Takaful Insurance: Two other firms get NAICOM’s nod

Two takaful firms have been granted provisional approval by the National Insurance Commission (NAICOM) to run their operations in Nigeria.

The two Takaful firms, Cornerstone Takaful Insurance Company Limited and Salam Takaful Insurance Company Limited were granted this approval as composite operators to perform family and general Takaful operations in Nigeria.

The Details: This came after NAICOM granted licenses to Noor Takaful and Jaiz Takaful, bringing the total number of Takaful operators to four insurance companies in Nigeria.

Explaining the reason for an approval in principle, the commission said the provisional approval was in line with the drive of the regulators for increasing insurance penetration and opening the country for more insurance inclusion while ensuring that the new firms abide by the guidelines set for them.

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Conditions for approval: The Commission promised to issue an operating license to the firms after it obtains evidence of the following:

• a conducive business environment at their head offices,
• the establishment of an infrastructure dedicated to ICT; and
• the appointment of a head to oversee the facility.

What you should know: Takaful is a type of Islamic insurance that operates according to sharia or Islamic law tenets. It majorly covers health, life and general insurance needs. In this type of insurance, members contribute money into a pool system to guarantee each other against loss or damage. Any claims made by participants are paid out of the takaful fund.

The movement has been praised as a means of providing superior alternatives to insurance that reinvigorate human capital, emphasize personal dignity, community self-help, and economic self-development. This means the insurance is premised on human tenets.

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Under Takaful, people and companies concerned about hazards make regular contributions (“donations”) to be reimbursed or repaid to members in the event of loss and managed on their behalf by a takaful operator. Like other Islamic finance products, Takaful is grounded in Islamic Muamalat (commercial and civil acts or dealings branch of Islamic law).

What this means: Both Cornerstone Takaful Insurance Company Limited and Salam Takaful Insurance Company Limited will be able to offer both options of Life Insurance and Non-Life Insurance after NAICOM lifted the ban on composite insurance last year.