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Submitted by Jawad Iqbal on
Islamic Insurance industry is growing rapidly. The concept of insurance has been there in islamic societies since early dawn of Islam as Takaful. Different arab tribes used to pool in money and use it when any of the tribe was in need, due to natural calamities or damages due to war or droughts. Islamic mode of insurance advocates sharing of risk by all the pool of the investors. The law of large numbers accommodate mitigation of risk, but unlike conventional insurance the risk is shared and cannot be transferred to someone else without any participation. Hence the asset backed financing model of islamic finance is applicable in insurance as well. The growth of islamic finance is now evident by the massive size and outstanding growth rates of the industry. In coming years, we might see a reversal in trend of insurance, assuming that awareness regarding benefits and limitations of takaful is increasing and having a deep impact. This will require awareness campaigns and research work on takaful and its applicability in modern times. Considering religion as a barrier to growth of insurance, its better to understand the religious segment and its needs. We can augment their needs into our products like we do for any other product or segment.