Ceylinco introduces Takaful insurance

by Elmo Leonard

Ceylinco Takaful Ltd (CTI), the latest addition to the Ceylinco conglomerate, last week introduced to Sri Lanka a new form of insurance, based on Islamic Shariah law. While, Ceylinco Insurance Company claimed to be the undisputed leader in life and non-life business in the local market it is part of the Ceylinco umbrella. Islamic insurance, in Sri Lanka will be limited to general insurance and not include life insurance.

Ceylinco Chairman, Lalith Kotelawala said that now, the Sri Lankan is afforded the choice of conventional insurance or Islamic insurance. CTI entered into an agreement with Shiekan Insurance and Reinsurance Co Ltd of Sudan (SIRCL) for the development of Takaful insurance in Sri Lanka. SIRCL, established in 1983 is reputed as the pioneer in Islamic insurance and has the biggest stake in the Sudanese private insurance business, with 70 percent of its market share, and ventures outside its borders.

Chairman of the Sudanese company, Dr. Mohamed El Rakabi, said at the launch of CTI in Colombo, that Takaful insurance emerged out of the necessity to have a system of insurance which is acceptable to Muslims, in compliance with Islamic Shariah.

Dr. Rakabi said that unless compelled by law or business requirements, Muslims avoid insuring their properties or liabilities simply because conventional insurance contravenes the Islamic law, being involved in the element of interest. Thus, Islamic scholars had come out with Takaful insurance.

Takaful is an Arabic word meaning guaranteeing each other, or joint guarantee. Here, a group of persons reciprocally guarantee one another. The people who participate in the Takaful insurance operation jointly guarantee among themselves to compensate against loss or damage that any of them may suffer due to calamities or perils.

In the eyes of Islamic insurance, conventional insurance companies collect a huge fund by way of premiums from a large number of persons and uses this fund to pay compensation for an unfortunate few. Very often the total premiums collected far exceed the total compensation paid together with operating expenses. Generally the surplus is retained by the insurance company as its profit. In Takaful insurance the surplus belongs to the policyholders.

CTI says that conventional insurance is more favourable to insurance companies than to the policyholder.

Shiekan provides insurance under all traditional classes of general insurance and specialised risks, including property and engineering; marine and aviation; miscellaneous accidents; agriculture; motor; medical; export credit, while the company has acquired a high professionalism in tailoring insurance packages to suit any project's specific requirements.

Shiekan has ventured further, putting in place a loss prevention department, the first service of its kind in both local and regional insurance markets. In essence, this service turns Shiekan into a partner of its clients in their concern to safeguard their properties.

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