Diversification of Islamic Financial Insturments
101
Table 44: Differences Between Takaful and Microtakaful in Sudan
Takaful Microtakaful
Market Policyholders are from middle
and high-income households
Policyholders are the poor and low-
income households, often working in
the informal economy and outside of
the social insurance coverage with
irregular income streams.
Market awareness Market is largely familiar with
insurance
Market is largely unfamiliar with
insurance
Contributions
(premiums)
Based on age or other specific
risk characteristics.
Low contributions and affordable
Affordability
considerations
Contributions are paid by
policyholders
Contributions may be paid in full or
partly by a subsidy from zakah funds,
waqf funds or th government
Sums insured Large sums insured Small sums insured
Policy document Complex policy document with
many exclusions
Simple and easy to understand policy
document with a few or no exclusions
Claims handling Claims process for large sums
insured may be quite complicated
Simple and fast procedures to small
sums, yet still controls fraud
Source: Hasim (2014)
However, in Sudan the Microtakaful models are the same as the Takaful models as seen in
table below.
Table 45. Microtakaful Models
Aspects Wakalah
Mudarabah
with surplus
sharing
Mudarabah
without
surplus
sharing
Hybrid Waqf
Takaful
operator
share in
investment
profits
Fees as
percentage of
total
investments
Profit share Profit share Profit share
fees as
percentage of
total
investments
Takaful
operator
share in
underlying
surplus
Not available Profit share Not available Profit share Not available
Operating
expenses
Borne by
shareholders
which are
compensated by
upfront charge of
wakala fees
Borne by
shareholders
and no fees
Borne by
policyholders
and charged at
year end
Borne by
shareholders
which are
compensated by
upfront charge of
Wakala fees
Borne by
shareholders
which are
compensated by
upfront charge of
Wakala fees
Source: Haydari (2007), Erlbeck et al (2011), Khan (2011), Barawi (2012)74
74 See