Is There Any Takaful Product For The Poorest? ISRA May Have The Answer

Is there any Takaful product for the poorest of the poor? Well, ISRA, the International Shariah Research Academy of Malaysia may find an answer for you by next year. If they can find a `right Islamic insurance product` to serve the bottom 40% of wage earners in the country, the model could be replicated in other Muslim countries as well. 

The Kuala Lumpur-based ISRA plans to collaborate with Insurer FWD Takaful in a one-million ringgit project to introduce Takaful (Islamic insurance) to the poorest 40% families in Malaysia.

ISRA Consultancy`s Chief Executive Officer, Professor Ashraf Bin Md. Hashim hopes to find a viable Islamic insurance solution to help the poorest families in the country meet their economic needs in the time of emergency. So far, the conventional and Islamic insurance providers in the country have mostly offered their services to the people who can easily afford it.

According to him, the proposed solution may need collaborative efforts by FWD, the insurer, the target customers, and the institutions of Zakat and Waqf which are already present in a Muslim society such as Malaysia.

However, the biggest challenge for the academic consultancy will be to find a win-win solution for all the stakeholders involved.

Some other Muslim countries such as Egypt have adopted similar approaches to provide a social safety net to the poorest of the poor in their societies. According to a recent World Bank survey, Egypt`s new conditional cash transfer programs known as karama and Takaful reached a half-million poor Egyptians successfully. The World Bank reports encourage the Egyptian government to continue expanding these Takaful programs to millions of other families in the country so that they could come out of the vicious circle of poverty.

In Bangladesh, micro takaful for the poor is growing at 13.5% annually. However, Mr. K M Mortuza Ali of Prime Islami Life Insurance Ltd. believes that the government has to improve its regulatory framework to further expand this unique form of insurance to protect the poor.

In Malaysia, financial institutions have been making concerted efforts to reach out to the poorest families to make them bankable.  The government has also initiated such programs to help the poor. Its MySalam Takaful scheme is already supporting 4.3 million people in emergency situations.

The study project jointly initiated by ISRA and FWD Insurer hopes to find even more ways to start offering comprehensive Islamic insurance coverage to the poor families in the country.