Cooperative Insurance and Takaful

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Cooperative Insurance and Takaful

• Asian Takaful Group Annual Meeting
• 29 November 2006

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Overview of presentation

• Cooperative and mutual principles
• The global cooperative and mutual movement
• Similarities and differences with Takaful
• Moving forward together

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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 enterprise
• Source International Cooperative Alliance (ICA)

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Cooperative/mutual values

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

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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)

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Cooperative vs. Mutuals
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Why a cooperative/mutual?
Welfare
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Cooperatives and Mutuals the hidden giants of
the world economy

• The largest 300 cooperatives and mutuals have a
  turnover of
• 1 trillion USD

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Worldwide importance of mutual insurers,
2001Percent of total premiums
100 2416 bio USD
USA
EUR
CAN
JAP
KOR
Source Swiss Re for worldwide total premium
ICMIF
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VERY ROUGH ESTIMATES
Europe, importance of mutual insurance sector,
2002Percentage of gross direct domestic
premium written

• Mut Coop Joint Stock
• Mut Joint Stock
• Coop Joint Stock

Luxembourg
Finland
Sweden
Netherlands
France
Belgium
Germany
UK
Austria
Italy
Slovenia
Ireland
Hungary
Spain
Denmark
Czech Rep.
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
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Affinity

• Affinity examples
• Japan Zenkyoren - Agriculture
• Zenrosai - Trade unions
• JCCU - Consumer cooperatives
• Nikkaren - Small Businesses
• Zenmoriren - Forest owners
• Kyosuiren - Fishery Cooperatives
• Canada The Cooperators - All type of
  cooperatives
• France Gema - Professional groups.
• Teachers, state
  employees, craftsmen, retailers)

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Efficient Mutual Insurers

• Mutual life insurers are 14 more efficient than
  plcs over the last 7 years
• Non-life insurers are 20 more efficient over the
  last 7 years
• Policyholder influence
• Community involvement
• Customer loyalty

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Similarities and differences between Cooperative
Insurance and Takaful
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Cooperative/mutual values

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

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Principles of Takaful

• Solidarity and joint guarantee
• Self reliance and self sustaining for community
  well being
• Assist those that need assistance
• Community pooling system
• Shariah approved investments and products
• Bear ye one anothers burden

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Differences between Cooperatives and Takaful

• Shariah-compliant investments and products
• Shareholder surplus participation
• Shareholder governance

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• A cooperative and mutual scheme providing
  Shariah approved products and investments is
  permissible under Islamic Law

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Thank you

• www.icmif.org/takaful