A valuable new World Bank publication stresses the links between mutual and cooperative insurance and takaful, the fast-growing Shariah compliant alternative to insurance.
The book, Takaful and Mutual Insurance: Alternative Approaches to Managing Risk, was launched at a well-attended conference held in Istanbul, Turkey in mid-November. The conference itself provided an overview of mutual insurance structures (including Christian and Jewish examples) in the context of takaful development. It also explored ways in which takaful structures could be applied to the microinsurance markets in emerging economies with large Muslim populations.
“The book seeks to increase the understanding, appreciation, and discussion of the challenges and solutions needed for the active development and implementation of takaful,” said Serap Gonulal, Senior Financial Sector Specialist, World Bank. “It attempts to develop a hybrid model of takaful, benefiting from existing models established around the world and bearing in mind compliance with Shariah rules and consistency with the culture of Muslim communities.”
Opening the conference, World Bank Managing Director Mahmoud Mohieldin, reminded his audience that takaful was based on the concept of social solidarity, cooperation and mutual support. “Essentially, takaful is a cooperative institution in the same spirit as the early cooperative movements that took shape on Europe and in the Americas in the 1800s. These movements share the same fundamental values, promoting voluntary association, enhancing inclusion, ensuring accountability for strategic decisions and supporting the communities that they serve,” he said.
ICMIF Senior Vice President Sabbir Patel, one of the contributors to the World Bank publication, was another speaker at Istanbul. He stressed in his presentation the importance of the mutual and takaful movements working together. As he mentioned, ICMIF already has many takaful providers in membership of the Federation, as well as running its dedicated takaful website and producing a regular Takaful newsletter.
Sabbir Patel also emphasised the importance for ICMIF and its members of developing Shariah compliant forms of microinsurance. “The next big thing is microtakaful, and we have a real opportunity to be at the forefront of this development,” he says.