An interview with Ab Latiff bin Haji Abu Bakar, President and CEO of Takaful Ikhlas Sdn Bhd

1. Please begin with a brief introduction to Takaful IKHLAS
Takaful IKHLAS has, within the ten years of its operations, established a strong presence in the provision of Islamic financial protection services based on the Takaful System, which stresses on a spirit of cooperation and joint responsibility among participants. Today, the Company is widely known in the market as a dynamic “brand”. The use of technology has been both deliberated and well thought out. The Company has invested considerably in this area in support of its philosophy of creating efficiency and effectiveness to serve its participants and business partners. Our products are not just evidence of innovation at work but in line with Shariah requirements, where all of Takaful IKHLAS’s products are 100% Shariah Compliant: through-out the whole process and right to the end-product. All operational matters, investment dealings, management and marketing of its products and service offerings are overseen by the Shariah Committee.

The Company offers individuals and commercial enterprises a comprehensive range of Family, Group and General Takaful Plans and Riders, with more being planned in the not too distant future. The distribution/service channels comprise highly knowledgeable and well-trained people. These channels comprise more than 5,000 agency personnel, brokers, financial institutions, motor franchise holders, co-operatives and Islamic bodies.

Our brand is our promise to our customers on the value we provide. Our brand promise communicates the benefits they can expect from our company and what differentiates Takaful IKLHAS products and services from those of our contest. It demonstrates that we are an expert at what we do. Takaful IKHLAS has provided customers with a choice of more than 80 products in a span of 10 years, certainly a noteworthy achievement. Its’ products are evidence of innovation at work. Takaful IKHLAS is a trailblazer on the innovation front, especially when it comes to optimizing technology. Takaful IKHLAS, without doubt, is the forerunner of making the best use of technology to deliver good services on a consistent basis.

In the past, some of the highlighted system innovations are:

• Motor e-cover note system (FLAS)
• Internet Point of Sales (I-POS)
• Motor Direct Takaful (e-IKHLAS)
• Electronic Claims estimation system
• e-Non motor

Within two years, the Company has established an extensive agency network. The Company has 12 branches located in Selangor, Sungai Petani, Kota Bahru, Johor Bharu, Kuching, Kota Kinabalu, Melaka, Kuantan, Ipoh, Terengganu, Putrajaya and Seremban.

2. Can you explain what Takaful is for our readers who are unfamiliar?
Takaful is an insurance concept which is grounded in Islamic Muamalat, observing the rules and regulations of shariah. It is a concept that has been in practice for over 1,400 years. In principle, Takaful system is based on mutual co-operation, responsibility, assurance, protection and assistance between groups of participants. In other words, it is the provision of shared contributions to help those who are in need.

Through the spirit of cooperation and joint-responsibility among participants and the act of charity and benevolence allows participants the opportunity to obtain two forms of benefit. First the monetary benefits through the Takaful plan itself. Secondly the “benefits” in the spiritual sense, through the act of Tabarru’ (donation), participants will receive God’s grace and blessings in life Hereafter. The Takaful system does not differentiate colour or creed; it is meant to benefit all participants, irrespective of their religious beliefs.

3. What are the benefits or differences of Takaful IKHLAS compared to conventional insurance?
The Takaful industry follows what the conventional industry does. By agreement, we have agreed not to innovate outside the tariff. We agreed to follow exactly what is in the tariff, we have agreed to play along the same rules, level playing fields.

To ensure consistency of practice and to facilitate proper growth of the industry, Bank Negara required all tariffs. So there is really no difference between conventional House Holders and a conventional House Owners, compared to what is being offered by the Takaful industry. No difference at all in the cover.

There are other types of differences in between conventional and Takaful. Conventional insurance is a contract of exchange. In Takaful, it is not a contract of exchange. You are actually putting the money into the pool with a “niat” (benevolent wish).

If anything unfortunate befalls any one of the participants, the Takaful operator use this money to assist them. So, you have the charitable, benevolent intention in that particular act. And you know that any charitable or any benevolent act will receive rewards in life hereafter.

Therefore even if there is a cross-subsidy, we still take up that risk. At the very least, the intention here is that one is donating to the pool.

4. What is the value proposition of Takaful IKHLAS for the public?
What makes us unique is our use of technology. Our distribution finds it very convenient working with us. To the buying public, we have a reputation of being prompt and fair in claims handling.

5. Takaful insurance is free from “riba”, “gharar” and “maisir”. Please explain these terms?
Conventional insurance is a contract of exchange of goods or service. In Takaful, in Syariah, when you want to exchange something, there must be a definite amount as well as a definite time for the exchange.

When you put your money into an insurance company, you don’t know when you’re going to get back something as an exchange. You don’t know whether you are going to get anything back, when you may get it back, and how much. There is a lot of uncertainty. And, as such, that uncertainty is what we call ‘gharar’: this leads to wagering. You don’t know whether you’re going to get your money or not. It’s wagering where you are going to lose. So that contract is unfair and has the element of uncertainty. Wagering, and whichever kind of contract that is unfair, is prohibited in Islam.

Under Islamic contract law, you cannot and should not enter into a contract which is weak. So this contract is called “fasir”’. If you enter into a contract which is weak, you are entering into a contract whereby one party is going to be oppressed, and that is“Haram” (forbidden). Therefore, entering into an insurance contract is “Haram”.

“Riba” is of course when you pay a premium to an insurance company, they will invest it in interest bearing instruments. Takaful companies are not invested nor are they kept in any “riba” arrangement.

6. What do you think differentiates Takaful IKHLAS from similar services in the Takaful industry?
Takaful IKHLAS aspire to be the preferred Takaful providers guided by Islamic principles. The Company places uncompromising importance to its Shariah values in every aspects of its business

7. What are the types of products that you have currently, in your portfolio and how are you looking to grow each business?
Currently we have both Family and General products. Family products mainly consists of ordinary, medical, and investment-link and General products consist of motor, fire, marine, aviation and transit (MAT), and miscellaneous classes. IKHLAS shall focus on all its distribution channels in ensuring that it is equipped with the right product, tools and efficient processes to target the right market segments for the various products.

8. What are the measures to be implemented? Is the company adopting new technology or employing more locally specialized workforce? Is there any new product to be introduced or new market has been identified to cater for the current demands?
Takaful IKHLAS is continuously investing in procuring and enhancing its system to be able to cater to the increasing business. Currently, Takaful IKHLAS is fully depending on a locally specialized workforce. In terms of new products, we plan to enhance the existing product and extend our services to Gen Y and Non-Muslim market.

9. How many branches do you have currently, and how many are you planning to open up to December 2015 to reach out to new and existing customers?
Currently we have 12 branches throughout Malaysia. As the Company grows branch setup shall continuously be reviewed to strengthen IKHLAS capability to reach out to our customers.

10. How does Takaful Ikhlas approach Corporate Social Responsibility?
As a responsible corporate citizen in the implementation of Islamic muamalat or business transactions, Takaful IKHLAS is always concern about the hardship and difficulty endured by the poor. We are aware that, in each profit or success achieved by us today, there are other people’s portion. The charitable efforts undertaken by Takaful IKHLAS in helping the people in need does not just limited to certain period of time, instead it is a routine practiced by us throughout the year.

The corporate social responsibility programs conducted by Takaful IKHLAS served as the Company’s commitment to create a bond of goodwill with the society who have been supporting Takaful IKHLAS’ operations until today. Takaful IKHLAS practices the principle of shared social responsibility by prioritizing the society’s interest in our business strategies. We are grateful for being able to contribute to the people in need.