Takaful Grows Worldwide

Islamic insurance concept is a growing alternatives to traditional insurance.

Traditional insurance methods are making way for new concepts, including Islamic-based Takaful, revealed Phillip Cook, CEO at Omega Insurance Holdings Inc. at the CIP Society Symposium on May 13, 2010 in Toronto.

 Though this system may be fairly new to the western world, Takaful has historical origins that are based on the principles of Sharia law, which has been practiced for over 1400 years.

 This insurance model stresses cooperation: policyholders pay a “subscription” (premium) to help those in need, losses are divided and liabilities are spread across a community pooling system. This eliminates uncertainty in terms of subscriptions and compensation, and no one receives an advantage at the cost of others.

 Additionally, Sharia legal proceedings are built on verbal evidence, so the need for cross-examination is unnecessary.

 When that principle is applied to Takaful, it means policyholders and insurers are bound by a state of trust. For example, when processing a claim, the insurer will believe the policyholder is telling the truth because your word is law.

 ”It’s just a simpler way of doing things,” said Cook.

 Takaful has grown at a rate of 10% to 20% worldwide over the last 15 years. There are over 60 companies, including Lloyd’s, that offer the Takaful concept, according to Cook. 

 ”As the Islamic population continues to grow here in Canada, Takaful may also become more noticeable here,” he said.

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