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Takaful A PILOT PROJECT IN C ANADA

Takaful A PILOT PROJECT IN C ANADA. Mohammed Jalaluddin, MS Vice Chairman, Islamic and Ansar Cooperative Housing Corporations President, Ansar Financial 1825 Markham Road Toronto, Ontario M1B 4Z9 CANADA. TAKAFUL – ISLAMIC INSURANCEON. Roots of Takaful are in Islamic Finance

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Takaful A PILOT PROJECT IN C ANADA

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  1. TakafulA PILOT PROJECTIN C ANADA Mohammed Jalaluddin, MS Vice Chairman, Islamic and Ansar Cooperative Housing Corporations President, Ansar Financial 1825 Markham Road Toronto, Ontario M1B 4Z9 CANADA

  2. TAKAFUL – ISLAMIC INSURANCEON • Roots of Takaful are in Islamic Finance • Prohibition of Riba • Prohibition of Gharar • Exclusion of Financial Transaction in any prohibited activity • Risk Sharing • Materiality in a Financial Transaction • Justice in a Financial Transaction

  3. TAKAFUL DEFINITION • Takaful is defined as, Guaranteeing each other, a shared guarantee or a shared responsibility, a cooperative concept of mutual assistance and mutuality.. • Like Islamic Finance, Takaful or Islamic Insurance is generally even less understood in the Muslim Community and some may self conclude as NOT allowed.

  4. CONVENTIONAL INSURANCE ISSUES • Conventional Insurance involves the trading of Risk in the process of which pure risk (on the part of the policyholder) becomes speculative risk (on the part of the insurer). • There are elements of Uncertainty (Gharar) in the transaction. • Insurance companies invest in Bonds (carries interest) and may hold equities of companies involved in prohibited activities.

  5. ISLAMIC FINANCE IN CANADA • Our efforts to implement HOLISTIC Islamic Finance in Canada. • Pioneered First Islamic Housing Cooperative in North America in 1980. • Followed by Interest-Free Islamic Investment opportunities for Muslims, RRSP etc.. • Takaful Pilot • First Interest-Free Public Corporation in North America.

  6. TAKAFUL in canada chronology • 2005 Ansar Cooperative Housing takes membership in International Co-operative &Mutual Insurance Federation (ICMIF). • Sabbir Patel, Vice President, ICMIF helped us a lot, as a start, by introducing us to the President of The Cooperators Insurance Company of Canada. • Since the principles of Takaful are closely aligned with co-operative and mutual principles, negotiations started with a fellow ICMIF member, the Cooperators for a Property Takaful for Islamic Ansar and Qurtuba Housing members.

  7. TAKAFUL CHRONOLGY Contd… • Cooperators motive and intention was to develop a NEW market and at the same time help a fellow member establish its own Takaful in the long run. • Over two years of rigorous work, several meetings to understand each others positions, Sharia requirements of Takaful and conducting demographic and risk reviews. • The cooperators offered only Property Takaful to Housing members in 2007, followed by Auto in 2008.

  8. TAKAFUL CHRONOLGY Contd… • We agreed that ALL premiums and Surplus Funds are invested separately in Sharia Compliant Investments and maintained in a separate book of business. • After meeting expenses and claims, surplus/profit is shared by the policyholders and cooperators on an agreed ratio.

  9. TAKAFUL results - initial • Low Claims • 100 % policy retention rate • Low Loss Ratio

  10. TAKAFUL challenges • Lack of Canadian Fixed Income Investment products (70% regulatory requirement) • Lack of Sharia compliant Investment Opportunities • Lack of Competent Local Sharia Scholars • Extensive Takaful education/seminars required

  11. TAKAFUL opportunities • Large Muslim Population in Canada, over 1.2 Million and other ethically minded customers. • Islamic Finance is better understood and practiced well in Canada than in USA. • Potential bigger Muslim population next door in US can be mobilized. • Great potential for overseas Takaful Operators

  12. TAKAFUL AND ISLAMIC FINANCE - FUTURE • For Takaful and Islamic Finance to succeed in the West it must be able to demonstrate its special qualities to the consumer and that it is as good as the conventional Finance. • Takaful and Islamic Finance is not limited to Muslims. It is another product line which avoids dealings in Interest, emphasis on the sharing of risk, transparency and investing only in Ethical, Socially and Environmentally Responsible Investments that promotes a healthy life style and sustainable development.

  13. Sharia role • The role of Sharia in Takaful is that of an overall reviewer and monitors Sharia adherence, an additional layer of scrutiny, the business decisions remain with the Management as is the responsibility that investors are treated fairly. • The resurgence of Islamic Finance after a brief period of absence requires extraordinary efforts by all stake holders not to deviate from its principles and demonstrate once again its proven viability Globally.

  14. TAKAFUL CONFERENCE CANADA 3RD INTERNATIONAL ISLAMIC BANKING, FINANCE & INSURANCE (TAKAFUL) CONFERENCE "Islamic Banking, Finance & Insurance (Takaful) in North America: Opportunities & Challenges" Held at Ottawa Congress Centre, Ottawa, Canada in May 2007 Website: www.ansargroup.com/conference Password to Download Presentations: 2007ansar883

  15. Get More Information From Anywhere/anytimeVisit: 1825 Markham Road, Suite 105 Toronto, ON M1B 4Z9 t: 416.609.2642 e: info@ansarfinancial.com www.ansarfinancial.com

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