1. Partner for International Cooperation AFC Consultants International AFC Consultants International GmbH Dottendorfer Str. 82 D-53129 Bonn Tel.: +49 228 985 79 0 Fax: +49 228 985 79 79 www.afci.de Zuriah ABDUL RAHMAN Professor in Insurance/Takaful/Risk Management Arshad Ayub Graduate Business School Universiti Teknologi MARA, Malaysia

2. Partner for International Cooperation SUMMARY OF FINDINGS Step Up Efforts to Educating the Stakeholders ISLAMIC FINANCE & TAKAFUL LITERACY

3. Partner for International Cooperation ISLAM AQIDAH (Faith & Belief) SHARIAH [Ibadah (Practice), Muamalat (Business Transaction]) AKHLAQ (Moral & Ethics) 5 TENETS OF ISLAM (Rukun Islam) ▪ Syahadah ▪ Prayer (Solat) ▪ Fasting (Puasa) ▪ Zakat (Alms)/Donation (Sadaqah) ▪ Hajj Political Economics Islamic Finance) Social Tabarru’ Concept based on Donation (Sadaqah) Mutual Help to Create: ▪ Solidarity ▪ Shared Responsibility ▪ Brotherhood Takaful

4. Partner for International Cooperation Takaful Takaful Concept based on Donation (Sadaqah) Shareholders Fund Contributions from Shareholders and Owned by Takaful Operators Takaful Fund Contribution from Participants Owned by Participants PSA PA Claims, Retakaful Reserves (Actuarial) Surplus or Deficient – Qard Loan ▪ Investment Account ▪ Surplus ROI Management Expenses Performance Fee Contract 1-6 Tabarru’

5. Partner for International Cooperation Short Term < 6 mthsMedium Term < 12 mths Long Term < 24 mths Brokers & Agents Banks (rural) Cooperatives (Traditional & Islamic BMT, BTM) MFIs & IMFIs (LKM, BPR,BPRS) NGO Working Group- TAKMIN Direct Selling Telecommunication System (Partnership & Community Model) Post offices Permodalan Nasional Madani (PNM) Pawn Shop Bank BNI, BRI, Mandiri Indomaret Western Union/Money Gram (7 MOUs have been signed except Western Union) (Partnership Model) Bancatakaful Employer Deduction (Worksite marketing) Major commercial banks Asuransi Sampah (Partnership, Full Service & Provider Model) DISTRIBUTION CHANNELS

6. Partner for International Cooperation COUNTRYPRODUCT TYPES MALAYSIA ▪ Family Takaful & Bank Rakyat ▪ 1Malaysia Micro Protection Plan for Micro Enterprise or Small Business (via banks) INDONESIA ▪ Credit Life & Micro loan ▪ Life & PA ▪ Motor insurance & Credit Life by ATK SRI LANKA ▪ Family & Education LEBANON ▪ Microloan & Family ▪ Agriculture & Health Insurance (85% govt. subsidy; 50% discount) SUDAN ▪ Microloan (IMFI) & Microtakaful (50% subsidy) PRODUCT BUNDLING

7. Partner for International Cooperation COMPLEMENTARITY OF MICROTAKAFUL & EXISTING HEALTH CARE BENEFITS Health Care is subsidized for poor Indonesia (JKM) Jaminan Kesihatan Masyarakat ● BPJS national/social health care Microtakaful with Health Care Benefits (potential offer) Hospital income benefits (HIB capped limit per day) Medical cost (capped limit per year/life) Malaysia 1MMPP Small business owners HIB (US7 = RM20 per day) UAE Takaful Emarat for all manual workers (Sehat Plan)-Health care US156 – USD27223/yr US147- USD13611/yr US139 – USD6806/yr Lebanon Agriculture & Health US5/-family/mth Subsidy 85%

8. Partner for International Cooperation DIFFERENTIATING TAKAFUL & INSURANCE ROLE OF REGULATOR MALAYSIA Shariah Advisory Council appointed by BNM Surplus – rights due to participants from Mudharabah or Hybrid Model Takaful operations are Shariah compliant Proper presentation to policyholders on the Shariah compliance of operation UAE National Shariah Supervisory Board Division between Takaful Operators & Takaful Windows Division between Individual Takaful: Family & Health & PA To Set-up Risk Management Department – best practices

9. Partner for International Cooperation MAIN CHALLENGES FOR MICROTAKAFUL CountryRegulationCapital requirement Transaction Costs Risk Exposure & Risk Data Skilled & Qualified Personnel MALAYSIA Insurance Act & IFSA 2013 RM100 million (US30.5 million) High InadequateLow - high UAE Resolution 4, Takaful Insurance 2010 N/AHigh InadequateLow - high SRI LANKA Unfavorable to Takaful - investment High InadequateLow LEBANON Insurance ActN/AHigh InadequateLow SUDAN ISAUS1.1 millionHigh InadequateLow - high INDONESIA Insurance Act (min. for takaful) N/AHigh InadequateLow

10. Partner for International Cooperation MAIN CHALLENGES FOR MICROTAKAFUL CountryIT InfrastructureEducational Background (Consumers) Number of Retakaful Operators PersistencyAffordability MALAYSIA Low - HighLowInsufficient Low - Medium From RM10 (US3.5)/mth UAE Low - HighLowInsufficient Medium - HighFrom US139/yr SRI LANKA Low Insufficient LowFrom US0.01/mth LEBANON Low Insufficient Low From US10/mth per family SUDAN Low -MediumLowInsufficient LowN/A INDONESIA Low (to improve on technology) LowInsufficient LowFrom Rp.24,000 (US2.06)/wk

11. Partner for International Cooperation Thank you very much for your attention!