Speaking on the new Insurance option, Vice-Chairman Chartered Insurance Institute of Nigeria (CIIN) Oyo State Chapter, Babatunde Omosola, stated at the 2013 media retreat in Ibadan, Oyo State that Takaful Insurance has attained about 70 per cent penetration in the country.
He noted that in other countries, Takaful products were bought by non Muslims due to some of attractive features, which were not offered under conventional products, but in Nigeria both the Muslims and the non Muslims buy the product.
He gave instance of the Eastern states where the sale of Takaful insurance had been very high when compared with the Northern states, adding that the implication of this trend was a promising market and potential growth for Takaful business.
On claims payment in Takaful insurance, he said that business claims were paid to those unfortunate policyholders/shareholders who suffered some insured losses within the period of cover, adding that they were compensated from the pool and reinstated accordingly.
He however identified re-Takaful and Takaful risk as some of the challenges confronting the products, adding that the shortage of re-Takaful capacity and the lack of companies in the market currently present great challenge to operators.
He noted that the challenge was to have a large enough Takaful market to justify re-Takaful business.
The Ibadan Chapter Vice Chairman said that Takaful risk is one of the greatest challenges that the Takaful operators faced worldwide was the rating system and that in conventional insurance there were standard rates for fire, motor, life and other lines of business prepared by actuaries, adding that this was not available in Takaful Insurance and that there is yet no scientific method or model for rating risks in Takaful insurance.
He added that the high rate risk of default by beneficiaries of Takaful and lack of efficient risk management tools to eliminate fraud and other risks was also a big challenge facing the business.
He also identified the absence of an effective risk management tool which can effectively eliminate fraud and other risk in the system as well as the absence of reinsurance capacity for Takaful insurance.
He also said that the absence of credit information in the market and moral hazards.
source: Nigerian Compass