Excerpt from ICBA Advantage Issue 5 – Winter 2009/10
Takaful (ta-KAH-ful) or Shariah-compliant insurers offer coverage that can significantly complement "conventional" or Western-based insurers’ footprints in Africa, the Middle East and the Asia Pacific region.
In recent years, professionals in global business and trade finance have been hearing about Islamic Finance and Shariah-Compliant business models. For many, these concepts are confusing and somewhat intimidating.
Takaful comes from an Arabic word meaning "guaranteeing each other." It is based on the concept of mutual help or protection. The primary difference between Takaful and conventional insurance in the West is how risks are treated. In a Takaful structure, risk from individuals or organizations is shared with other individuals or organizations with a similar risk profile. Takaful or Shariah-compliant insurance complies with the requirements of Islamic law, while providing risk mitigation for investments and trade transactions. According to Ernst & Young’s 2008 World Takaful Report, the global Takaful market is projected to exceed $10 billion by 2010.
Many Takaful credit insurers function like government-run Export Credit Agencies, so Western firms with manufacturing facilities in Islamic countries, such as Malaysia, Indonesia or the UAE, can obtain coverage on exported goods manufactured in those countries, so long as eligibility criteria are met. ...
To learn more about Takaful Political Risk and Trade Credit Insurance, and about eligibility requirements, please read the full article in ICBA Advantage – Winter 2009/10, and contact Gayle Jacobs at ICBA USA at firstname.lastname@example.org.
(This article is excerpted from ICBA Advantage – The newsletter for trade credit insurance solutions, and based on a summary of an article from an International Risk Consultants, Inc. (IRC) newsletter. IRC is a globally-integrated trade-finance and credit insurance brokerage, and is the operating member of ICBA for Asia, Brazil, India and the USA.)