The World of Cooperatives and the Takaful twist by qingyunliuliu


									The World of Cooperatives and the
          Takaful Twist

   2nd Asian Conference on Takaful
            26 March 2007
      Overview of presentation

•   Cooperative and mutual principles
•   The global cooperative and mutual movement
•   Linkage with Takaful
•   Moving forward together
      Cooperative definition

“A cooperative is an autonomous association
  of persons united voluntarily to meet their
  common economic, social, and cultural
  needs and aspirations through a jointly-
  owned and democratically controlled

                  Source: International Cooperative Alliance (ICA)
      Cooperative/mutual values

•   Self-help, self-responsibility
•   Democracy, equality, equity
•   Solidarity
•   Honesty, openness
•   Social responsibility, caring for others
         Cooperative principles
•   Voluntary and open membership
•   Democratic member control
•   Member economic participation
•   Autonomy and independence
•   Education, training, and information
•   Cooperation among cooperatives
•   Concern for community

                                  Source: International Cooperative Alliance (ICA)
        Cooperative vs. Mutuals
Cooperative principles            Mutual principles

Open and voluntary membership     Free association

One member, one vote              User must be member
Limited interest on shares        "Not for profit”

For the benefit of user-members   Quality products

Cooperative education             Personal development
Cooperation among cooperatives    Solidarity
Providing access to services
Cooperatives and Mutuals: the
  hidden giants of the world

   The largest 300 cooperatives and
      mutuals have a turnover of
             1 trillion USD
             Worldwide importance of mutual insurers, 2001
                      Percent of total premiums

                 100% = 2416 bio USD



                                                25                19



Source: Swiss Re for worldwide total premium; ICMIF
                                                                                                                        VERY ROUGH
          Europe, importance of mutual insurance sector*, 2002
         Percentage of gross direct domestic** premium written                                                   •Mut + Coop + Joint Stock

                                                                                                                 •Mut + Joint Stock

      Finland                                                 Luxembourg                                         •Coop + Joint Stock
                                                ~69                                       ~16

      Sweden                              ~45                 Netherlands                 ~15

      France                             ~40                  Belgium                     ~15

      Germany                      ~30                        UK                       ~12

      Austria                ~22                              Italy                    ~12

      Slovenia               ~21                              Ireland                ~8

      Spain                 ~20                               Hungary                ~8

      Czech Rep.           ~17                                Denmark                ~8

      * Mutual and cooperative insurers; mutual insurers controlled by mutual holding
     ** Except Luxembourg and Ireland: domestic and foreign
Source: National supervisory authorities; Industry associates; Company web sites / annual reports, AISAM and ACME analysis
         Cooperative and Mutual
Name of Company   Country     GWP 2004
Zenkyoren         Japan       54 billion

Nationwide        USA         31 billion
Unipol            Italy       13 billion

Seguros Fedpa     Panama      120 thousand

CIS Pakistan      Pakistan    115 thousand
Cooperar          Venezuela   58 thousand
           Key success factors
         for cooperative insurance

•   Understanding and responding to customers needs
•   Value for money
•   Customer service and claims management
•   Policyholder = member
•   Instilling mutual values in staff
•   Prevention and risk management
•   Community concern
•   Financial inclusion
“Satisfied customers equal
     loyal customers”
Linkage with Takaful
      Cooperative/mutual values

•   Self-help, self-responsibility
•   Democracy, equality, equity
•   Solidarity
•   Honesty, openness
•   Social responsibility, caring for others
           Principles of Takaful

•   Solidarity and joint guarantee
•   Self reliance and self sustaining for community well being
•   Assist those that need assistance
•   Community pooling system
•   Shari’ah approved investments and products

                 “Bear ye one another’s burden”
      Differences between
    Cooperatives and Takaful

• Shari’ah-compliant investments and products
• Shareholder surplus participation
• Shareholder governance
“A cooperative and mutual scheme providing
  Shari’ah approved products and investments
  is permissible under Islamic Law”
• “… It is well known that in most non-Islamic
  countries there are cooperative and mutual
  insurance companies. There is no harm from the
  Shari`ah point of view to participate in these
  services. So, it is unlawful for a Muslim living in a
  country where there is such a cooperative
  insurance company to make an agreement with
  a commercial insurance company…..”

       Ruling by the European Council of Fatwa and Research
Cooperatives providing Takaful

•   NTUC Income - Singapore
•   Bumiputera – Indonesia
•   Takaful T&T – Trinidad and Tobago
•   Folksam - Sweden
•   The Cooperators – Canada
Moving forward together

• Established in 1922
• 174 members from 69 countries
• Not-for-profit, voluntary and member driven
• Regional offices in Brussels, Tokyo, Tunis &
• Represents 11% of total global premiums
     The Federation’s position

• “Principles of Takaful in line with cooperative and
  mutual philosophy”
• “ICMIF should support the development of the
  Takaful sector and increase awareness of
  cooperative and mutual form”

                    ICMIF Board of Directors meeting 2002
             ICMIF Objectives
• Help the development of the overall Takaful sector.
• Support the growth of individual Takaful operators.
• Assist Takaful companies to understand mutual and
  cooperative principles.
• Establish new Takaful schemes.
• Encourage the Federation’s members to set up Takaful
• Provide access to microtakaful products for the low-income
  sectors of society.
               ICMIF Takaful Members

•   Bangladesh - Prime Islami Life Insurance
•   Egypt – Egypt Saudi Insurance House
•   Indonesia – Bumiputera 1912
•   Malaysia – Takaful Ikhlas & Takaful Nasional
•   Qatar - Islamic Takaful
•   Saudi Arabia - International Islamic Insurance, Takaful Ta’awuni
    & SALAMA
•   Singapore - NTUC Income
•   Sri Lanka - Amana Takaful
•   Sudan - Islamic Insurance, Shiekan Insurance & Reinsurance &
    Watania Cooperative Insurance
•   Trinidad and Tobago - Takaaful T&T
•   Tunisia - Best Re
Learning from each other
       Experiences from the
      cooperative movement
• Good corporate governance and transparency.
• Challenges to demonstrate difference increases
  as size of company grows.
• Management have responsibility to instil Takaful
  principles and philosophy in staff and business
• Policyholder involvement can be a unique selling
  point and ensure customer loyalty.
        Experiences from the
       cooperative movement
• Consider social projects and increasing access
  to Takaful products for all the community.
• Greater cooperation between operators is
• Larger operators should assist smaller providers.

    “The customer must feel he is part of
             something different”
A Global reach for
  local strength
        Thank you

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