GamEconomics Factor With Yankuba Mamburay:

By Yankuba Mamburay, Atlanta, Georgia

The need for us the Gambians to educate ourselves about Islamic Insurance, commonly known as Tackaful, has grown tremendously with the establishment of Takaful Gambia Limited not too long ago. Though not in a formal setting as today, the concept of Takaful has been in existence for the past 1400 years. Some Muslim scholars were somewhat apprehensive about the need to have insurance companies that conduct their transactions based solely on Islamic rules and regulations. This is because many had the belief that there was no point to establish such companies as long as Muslims do what they are supposed to do by giving out alms, Zakat, helping the poor and the needy, etc.

However, the complexity of business transactions has been amplified by growing globalization. This has made it possible for Muslims, Christian, Jews, Hindus, Buddhists, pagans, nonbeliever, etc. to enter business transactions with each other on a daily basis. It would not take long for Muslims to understand the need to come up with practical ways of conducting businesses without necessarily abdicating their religious beliefs and practices; thus the birth of Takaful companies.

In the same vein, some conventional insurance companies, such as AIG, one of the heavyweights of our global economy, decided to be more practical by adopting this concept of Islamic Insurance. How many people, including Americans, know that one of the largest companies in the world, a Western company, such as AIG (American International Group) that was at the forefront of U.S. stimulus program recently, is practicing Islamic insurance? Here is what the head of the AIG Global Takaful said at the inception of their Takaful department:

“Having witnessed the diversity and vast growth of the Takaful Insurance Market, we at AIG as a premier International Insurance leader launched AIG Takaful-Enaya in 2006, as a regional company headquartered in Bahrain, providing Shariah Compliant Insurance Solutions (Takaful).”

By the way, what is Takaful? Takaful is an Islamic insurance concept in which participants pool funds together with the ultimate objective of not making profit but reciprocally guaranteeing one another through mutual cooperation, mutual responsibility, and mutual protection. Individuals are invited to participate by making contributions to the Takaful fund with the company. In case a participant suffers any mishaps, for example loss of a car to a fire accident, the company takes care of the problem, just as a conventional insurance company would do. At the end of the day, profits are shared amongst the participants according to their contributions. Profits are only distributed after determining that all obligations have been taken care of such as salaries of workers and management, loans, etc. All the funds have to be invested and transacted according to the principles of Muamalat (Islamic banking transactions).

That is why Takaful is based on either Mudarabah, or Wakalah. Mudarabah is the more common of the two, based on profit sharing where each participant, including the company itself, contributes and shares in the profit and losses. In the case of Wakalah, it is just like an agency where the participants select a management team (which could be a company) which they pay to manage the funds and take care of all their Takaful transactions. Here too, profits are shared at the end of the period but the agent or the fund manager is only paid a fee which could be in the form of salaries. The wakil (agent) may not participate in the sharing of profits.

The concept of Takaful can be drawn from Surat’al Baqarah, verse 178:  "It is not righteousness that you turn your faces towards east or west but righteousness is whoever believes in God and the Last Day and the angels and the Book and the messengers; and spending out of his wealth for His love towards kin, and orphans and the poor and the wayfarer and those who ask and the freeing of slaves and those in debt; to be steadfast in prayer and practice regular charity; to fulfill the contracts which you have made; and to be firm and patient in pain or suffering and adversity and throughout all periods of panic. Such are the people of the truth, the God-fearing." (Quran 2:178).

Islamic financial transactions (Muamalat) are guided by the principles of risk taking, riba (interest) avoidance or prevention, justice and equity, and the avoidance of haram and indulgence in halal. These are the guiding principles of both Islamic banking and Islamic insurance. Both concepts are now of paramount importance for companies, conventional and Islamic ones, and that is why giant Western companies such as Standard Chartered Bank and AIG have both decided to adopt the concepts in their business dealings. AIG now offers products such as:  
- Accidental and Health Takaful 
- Casualty Takaful 
- Crisis Management Takaful 
- Energy Takaful 
- Marine Takaful 
- Property Takaful

In Malaysia, the Malaysia Takaful provides Life (family) and Medical & Health products, in addition to a host of other products. In The Gambia, Takaful Gambia Ltd. (TGL) offers products such as Fire and General Accident, Marine, Medical and Motor Takaful. The concept, in its modern form, is young but it is taking pace throughout the globe. It is a concept that can be used both Muslims and non-Muslims.

Yankuba Mamburay is the author of the non-fiction book: “The Search for a Lost Brother.”