Partner for International Cooperation AFC Consultants International Gmb

Partner for International Cooperation AFC Consultants International Gmb. H Dottendorfer Str. 82 D-53129 Bonn Tel. : +49 228 985 79 0 Fax: +49 228 985 79 79 www. afci. de Zuriah ABDUL RAHMAN Professor in Insurance/Takaful/Risk Management Arshad Ayub Graduate Business School Universiti Teknologi MARA, Malaysia

SUMMARY OF FINDINGS Partner for International Cooperation Step Up Efforts to Educating the Stakeholders ISLAMIC FINANCE & TAKAFUL LITERACY

ISLAM AQIDAH (Faith & Belief) Political 5 TENETS OF ISLAM (Rukun Islam) ▪ Syahadah ▪ Prayer (Solat) ▪ Fasting (Puasa) ▪ Zakat (Alms)/Donation (Sadaqah) ▪ Hajj SHARIAH [Ibadah (Practice), Muamalat (Business Transaction]) Economics Islamic Finance) Partner for International Cooperation AKHLAQ (Moral & Ethics) Social Takaful Tabarru’ Concept based on Donation (Sadaqah) Mutual Help to Create: ▪ Solidarity ▪ Shared Responsibility ▪ Brotherhood

Takaful Partner for International Cooperation Takaful Concept based on Donation (Sadaqah) Shareholders Fund Contributions from Shareholders and Owned by Takaful Operators Contract 1 -6 Tabarru’ Takaful Fund Contribution from Participants Owned by Participants Management Expenses Performance Fee PSA PA Claims, Retakaful Reserves (Actuarial) Surplus or Deficient – Qard Loan ▪ Investment Account ▪ Surplus ROI

DISTRIBUTION CHANNELS Partner for International Cooperation Short Term < 6 mths • Brokers & Agents • Banks (rural) • Cooperatives (Traditional & Islamic BMT, BTM) • MFIs & IMFIs (LKM, BPRS) • NGO Working Group. TAKMIN • Direct Selling • Telecommunication System (Partnership & Community Model) Medium Term < 12 mths • Post offices • Permodalan Nasional Madani (PNM) • Pawn Shop • Bank BNI, BRI, Mandiri • Indomaret • Western Union/Money Gram (7 MOUs have been signed except Western Union) (Partnership Model) Long Term < 24 mths • Bancatakaful • Employer Deduction (Worksite marketing) • Major commercial banks • Asuransi Sampah (Partnership, Full Service & Provider Model)

PRODUCT BUNDLING Partner for International Cooperation COUNTRY PRODUCT TYPES MALAYSIA ▪ Family Takaful & Bank Rakyat ▪ 1 Malaysia Micro Protection Plan for Micro Enterprise or Small Business (via banks) INDONESIA ▪ Credit Life & Micro loan ▪ Life & PA ▪ Motor insurance & Credit Life by ATK SRI LANKA ▪ Family & Education LEBANON ▪ Microloan & Family ▪ Agriculture & Health Insurance (85% govt. subsidy; 50% discount) SUDAN ▪ Microloan (IMFI) & Microtakaful (50% subsidy)

COMPLEMENTARITY OF MICROTAKAFUL & EXISTING HEALTH CARE BENEFITS Health Care is subsidized for poor Indonesia • (JKM) Jaminan Kesihatan Masyarakat ● BPJS national/social health care Microtakaful with Health Care Benefits (potential offer) • Hospital income benefits (HIB capped limit per day) • Medical cost (capped limit per year/life) Partner for International Cooperation Malaysia • 1 MMPP • Small business owners • HIB (US 7 = RM 20 per day) • UAE • Takaful Emarat for all manual workers (Sehat Plan)-Health care • US 156 – USD 27223/yr • US 147 - USD 13611/yr • US 139 – USD 6806/yr • • Lebanon Agriculture & Health US 5/-family/mth Subsidy 85%

DIFFERENTIATING TAKAFUL & INSURANCE ROLE OF REGULATOR MALAYSIA Partner for International Cooperation UAE Shariah Advisory Council appointed by BNM National Shariah Supervisory Board Surplus – rights due to participants from Mudharabah or Hybrid Model Division between Takaful Operators & Takaful Windows Takaful operations are Shariah compliant Proper presentation to policyholders on the Shariah compliance of operation Division between Individual Takaful: Family & Health & PA To Set-up Risk Management Department – best practices

MAIN CHALLENGES FOR MICROTAKAFUL Partner for International Cooperation Regulation Capital requirement Transaction Costs Risk Exposure & Risk Data Skilled & Qualified Personnel Insurance Act & IFSA 2013 RM 100 million (US 30. 5 million) High Inadequate Low - high Resolution 4, Takaful Insurance 2010 N/A High Inadequate Low - high SRI LANKA Unfavorable to Takaful investment High Inadequate Low LEBANON Insurance Act N/A High Inadequate Low ISA US 1. 1 million High Inadequate Low - high Insurance Act (min. for takaful) N/A High Inadequate Low Country MALAYSIA UAE SUDAN INDONESIA

MAIN CHALLENGES FOR MICROTAKAFUL Partner for International Cooperation Country IT Infrastructure Educational Background (Consumers) Number of Retakaful Operators Persistency Affordability MALAYSIA Low - High Low Insufficient Low - Medium From RM 10 (US 3. 5)/mth UAE Low - High Low Insufficient Medium - High From US 139/yr SRI LANKA Low Insufficient Low From US 0. 01/mth LEBANON Low Insufficient Low From US 10/mth per family Low -Medium Low Insufficient Low N/A Low (to improve on technology) Low Insufficient Low From Rp. 24, 000 (US 2. 06)/wk SUDAN INDONESIA

Partner for International Cooperation Thank you very much for your attention!