Takaful - a new market for UK mutuals · 2019-10-16 · Ajmal Bhatty, CEO & Managing Partner,...

MassesGlobalLLP

Ajmal Bhatty, CEO & Managing Partner, MassesGlobal

CONFIDENTIALNOTFORGENERALDISTRIBUTION

Takaful-anewmarketforUKmutuals… insurancebasedonethicalprinciples

B r e a k o u t S e s s i o n @ 1 5 . 0 0 Mond a y , 1 4 t h O c t o b e r 2 0 1 9

Financial&InsuranceAdvisoryFirmLondon,Dubai

W:https://www.massesglobal.orgE:ajmalbhatty@massesglobal.org

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MassesGlobalLLP2

Takaful is Insurance …… ..... but its norms are closer to Mutuals

u  Theinsuredpaypremiumsintoamutualfundtoprotecteachotheragainstinsuredperils.

u  TheShareholdersenablethismutualitytotakeplaceoncooperativeprinciples.

u  Themutualityandcooperativeprinciplesareabout equityandfairnessinthevalue-chainofsocialgoodness.

u  TheDNAofTakafulandEthicalFinanceistomaintainaBalancedFinancialEnergyforthegoodofPeopleandPlanet;thefinancialenergybeingtheProfitmadeinfairandequitableways.

TakafulForUK|ASupplyGap|Under-servedDemand

MassesGlobalLLP

• Customerspaysmallamounts(premiums)forbigamounts(claims)andshareholdersmakeprofitifclaimsarenotmany,… like gambling

Speculation(Maysir)

• Aclaimmayormaynothappen.Premiumsbecomethepropertyofinsurancecompanyinexchangeforapromisetopayifaneventhappens

Uncertainty(Gharar)

• Abigpartofreturnoninvestedpremiumscomesfrominterestandfrombusinesses/industriesnotalwaysgoodforus(alcohol,smoking,harammeat,pornetc)

Interest(Usury–Riba)

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Conventional Insurance Why it is unacceptable ?

TakafulForUK|ASupplyGap|Under-servedDemand

MassesGlobalLLP

EDINBURGHDECLARATIONSHAREDVALUESFRAMEWORKFORETHICALFINANCE(UKIFC)

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SOUNDMORALPRINCIPLES(STEWARDSHIP)

WealthisatrustfromGod

LOVEOFTHENEIGHBOURGenerosityandaltruism

towardsothers

SUSTAINABILITY&PURPOSEFULNESSMoralobligationtoplacetangiblesocietalpracticesandprocessestopreserveearth’s

limitednaturalresources

JUSTICE&EQUITYFairness,equityandjusticeinone’sfinancialdealings

COMMONGOODEconomicactivityseekingtopromotemutualbenefit

HUMANFLOURISHINGPromotingandprotectingprosperity

beyondthefewtothemany

SHAREDVALUES

Commontoall

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MassesGlobalLLP

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2

34

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AVOIDINGUSURY(GREED)MoneyisGod-givenenergyforthe

collectiveserviceofall,andnotjustfortheSelf,inmakingourworldabetterplace

MUTUALITYAsystemthatchannelsfinancial

energynotjustforprotectingeachotherbututilizingcapitalforthe

benefitofothers

RESPONSIBLEINVESTINGMoralobligationtoplacetangiblesocietalpracticesandprocessestopreserveearth’s

limitednaturalresources

TRANSPARENCYFairness,equityandjusticeinone’sfinancialdealingsandmakingprofitinthemostequitableways

COMMONGOODEnablingindividualstochannelcorporatefinancialenergynotjustforprotectingtheirownlivelihoodbutalsothePlanet

RISKSHARINGAffordablewaysofprotecting

livelihoodtomaintainprosperityoffamiliesandcommunities

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TakafulForUK|ASupplyGap|Under-servedDemand

TAKAFUL’SROOTSARECOMMONANDFOUNDINALLRELIGIONS

ETHICALVALUES

Commontoall

MassesGlobalLLP

TAKAFUL&ETHICALFINANCEDNA=BALANCEDFINANCIALENERGY

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34

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AVOIDINGUSURY(GREED)MoneyisGod-givenenergyforthe

collectiveserviceofall,andnotjustfortheSelf,inmakingourworldabetterplace

MUTUALITYAsystemthatchannelsfinancial

energynotjustforprotectingeachotherbututilizingcapitalforthe

benefitofothers

RESPONSIBLEINVESTINGMoralobligationtoplacetangiblesocietalpracticesandprocessestopreserveearth’s

limitednaturalresources

TRANSPARENCYFairness,equityandjusticeinone’sfinancialdealingsandmakingprofitinthemostequitableways

COMMONGOODEnablingindividualstochannelcorporatefinancialenergynotjustforprotectingtheirownlivelihoodbutalsothePlanet

