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Promoting microTakaful as a means to boost market share of Takaful

Updated: Wednesday 16 October 2013 - 10:51 Kategori: Umum Posted by: Admin

It is well known that around one-fifth of the world's population is Muslim. Unfortunately, most of them live in the low-income or lower-middle income countries. As a result, most of them are unable to participate in normal insurance or Takaful schemes.

The World Takaful Report 2012 released by Ernst & Young indicated that insurance penetration rates in Muslim countries are still very low. For example, in 2010, the insurance penetration rate for Indonesia, the world's most populous Muslim country, only stood at 1.5% while in Pakistan, the penetration rate stood at 0.7%. These figures are still below their potential levels. With relatively high population growth rate in most Muslim countries, this situation should be seen as an opportunity for Takaful operators to explore the microTakaful segment.

MicroTakaful can be defined as a Takaful scheme for low-income people. This segment is relatively untapped despite it having the potential to boost the Takaful market share. One of the practicable implementations of microTakaful is to support an Islamic microfinance scheme offered by Islamic rural banks and Baitul Mal Wat-tamweel (BMT). Ths policy is also known as credit life microTakaful.

The policy is used to protect against the death risk of a person who takes microfinancing from an Islamic microfinance institution. This scheme obviously benefits both the heirs of the deceased and the Islamic microfinance institution itself.

Through close cooperation with the Islamic rural banks, BMT, cooperatives and other Islamic microfinance institutions, microTakaful can offer substantial business opportunities for Takaful players. Another effective distribution channel is through microTakaful agents. In addition, educating the target market on the importance of having a Takaful policy should be the focus of microTakaful operators in order to successfully attract customers to participate in the scheme.

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