Year Family takaful
USD millions %
USD millions %
USD millions %
1998 55.0 36.6 91.6
1999 70.0 27% 42.7 17% 112.7 23%
2000 93.2 33% 49.8 17% 143.0 27%
Source: Bhatty (2001)
As the takaful and co-operative concepts are so similar, there is no real obstacle for the more established co-operative movement to assist the takaful movement in providing insurance products to poor Muslims across the world . Over the last year, ICMIF has held discussions with key players in the takaful movement and proposed support by providing; technical expertise, partnership with existing co-operatives, co-operative reinsurance cover and assist establishing a global presence to harmonise and promote the takaful concept. With no existing insurance schemes available, takaful products in Islamic countries will protect the middle and working classes from falling into poverty in the event of a large loss. Establishing ‘microtakaful’ schemes enables insurance to become much more acceptable and accessible to the poor whilst still maintaining the benefits and principles of a co-operative.
3.7. - Summary
In developing countries the provision of insurance products to the poor has been done with a certain degree of success through co-operatives, credit unions and other community or group based saving mechanisms. The co-operative structure is also appropriate for accessing the Muslim population in developing and even developed countries. However, the scope of protection and extent of coverage to the poor is limited to the risk bearing capabilities of the entity, which is very small. It has been estimated that low-income households can only protect themselves up to 40 percent of losses through informal risk coping mechanisms (Brown & Churchill 1999). To enable a higher coverage over a wider range of risks to the poor on a sustainable and viable basis there are a number of challenges that the micro-insurance provider still has to overcome.
• Technical expertise - co-operatives do not possess the necessary insurance expertise to provide a wider range of products on a prudent and sustainable basis.
• Regulations - high capital requirements mean that insurance schemes remain in the informal sector. Operating illegitimately, the rights of the policyholder and the operating practices of the provider remain outside the control of regulatory bodies. Without a license, insurance schemes are unable to obtain reinsurance cover and are limited to the coverage they provide.
• Globalisation - the liberalisation of insurance markets in developing countries is threatening the existence of small domestic niche players serving the interests of the poor. The influence of multinationals on government policy to raise capital requirements and force small players to merge is making it more difficult for informal mechanisms to succeed and grow.