Kampala- The recent amendments to the Financial Institutions Act (2015) and the Insurance Act (amended) 2011 have ushered in discussions on how the insurance industry can take advantage of these changes to spur growth over the next few years.
Key to these discussions has been the introduction of agency banking, bancassurance and Islamic financing and specifically for the Insurance industry, Takaful insurance.
“Takaful will allow for, among others, diversification in the products that the industry can provide to its ever changing and growing market and given that insurance penetration in Uganda is less than 1 per cent, we are confident that more and more Ugandans take up insurance with the introduction of takaful,” Ms Miriam Magala, the chief executive officer Uganda Insurers Association (UIA), said.
Ms Magala said they are cognisant of the fact that many people are still unaware about insurance in general and more so about takaful insurance.
“We have therefore signed a Memorandum of Understanding (MoU) with Alhuda CIBE to ensure the success of takaful in Uganda. Our partnership will extend to, among others, capacity building, product development, design and distribution, appropriate models for this market and advising on suitable regulatory frameworks,” she said.
Mr Muhammad Zubair Mughal, the chief executive officer, AlHuda Centre of Islamic Banking and Economic (CIBE), said Takaful insurance is the Sharia compliant brand name for the Islamic alternative to conventional insurance and is based on the principal of Ta’awan or mutual assistance.
Speaking at UIA’s Takaful symposium held in Kampala recently, he noted that although people generally think about Islamic financing or Islamic banking and insurance as only for Muslims, these services can be utilised by both Muslims and non-Muslims.
The symposium created the first of many platforms to discuss the streamlining of Takaful insurance extending to regulation, models, consumer awareness and product development.
About the product. Takaful insurance can be traced as far back as 1979 when the first takaful company was opened in Sudan. Since then more companies have opened in countries such as Malaysia, Pakistan, Iran and Egypt.