators if takaful is to be recognized and properly regulated. Such a Council/boards while carrying out the wider regulatory function will provide impetus, research, development and enhancement of the regulatory frameworks as markets expand. It is thus notable thus, the formation of such a council is critical to the conventional regulator for purposes of Takaful regulation and development as a beginning point. It thus is paramount for takaful understanding by regulators as they are the masters and the ultimate supervisory body that must enhance and safeguard the welfare of the participants and the concept.

These are only examples, but they should be sufficient to indicate that regulatory regimes developed for conventional insurance cannot necessarily be applied uncritically to Takaful. All the above points and factors highlight the need for proper understanding of the Takaful framework by regulators.

Ummi Bashir (LL.B & PG.D-Kenya School of Law)

A New Dawn in East Africa

Takaful Insurance of Africa Limited

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Takaful Commentary

T
GDP

The prospect of Takaful in East Africa region

he East African Community comprises of five intergovernmental entities that includes; Kenya, Uganda, Tanzania, Rwanda and Burundi, with its head quarter in Arusha, Tanzania. The EAC aims at widening and deepening co-operation among the Partner States in, among others, political, economic and social fields for their mutual benefit. To this extent the EAC countries established a Customs Union in 2005 and a Common Market in 2010. The next phase of the integration will see the bloc enter into a Monetary Union and ultimately become a Political Federation of the East African States. The regions population (2009) was estimated to be 133.5 million, and a GDP of US$74.5 billion, which translates to GDP Per Capita of US$ 558. GDP growth rate for the year 2009 averaged 4.7% a drop from the previous years 7% growth. Agriculture is the predominant source of income followed by wholesale and retail manufacturing. The region has a very low insurance penetration level, standing at an average of 1%. Kenya has the highest penetration level in the region, at 2.6% of the population having insurance policy. The three big economies of the region had mixed growth rate for the insurance sector putting Kenya in a prime position as the regions torch bearer in the market, the following data explains further.

Kenya
Population No. of Ins. Companies Gross Premium Market Penetration 38 Mil US$22.4bil 44 US$646.57mil 2.6%

Uganda
20.7 US$12.93bil 21 US$ 76.4bil 0.6%

Tanzania
42.7 US$15.93bil 24 US.126mil 1%

East Africas prospect looks appealing to TIA given the regions low penetration (99% of the population) and also considering TIAs unique proposition of having financial protection that is not just a liability to the individual and the business, but also gives back in form of dividend and shared profits.

Bridging the Barriers

For TIA to succeed in the EAC region, it will have to avoid the pitfalls faced by other insurance companies which is concentration in the urban region, fewer products that targets certain sectors, and over pricing of insurance products that puts the product beyond the common mans reach. It is essential to emphasis on the unique proposition of the Takaful concept that focuses more on the risk sharing aspect to that of risk transfer adopted by the insurance companies in order to communicate the benefit of taking up a takaful cover rather than that of insurance products Whereas a Muslim clients insurance needs was limited to Takaful Insurance of Africa Limited

the required 3rd party cover for motor vehicle owners and the mortgage cover, a requirement for home loans, the vast insurance products that an individual and a business customer can access was beyond their reach due to religious restriction on having a conventional insurance policy, a non-Muslim client is devoid from such restrictions.

Approach to the market

To begin with, TIA has to set the market segment it will serve, and analyze the segments attractiveness. Even though the takaful concept is based on the taawuni principle, TIA will be risking the shareholders funds as well as the participant funds if it chooses a segment that will prone to high rates of claims. Therefore the most important approach will be having a pre-selected screening process given the frequency and the severity of the claims arising from the chosen segment.

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Takaful Commentary / Information

Secondly, another key differentiator will be product pricing. Conceptually, Takaful products are not necessarily cheaper than conventional products; this may be a challenging factor if not understood well by the market. Pricing strategy will work well with the market segmentation that is adopted, where every segment is priced differently. The assumption is that corporate clients will have slightly different contribution as compared to the individual contributors. The individual contributors can further be segmented along income level to high and low incomes. Thirdly, Islamic finance is in its infantile stage in the EAC market, with Kenya been the driving force given the presence of three Islamic financial institutions. The market requires proper education and sensitization on the principles of Islamic finance and its benefits. It is without doubt that the larger populace of the region may view Islamic insurance as Muslims only venture which is not so, TIA will have to carry out a wide awareness campaign to remove this misconception in order to reach out to the wider populace. Fourthly, for TIA to succeed in any market, it needs to invest in its human resources if it has to stand out from the crowd. Thus far, TIA is advantaged to have employees who have the requisite Islamic financial know-how in its ranks; however, a more company knowledge creation hub will be quintessential to the institutions future growth in the industry. Finally, for TIA to be successful in the EAC region it will have to develop its Kenyan market which is promising given the figures from the first 6 months, a lot of work is required for the TIA community to steer the company to start break-even point. To reach there, the company will face several challenges including lack of developed market for investments, information asymmetry, suspicions from the Muslim consumers regarding the Shariah aspect of takaful, among others. Mohamud A. Kassim Business Development Manager

Claim Process Simplified

any people say that its almost impossible to be compensated by an insurance company when you have a claim, other believe that Insurance contracts is like gambling. You and the insurance company are betting on the likelihood of you filing a claim and the amount of that claim. Submitting a claim on your home or motor policy is very simple here in takaful. To make a claim you dont have to wait until our offices are opened you can report the claim on our emergency helpline which operates 24-hour. When you do make a claim you should expect to be sent an accident report form, however well be happy to take all of the details over the telephone if necessary. It is important that you take the opportunity to ask us what precisely we require you to do and what evidence we will be expecting from you to support your claim.

