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INTRODUCING TAKAFUL IN NON - TAKAFUL MARKETS: THE CIC KENYA EXPERIENCE

Presenter: Steve Muia Business Development Manager The Co-operative Insurance Company of Kenya Limited (CIC Insurance) Kenya, East Africa Email: muia@cic.co.ke Website: www.cic.co.ke. INTRODUCING TAKAFUL IN NON - TAKAFUL MARKETS: THE CIC KENYA EXPERIENCE. About Kenya Demographics

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INTRODUCING TAKAFUL IN NON - TAKAFUL MARKETS: THE CIC KENYA EXPERIENCE

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  1. Presenter: Steve Muia Business Development Manager The Co-operative Insurance Company of Kenya Limited (CIC Insurance) Kenya, East Africa Email: muia@cic.co.ke Website: www.cic.co.ke INTRODUCING TAKAFUL IN NON - TAKAFUL MARKETS: THE CIC KENYA EXPERIENCE

  2. About Kenya Demographics Overview of Insurance Industry in Kenya CIC Kenya Takaful Challenges Opportunities Conclusion Summary of Presentation

  3. Location: Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania Area:Total: 582,650 sq km Land: 569,250 sq km Water: 13,400 sq km Coastline:536 km About Kenya

  4. Population: 39,002,772 Age structure:0-14 years: 42.3% 15-64 years: 55.1% 65 years and over: 2.6% Median age:total: 18.7 years male: 18.6 years female: 18.8 years (2008 est.) Demographics

  5. Population Growth Rate: 2.691% (2009 est.) Birth rate: 37.89 births/1,000 population (2008 est.) Death rate: 10.3 deaths/1,000 population (2008 est.) Sex ratio: Under 15 years: 1.01 male(s)/female 15-64 years: 1.01 male(s)/female 65 years and over: 0.84 male(s)/female Demographics

  6. Protestant 45% (17.6 m) Roman Catholic 33% (12.9m) Muslim 10% (3.9m) Indigenous beliefs 10% (3.9m) Other 2% (780,000) Note: A large majority of Kenyans are Christian, but estimates for the percentage of the population that adheres to Islam or indigenous beliefs vary widely Religions

  7. The regional hub for trade and finance in East Africa GDP grew an estimated 2.1% in 2008 – projection 7% Economy

  8. Players: 43 companies (2008) Gross industry premium Kshs. 48.1 billion (2007) Assets Kshs. 130 billion (2007) Overview of Insurance Industry

  9. Insurance Companies in Kenya

  10. Regulatory Framework In Kenya, the insurance industry is governed by the Insurance Act Cap 487 , regulated and supervised by the CEO of the Insurance Regulatory Authority (IRA) . The mandate of the Authority is to ; Regulate, supervise and develop the insurance industry in Kenya. Administer the Insurance Act and advise the government on policy matters insurance. Protect the interests of policyholders. The policy and regulatory framework has no provisions pertaining to Islamic Insurance. Act is neutral

  11. Established in 1978 Staffing - 151 Branches - 14 Asset base - Kshs. 3 billion Gross premium: Kshs. 2.4 billion CIC is the 6th largest insurance company in Kenya CIC Kenya

  12. Takaful

  13. Idea mooted in 2004. Little/No progress made Picked up in 2005 with formation of a technical team from CIC Kenya and a consultant Concept development Networking Documents Model Systems Staffing Idea Conception

  14. Understanding the concept Gauging regulator’s reaction Model development Islamic Leaders – Supreme Council of Kenya Muslims (SUPKEM) and COI Research on viability – target areas with large pop of Muslims – fear of leakage to competitors/cost/ Takaful Advisory Board Operational guidelines – underwriting, finance, investment Retakaful Marketing Plan/Strategy/Distribution Policy documentation Systems – IT and operational Key Issues

  15. Model

  16. Lack of regulatory framework Shariah compliance CIC Board Capital requirements Window or fully fledged takaful company New concept – profit sharing, etc Language/Terms Religious and cultural – polarization (Islam phobia) Technology Challenges

  17. Operational issues – investment vehicles Staff training Board/Advisory panel Accounting model Acceptance Retakaful Which model? Rating Anticipated competition Challenges

  18. New concept Large population that is not insured Alternative – Kenyans always ask why insurers never refund premium Islamic banking Regional expansion – EAC, Somalia, Ethiopia, Djibouti Opportunities

  19. Country Figures (2009 est) - Opportunities

  20. CIC is partnering with local investors to set up a Takaful insurance company. Partnering with local investors to purchase 30% stake in a newly registered venture - Takaful Insurance of Africa Current Status

  21. CIC is optimistic that the Takaful concept will pick well in the market and that our partnership with Takaful Insurance of Africa will bear fruit to the co-operative movement. We shall bank on the international co-operative community to give us the necessary support in rolling out Takaful in Kenya. Thank you and may God bless you Conclusion

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