Abstract

The Islamic insurance (Takaful) introduced in March, 2013, was specifically meant to bridge the endemic insurance gap in Nigeria by engendering deepening insurance penetration and financial inclusion of the hitherto underserved and uninsured huge Muslim clientele. However, the Takaful Operational Guidelines and a host of other enabling insurance instruments are caught up in a web of regulatory conflict and ambiguity. The legal effect of this is a huge regulatory vacuum that is bound to impact negatively on capital investment climate, breed mistrust and uncertainty and discourage participation in the nascent Takaful industry. Nigeria would need to draw from the vast experiences of Malaysia in order to overcome these challenges. Nigeria and Malaysia are both former British colonies with diverse ethnic and socio-cultural backgrounds. They both practice divergent legal systems in a secular setting. Both have sizeable numbers of Muslim population. While Malaysia is considered the hub of Takaful practice in the world, Nigeria is just an emerging market in the now trending Islamic financial revolution. This paper examines the enormous general and regulatory challenges the nascent Nigerian Takaful practice will encounter in its quest to attain sustainability and vibrancy. The methodology of the study is both doctrinal and qualitative whilst employing non-random sampling technique. The study employs both primary and secondary sources of information and interviews where appropriate. The study finds the need for a review and harmonization of all the enabling insurance instruments in Nigeria, transforming the current business models and improving practices in the insurance sector to enhance the application of Takaful. The study recommends the enactment of a Takaful Act like that of Malaysia.

This work is licensed under a Creative Commons Attribution 4.0 License.