RISKSHARINGAffordablewaysofprotecting

livelihoodtomaintainprosperityoffamiliesandcommunities

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PEOPLEPLANETPROFIT

GOODFORALL

TakafulForUK|ASupplyGap|Under-servedDemand

MassesGlobalLLPRESTRICTED CIRCULATION ONLY

1.   Asia:8marketsMalaysia,Indonesia,Brunei,Pakistan,Bangladesh,Afghanistan,SriLanka,Maldives

2.   MiddleEast:8marketsUAE,SaudiArabia,Kuwait,Qatar,Oman,Bahrain,Jordan,Lebanon

3.   Africa:9marketsEgypt,Tunisia,Morocco,SouthAfrica,Kenya,Somalia,Sudan,Nigeria,Gambia

4.   Others:2marketsTurkey,Mauritius

Takaful industry worldwide

TakafulForUK|ASupplyGap|Under-servedDemand

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MassesGlobalLLP

u  Global:GWPUS$26bn,AUMUS$43bnin2016.

u  IslamicFinanceAUMsUS$2.2Trillionacross56countries,2016.

u  IslamicFinancepoisedtogrowtoUS$3.8trillionby2022.

u  UK,withitspost-Brexitdriveforglobalfinancialconnectivity,isexpectedtoplayasignificantroleinthisdevelopment.

RESTRICTED CIRCULATION ONLY

Takaful industry worldwide

TakafulForUK|ASupplyGap|Under-servedDemand

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MassesGlobalLLP9

u  TheUKhas3m+Muslims(approx.1.53madults,1m<15)

u  UKMuslimcommunityspendsanestimatedUS$4.5billionpaonlifeandnon-lifeinsuranceproducts(A2004UKsurvey).

u  9%ofMuslimsexclusivelyuseIslamicfinance,27%usesomeIslamicfinanceand45%willconsiderIslamicfinanceifpriceandserviceisright(MuslimCouncilofBritainResearch)

u  Iftakafulisoffered,asignificantproportionofUKMuslimpopulationwouldchooseTakafulovertraditionalinsuranceproducts(IslamicInsuranceAssociationofLondon)

RESTRICTED CIRCULATION ONLY

Takaful For UK

TakafulForUK|ASupplyGap|Under-servedDemand

MassesGlobalLLP

Takafulisboundbasedonsamescientificrulesandactuarialapproaches:

mortalityratesmorbidityratesaccidentratesclaimsexperiencediscountedcashflowspriceofriskevaluationofliabilities.

Takaful’s Technical Similarities

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TakafulForUK|ASupplyGap|Under-servedDemand

MassesGlobalLLP

TakafulworksbecauseofitsDNAofSocialGoodness.Anycompromiseonthisrenderstakafulsameasconventionalinsurance.TopreservethisDNA,aTakafulstructurewithinUKMutualshouldhavethefollowing:1.  Interest/debttobeavoidedfrominvestmentsbackingtakafulbusiness2.  Toinvestaccordingtostatedscreeningcriteriainassets,businessesand

instrumentsthatdon’thavenegativeimpactonsocialgoodness.3.  Alldocumentationandclientfacingprocessestobesimpleandclear4.  Distributionofunderwritingsurplusandinvestmentreturnstobefair

andequitable5.  Products,investmentfundsandsurplusdistributiontobealignedwith

statedTakafulprinciples.6.  RegularTakafulauditstoensurecompliancewithtakafulprinciples.This

isinadditiontothefinancialauditsandactuarialvaluations.

Takaful Specificities

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TakafulForUK|ASupplyGap|Under-servedDemand

MassesGlobalLLP

Takafulisdrivenbytheneedtoprovideprotectiononmutualprinciples.WithoutShareholderCapitalthiscooperativeapproachisdifficultinthisdayandage;buttakafulstructurescanbebuiltwithoutcapitalifthesystemcansupportbusinessviabilityandtechnicalsolvency.So,TakafulcanworkwithorwithoutShareholdercapitalforUKMutualsinthefollowingmanner:1.  UKmutualstooffertakafulproductsadheringtotakafulspecificities.2.  Investorcapital(viaDeferredShares)toinvestandsupportamutual

companyforanembeddedtakafulstructure,UKregulationspermitting.3.  AmergerofsomeUKmutualsbackedbyInvestorCapitaltoformoneor

morelargeranddynamicmutual.

Post-Brexit,(2)and(3)maybeawelcomedapproachandsupportedbytheUKgovernment.

Ways of Embedding Takaful Within UK Mutuals

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TakafulForUK|ASupplyGap|Under-servedDemand

MassesGlobalLLP

Ajmal Bhatty, CEO & Managing Partner, MassesGlobal

CONFIDENTIALNOTFORGENERALDISTRIBUTION

ThankYou

B r e a k o u t S e s s i o n @ 1 5 . 0 0 Mond a y , 1 4 t h O c t o b e r 2 0 1 9

Financial&InsuranceAdvisoryFirmLondon,Dubai

W:https://www.massesglobal.orgE:ajmalbhatty@massesglobal.org

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