Motor Vehicle Inspection report (for third party claims) Copy of the Drivers Driving licence And any other information that our officers may ask for to help process the claim.
Unfortunately, theres no cut-and-dried formula for determining when to involve your insurance company and when to keep your problems to yourself. Not reporting about an accident youve caused is a risky maneuver, however, if another driver was involved and there were injuries, or you had a passenger. While youre legally not required to make an insurance claim, you probably should notify Takaful of what happened if theres a chance someone else could make a claim on your policy. We would not wish be caught an aware by surprise claim on a participant policy by a third party. Its good if you could let us know your version of events on the record. In a worst-case scenario, your company could use your failure to report the accident as a reason not to pay your defense costs if you are sued. We encourage our entire participant to report to us any accident or incident that may be involve with a subject matter insured with us. You can reach us on any claim that you may have through our helplines 0737808010 or 0753808010 and you can also send an email at info@takafulafrica.com.

In the event of a loss you should report to us immediately. Our officers will ask youre to provide the following documents:
Report to the police immediately and thereafter to Takaful through our helpline Take any necessary measure to reduce the effect or damage to property Do not admit liability of any kind Provide all the information to the police and make a statement to the police if they ask how the accident occurred, but do not admit fault. Fault for a motor vehicle accident is not always clear Get Police Abstract Report
Takaful Insurance of Africa Limited

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Domestic Package Takaful

Our homes are pillars of identity and comfort, to have an ethical and trustworthy partner for the security and stability of our homes is critical.

DOMESTIC you that Takaful gives PACKAGE guarantee to safeguard your property TAKAFUL
Takaful Insurance of Africa Limited

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A bond beyond insurance

The concept of Family Takaful

amily Takaful is a contract that protects individuals against financial losses resulting from death. Thus, contrary to common understanding or belief Family Takaful refers to a procedure where individuals can engage in investment plans with multiple of effect of financial protection to offsprings and dependents at deaths or investment income. Family Takaful provides Participants with a protection and long-term savings. A participant of the Family Takaful pool or their beneficiary will be provided with financial benefits in case of a tragedy. At the same time, the participant will enjoy a long-term personal savings because part of the contribution will be deposited in an account for the purpose of savings. Thus, one will be able to enjoy investment returns from the savings portion based on a pre-agreed ratio. Family Takaful seeks to administer one form of uncertainty in our daily life called pure risk. Pure risk exists when there is no potential gain, only possibility of loss. In daily Life, the possibility of financial loss to dependents and family in case of death of bread winner is always pertinent. The role of Family Takaful is to share in the risk of financial and enable members plan ahead and mitigate to safeguard dependents from adverse effects. As such members of a family Takaful fund both enjoy investment avenues and the ability to jointly pool resources and help ease the burden of the family as a result of the demise. This is a concept that is encouraged and upheld by Shariah and Islamic teachings as the plight of widows, orphans and families is always a priority.

Types of covers available under Family Takaful Include:

Ordinary family Family Takaful, depending on the needs of clients to achieve investment linked protection and save for long term plans like education and mortgage. Individual family Takaful (individuals) The plans include education, mortgage, health and riders. You will receive financial benefits arising from death or permanent disability, as well as long-term savings (investment), and investment profits that are distributed upon claim, maturity or early surrender. Group family Takaful (employers, clubs, associations and societies) The plans include group education, group medical, health and riders. A minimum number of participants are required to qualify under these plans. You will receive protection in the form of financial benefits arising from death or permanent disability. 2) Annuity a plan that provides regular income upon retirement of an individual who has a Family Takaful policy. The income could be disbursed on monthly basis or on lump sum depending on the needs of the client 3) Investment-linked By virtue of a Family Takaful policy, a participant could get access to investment opportunities and bigger returns following membership into a big fund and pool resources managed by professional fund managers and trustees in accordance with Shariah.

Operations of Family Takaful

When you participate in family Takaful, you will contribute a certain amount of money to a Takaful fund. Part of the contribution will be placed in the form of participative contribution (tabarru) and the other part for savings and investment. The contribution in the form of tabarru will be placed in a fund (Participants Special Account or PSA) that will be used to fulfill your obligation of mutual help to the pool and other members, should any of the participants face a misfortune arising from death or permanent disability. If you survive until the date of maturity of the plan, you will be entitled to share the net surplus from the fund. The Takaful operator will invest your savings and investment contribution (Participants Account or PA) and the profit will be shared between you and the Takaful operator according to a pre-agreed ratio.

