Absa Embraces Takafol
Absa Insurance Company welcomes Takafol South Africa (Pty) Ltd to its portfolio of specialist underwriting managers. Takafol SA is the leading provider of Shari’ah compliant risk protection and has established an impressive growth record over the past three years.
Absa Islamic Banking began operations during March 2006 to provide the Muslim community with banking and financial products that complied with Islamic principles (Shari’ah).
“It is our goal to provide our clients with Islamic products that will enable them to meet their financial needs and goals within the requirement of their faith. We must therefore continue to add appropriate products to our core offering,” says Ahmed Moola, Managing Director, Absa Islamic Bank.
“Insurance is an essential part of a financial portfolio as it smoothes the financial impact of losses and lessens uncertainty about one’s future well-being,” says Coenraad de Jager, Managing Director of Absa Insurance Company, “and it made perfect sense to design and align a relevant product to support Absa’s offering to the Islamic community.”
Takafol is a form of financial protection, similar to insurance, which is designed to be compliant with Islamic principles (Shari’ah) and which is based on the principle of solidarity and mutual guarantee. It has been established in its modern form for over 25 years.
Firms that offer Takafol protection have significantly grown in both number as well as scale in recent years. Fitch Ratings estimates that global Takafol premiums amounted to around USD2.6bn for 2006 and expects that this figure will increase substantially over the next decade.
“Once we had researched the basic requirements of a Shari’ah compliant (Takafol) product, we realised that it would be more feasible to establish a partnership with Takafol South Africa, than to try and adapt our existing products,” continues De Jager, “and we’ve done just that. Through our access to the infrastructure and client base of the Absa Group, specifically Absa Islamic Banking, we are able to provide Takafol SA with a significant competitive advantage, and through their intimate knowledge of the Muslim market, Takafol SA provides us with an accepted, world-class Shari’ah compliant product and services range.”
Takafol SA currently provides its clients with Shari’ah compliant Personal and Business risk protection and will be extending this range to include various Life and Travel options.
Says Takafol South Africa Managing Director, Uwaiz Jassat: “Our approach at Takafol SA has always been to be the leader in providing acceptable products that answer the community’s needs. Our association with Absa not only enables us to broaden our product offering but, more importantly, it enables both Absa and Takafol to provide a more holistic solution to our clients’ needs.”
Internationally, Islamic finance is an important emerging area in the global financial markets. As a result, the demand for Islamic insurance (Takafol) is increasing, as this offers a faith-sensitive alternative to traditional insurance to ensure there are no ‘holes’ left by a lack of cover derived from religious points of view. Amongst the firms already offering Islamic insurance are Swiss Re, Allianz and AIG, who all have their own range of products that comply with the requirements of the Islamic faith.
Lloyds chairperson, Lord Levene, suggests that the market for Islamic insurance has grown rapidly and is one of the key areas for expansion of the industry in the coming ten years, particularly as services become more widespread and more developed by Western insurance groups.
There is significant growth potential that exists in Takafol, with many opportunities for innovative development of unique products, techniques and systems needed to fill gaps in insurance penetration in many of the markets around the globe.
Absa and Takafol SA will continue to develop their product offerings and will lead many new developments in South Africa and into Africa, to support Absa’s objective of pre-eminence.
Absa Insurance Company has an AAA rating from international ratings agency Global Credit Ratings (“GCR”), ranking it among the best credit risks in the insurance industry.
