Ceylinco Takaful Ltd newest entrant to insurance business

Ceylinco Takaful is a new entrant to insurance business in Sri Lanka. Takaful is a new form of insurance based on Islamic Shareeah. Takaful insurance emerged out of the necessity to have a system of insurance which is acceptable to Muslims, and in compliance with Islamic Shareeah, the company said.

“Unless compelled by law or business requirements Muslims avoid insuring their properties or liabilities simply because conventional insurance contravenes the Islamic Law, and also the involvement of interest element. To correct the un-Islamic aspects of conventional insurance Islamic scholars came out with an excellent system of insurance called Takaful based on Islamic contractual law,” the statement said.

‘Takaful’ is an Arabic word meaning “Guaranteeing each other” or joint guarantee ie. a group of persons reciprocally guaranteeing one another. This means that the persons who participate in Takaful insurance operation jointly guarantee among themselves to compensate against loss or damage that any of them may suffer due to certain calamities or perils.

What attracted Ceylinco to Takaful insurance is the reality that Takaful is essentially a people oriented insurance system which is fair and equitable.

Under the conventional insurance system the insurance company collects a huge fund by way of premiums from a large number of persons and uses this fund to pay compensations for an unfortunate few. Very often the total premiums collected far exceeds the total compensations paid together with operating expenses. Generally, this surplus is retained by the insurance company as its profit. Whereas under Takaful insurance system this surplus belongs to the policyholders, the company said.

Conventional insurance system is more favourable to insurance companies than to the policyholders. But Ceylinco being a people oriented organization and has the welfare of the people as its prime objective wants to give the people a choice between conventional insurance and Takaful insurance. Hence the formation of Ceylinco Takaful Limited.

Ceylinco Takaful Limited is engaged in non-life insurance only ie. general insurance only. Ceylinco Takaful underwrites all key classes of general insurance.

Ceylinco Takaful has tied up with Shiekan Insurance and Reinsurance Co. Ltd. of Sudan, the pioneers in Takaful insurance which was, established in 1983.

Shiekan has captured the biggest stake of the Sudanese private insurance business. In terms of annual premiums written in the Sudanese market (general & life), Shiekan has now come to occupy a leading position with about 70 % market share in 2005. The company has spread out its network countrywide with well established branches and agencies in most of the 26 federal States of Sudan, thus rendering to the clients door-to-door insurance services.