Being properly insured is essential. Yet, for the world?½fs Muslims, conventional insurance as seen in Japan and in Western countries is incompatible with Islamic principles.
      Enter Takaful, an Islamic insurance concept that has existed, in various forms, for over a millennium and that is based on a philosophy of a “mutual guarantee” within a group of participants. Today, insurance products based on this system are growing in popularity throughout the Muslim world.
      Mr. Atsuhiko Ayabe of Tokio Marine & Nichido Fire Insurance talks about the company’s Takaful business, and the growing Islamic finance market.
Atsuhiko Ayabe,
Expatriate staff of Kuala Lumpur,
Tokio Marine & Nichido Fire Insurance

What is Takaful?
Takaful is Islamic insurance. Based on a mutual assistance structure, it is designed to meet the needs of Muslims by eliminating features of conventional insurance, such as interest, uncertainty and elements of gambling, that contravene Islamic principles. The world’s first Takaful insurance product was created in Sudan in 1979, and the product concept has spread gradually ever since. Contributions are accumulated in mutual assistance funds. These are managed by Takaful companies, which levy fees. Benefits (insurance payments) are paid not by insurance companies, but from the funds.
Why have Takaful companies become so common?
In 1999, our joint venture partner in Saudi Arabia told us that Islamic Finance would grow in the future. This prompted us to establish a pilot operation there in 2001. It was assumed that conventional insurance would not be accepted in Islamic countries, and it was very uncommon. However, when Tokio Marine & Nichido Fire Insurance, a company with a history dating back 130 years, launched a Takaful business in Saudi Arabia, people immediately recognised it. Japan has a favorable image, and we were trusted from the outset. After you visit people five or ten times, they start to give you business out of a sense of loyalty and obligation. We are now the clear leader in the Takaful business, with operations in Saudi Arabia, Indonesia, Singapore, Malaysia and recently in Egypt.
How do you view the outlook?
In the near future, one in four people in the world will be Muslim. In Malaysia, Takaful contributions increased by 48.6% in 2007, and similar growth is expected worldwide. A major advantage for Tokio Marine & Nichido Fire Insurance is the fact that it has products based on in-depth understanding of Islam. I am confident that we will be able to assist when Japanese companies start to use Islamic finance.
On a different note, you wanted to include a personal message in this article.
Yes, that’s right! I would like to take this opportunity to express my gratitude to the members of the Mitsubishi Boat Club for the great time we had at the Henley Royal Regatta in the United Kingdom in July 1990, 1992 and 1994. It was truly a memorable experience!
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