A six months plan to expand into auto and other insurance products
The US-based insurer, American International Group has offered Takaful, an Islamic homeowners insurance in the US, with a six months plan to expand into auto and other insurance products – reported MEDILL Reports Chicago.
Currently, Takaful in the US is issued through AIG’s underwriting subsidiary, Risk Specialist Companies, along with Lexington Insurance. New York-based Islamic financial services firm, Zayan Finance is the exclusive broker for the product, which is presently offering Takaful in 13 states. Substantially, that number is expected to increase.
Through AIG Takaful Enaya, AIG first began offering Takaful health, auto, and property and casualty products in Bahrain in 2006. The concept of Takaful insurance was first introduced in Malaysia and was spread to other Muslim countries such as Saudi Arabia, Indonesia and Pakistan.
Matthew Power, president of Risk Specialist Companies, in a news release, said: “We are pleased to offer socially responsible solutions to this segment of the domestic market.”
Nasser Nubani, spokesman for Zayan Finance, said that Takaful pools are jointly owned by the policyholders and are “a separate entity from the insurance company.”
The policyholders would pay into the pool with the intention of helping the community in case of accidents, fully expecting that the money may not be returned. In case of a surplus, the money is distributed back to the policyholders. Takaful is a way to avoid gambling or speculation.
Karen Hunt-Ahmed, assistant professor of finance at DePaul University, said: “Conventional insurance is based on speculation in the sense that you’re speculating how long a person may live or whether or not your home will be damaged. She informed that Takaful insurance would be a way of managing risk without the troubling aspects of speculation.
Takaful companies are not suppose to invest their policyholder contributions in banks and other companies that earn profits through interest. They can be invested in real estate, stocks of companies that don’t deal with interest and other non-interest investments. Another hurdle for Takaful is that it operates for the most part outside the reach of state insurance regulators.