Insurance Firm Excites Market

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Give us a brief background of Takaful Insurance?
We are a four-year old company based in Kenya and now in Somalia. The Takaful Insurance office in Somalia has a significant shareholding from the local investors. It carries the same name, same brand, and same feel; more of a sister company. But it is independent of the Nairobi offices and is separately capitalised.

What is the vision behind the formation of the company?
In Kenya, we targeted the Muslim community with their unique risk management needs, although our doors were open to everyone.  In Somalia, we are doing the same; offering an avenue for investors, businessmen, individuals and institutions to manage their risks. How long have you been in Somalia and what is the progress that you have made since the launch… We have been in Somalia from the beginning of 2014. So far, we have four branches; Mogadishu, Hargeisa, Kismayo and Garowe. Why did you go to Somalia in 2014 and not before or after… We saw the risk profile of Somalia changing.  It might take time but the profile is changing. The Federal Government is in place, we see in the horizon, a secure and stable Somalia, which will be conducive for business. We also see a dynamic market. However, the most important factor is the ‘thriving intention’ to do business in Somalia. Risk management is a fundamental starting platform. Our reasons for venturing out into this market are simple yet profound. Somalia has not had any form of insurance for the past two decades. We saw the gap and moved
in to take charge. It has also been part of Takaful Insurance’s strategic plan to spread across East Africa.

What is unique about your insurance model?
Takaful differs from conventionally understood insurance cover in three ways. First, in a conventional insurance scheme, the insured person sells his risk at a price to another party, thus introducing an element of “gharar” (uncertainty) in the contract. Second, conventional insurers invest in ventures that involve interest or some form of activity, which goes against Shariah principles. Third, conventional insurance is not mutually beneficial, as certain individuals (shareholders, for example) benefit at the expense of others. In other words, commercial insurance companies exist to serve the interest of shareholders first, not policy holders.

You must be having a large team managing the Risk Fund then?
Takaful does not take part in the management of these funds. That is a preserve of the Shariah Supervisory Council.

Tell us about the products you have on offer?
At the moment, we can write covers on motor insurance, medical insurance, insurance against fire, burglary, personal and group accident covers as well as marine and livestock covers. Political Violence and Terrorism cover is also on offer. About Political Violence and Terrorism cover…this should be an area of interest for most investors… This is highly needed in Somalia, especially for large investments. The risk is high and what we do as insurers is to underwrite risks and to offer mitigation to the society. The need is there in Mogadishu and we are willing and able to engage with our clients on this front.

Of the above covers, which one is most asked about in Mogadishu?
Motor insurance. The need to know more about motor insurance is driven by people who have been living out of the country and have interacted with insurance in those environments that they have come from.

And which cover is most taken?
Medical cover, boosted by the fact that we offer covers for corporate- covering families through employee medical cover. Under such arrangements, depending on the family size and the earnings of the staff, we can offer Member (M)+4, M+5 or M+7 and such options. Depending on the specifics of the cover, such staff members and their family will have access to outpatient care, inpatient care, dental, optical and maternity care. We are in partnership with 10 hospitals in Mogadishu- 8 of which are private hospitals.

How do you go about handling claims?
We pay all our claims. Unless there is reason for us not to- usually this occurs when we realize that someone is attempting to cheat the company. There are basic rules, standards and procedures that are adhered to internationally. We use such standards but add our own procedural ethics to them. Take motor insurance for instance, the first step in case a client sees an opportunity of making a claim say after an accident  is to report immediately –within 24 hrs.

This can be done through our cover-specific hotlines. Once we receive the report, we will send assessors to prepare a report on the nature and magnitude of the accident. In case of injuries, we would need a medical report- especially if the client in question had medical cover. Once proven to be a genuine claim, we send everything to the claims department for processing.

Institutionally our rules demand that claim payments be made within 30 days of a report being made, but we do process claims in ten days or even less. In other words, in terms of ease and timeliness, if all the due processes is handled appropriately,  we can resolve claim requests within a working week.

Now that most institutions in Somalia are at their infancy, under what frameworks to you handle the legal aspects of offering insurance cover in Somalia?
It is true that most of the needed structures are underdeveloped in Somalia. The work on regulatory frameworks has started as we speak. So far, instructions on key processes such as business registration or what is needed for operation in Somalia have been formulated. As an insurer, we are interested in the Insurance Act, but this is yet to be developed.

But one thing that needs to be known is that the Somali people have always had ways of handling transactional maters in a traditional way and those methods have worked in the past.

What of the corporate structure of your firm…especially with reference to staffing…?
Takaful insurance has a clear corporate structure.  We do have technical limitations though and this forces us to work with international staff. We do have trained local staff also, and expect that technical institutions to come up and get involved in the local training processes. Our human resource is local, but not 100 per cent.  The technical and management team is mostly professionals from other countries.

What are the challenges that Somalia insurance industry has to face before everything gets better?
There are about three main challenges; inadequate technical human resource, lack of regulatory frameworks and insufficient needed insurance related institutions.

In your view, what is the current situation of the insurance sector in Somalia?
It is taking off.  We are on the ground. We have the capacity to offer risk management to the investors. All we need from them is their confidence in doing business with us.

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