Conclusion
Globally, Family Takaful has provided Muslims with the capacity to mitigate against risks, make long term plans for education and mortgage, save for eventualities while still ensuring Family wellbeing is placed under utmost consideration and Shariah guidelines on Investments and Inheritance is safe guarded, Under a Family Takaful scheme, the plan is not to insure Life or Stop death but to emphasize on reducing financial implication to dependents and adverse effects on widows or orphans following deaths of family members. This is a noble idea. Takaful Insurance of Africa does not currently provide Family Takaful, but has plans to roll out such policies and benefits in the near future.

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A bond beyond insurance

Burglary Takaful
The TIA Burglary cover provides insurance against loss or damage of property insured resulting from theft accompanied by forceful entry and exit from the premises. Other contents damaged by thieves while breaking in or out of the premises are also covered.

Take Burglary Takaful and enjoy the peace of mind that comes with preparation.
Takaful Insurance of Africa Limited

23 www.takafulafrica.com

A bond beyond insurance

Takaful Information

Staying Safe on our Roads

Safety tips for drivers

Buckle up with a properly fastened seat belt no matter how short the journey is. Protect children travelling in your vehicle. Use child safety seats according to manufacturers instructions. Make sure teenagers buckle up. Keep your hands on the wheel and your mind on the task at hand. Never use your cell phone while driving. This is risky. Never attend to make up or eat while on the wheels. Your life is more important. Stay alert always. Check traffic in all directions before entering an intersection and Watch for pedestrians, bicyclists, motorcyclists and children playing. Obey the speed limit Slow down when road and weather conditions are poor and always obey speed limit Give yourself a space cushion, Leave space around your vehicle so that you have room to stop or maneuver in an emergency. Always check your blind spot, be aware of other drivers blind spots. Can they see you? Yield the right-of-way, be cautious when approaching intersections. Make the smart choice - Alcohol, medication, fatigue or stress affect youre driving. Drive only when you are fully alert. Have your vehicle serviced regularly. A well-maintained vehicle is a safe vehicle. At Takaful Insurance of Africa, we well like to wish all our esteem participants a happy and safe festive season. Save a life and stay safe!

A new policy of reckless driving, complete dis regard for traffic rules and drink-driving in particular seem to unfolding and taking over from the Michuki one. Amongst various modes of transport, public service vehicles are responsible for large percentage of the road accidents compared to private cars and utility vehicles. A high percentage of accidents are attributed to mass transport modes in Africa, while in the rest of the world mass transportation is the safest means and accidents are mainly due to speeding and drunken driving common to passenger cars. The Takaful family took time to compile for you tips on road safety for pedestrians and drivers.

Safety tips for pedestrians

Stop, Look, Listen and Think before crossing the road; NEVER assume that a driver has seen you and will stop for you. Before crossing the road. Think about whether the approaching driver can see you; Always cross at a pedestrian crossing, traffic signals or at a pedestrian refuge; If there is no pedestrian crossing facility, choose a location where you have a clear view of approaching traffic and where drivers can see you; Be seen. At night wear reflective clothing such as a wrist band and clear colours Always avoid crossing on a bend Never let a child cross the road alone. Children learn about safety by watching adults, so set a good example by observing road safety discipline.

Takaful Insurance of Africa Limited

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SA AY F

he months of December and January bring holiday parties, family gatherings and various social events.

IVE SAF R

It is a time of celebration, but it is also a dangerous time to be on the road. New Year, chrismas and traditional holidaying time for families and many more festivities come in these months. Statistics show that this the time of the year when many accidents occur for various reasons and many innocent lives are lost. Unfortunately, road safety trends in Kenya are worsening with the reluctance of the Michuki policy, which advocated for a maximum speed of 80 kph and that all vehicles must be fitted with safety belts and the failure of the alcoblow.

ST

A bond beyond insurance

From all of us at

We wish you a Happy Festive Season

The Chairman, Board of Directors, Management and Staff of TIA wish all our esteemed participants a Happy Festive Season. We thank you for embracing Takaful and we are proud to be your preferred Insurer.
Takaful Insurance of Africa Limited

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A bond beyond insurance

A Fresh Approach to Insurance

HEAD OFFICE CIC Plaza, 3rd Floor, Mara Road, Upper Hill Tel: +254 (20) 2725134/5 NAIROBI CBD BRANCH Rehani House, 2nd Floor, Koinange Street Tel: +254 (20) 2222744/5 EASTLEIGH BRANCH Madina Mall, 1st Floor, General Waruinge Street Tel: +254 703281148 MOMBASA BRANCH Oriental Building, Ground Floor, Nkrumah Road Tel: +254 (41) 2313435/6

P.O. BOX 1811 - 00100, Nairobi, Kenya, Email: info@takafulafrica.com, Website: www.takafulafrica.com