Oman First Islamic Finance &
Banking Conference
Session: Takaful Services and
Efficient Market Presence
January 24th, 2012
$10 Million - $100 Million Omani Riyal Facility
December 24th 2011
UM Financial Group (UMFG)
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Canada’s Premier Islamic Financial Institution
Established a financing facility with a Canadian institution which approached
$120 million and a network of eight branches
Since it’s inception UMFG has undertaken the research, development,
launch and implementation of Islamic financial products
UMFG has been invited by government invitation to Saudi Arabia and
Kuwait to share technical skills and investments opportunities
Listed in The Banker magazine's Top 500 Islamic Financial Institutions for
the last four years
World Finance North American Business Leadership and Pioneering
Leadership Award in Islamic Finance
Only Canadian member of Accounting & Auditing Organization for Islamic
Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB)
Shariah Ethics Board formulated: Sh. Nizam Yacuby (Bahrain), Dr. Aznan
Hassan (Malaysia), Mufti Dr. Zubair Usmani (Pakistan)
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UM Financial Group Products 2003 - 2011
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Residential Home Financing structured Shariah compliant in 2005
 Reached close to $120 million in home financing
Pioneered Deposit Accounts based on Islamic principles:
 Deposit Account by Metro Credit Union in 2004
 Deposit and Term Deposit Account by McMaster Credit Union in 2006
Real Estate Investment Fund
 Established in 2007 for Canadian Islamic community-based investments
and mortgages
Project Launch of Co-branded ETF off the Toronto Stock Exchange in 2009
 Managed by Jovian Capital (JOV-TSX). Compliant with Islamic
principles.
Project Launch of Pre-Paid MasterCard in 2010
 Partnered with Mint Technology/GE Money (MIT-TSX-V)
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Canada’s Demographics
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Population of over 34 Million
Second Largest country in size
Second Largest country in oil reserves after Saudi Arabia
Seventh most traded currency - Canadian Dollar
Ninth largest economy globally
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Toronto
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Fifth largest city in North America (Population 5.4 Million)
TSX 3rd largest stock exchange in North America and 7th largest
internationally
Best educated work force in the G7
Diverse Multicultural Population with over 50% of the population
visible minorities
160 million customers are within one-day’s drive
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Canada’s Muslim Demographics
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Statistics Canada Census Muslim Population
1991 – 256,000
0.9% Canada Population
2001 – 597,000
2.0% Canada Population
2011 – 1,299,300 (Projection)
3.8% Canada Population
2017 – 1,784,300 (Projection)
4.9% Canada Population
Muslim population is doubling every 10 years (86% live in 6 cities)
 2001 Census Mississauga 6.9% (1 in 14) Toronto 5.5% (1 in 18)
 Islamic Finance in Canada 30 years ago (1979) within Co-operatives
with pooled funds funding homes. Limited resources and growth
 Islamic Financial products being Usury free have attracted interest from
sects within the Christian and Jewish groups. Other non-religious
group on social benefit also open to accepting Islamic finance products.
Future consolidation to a Multicultural bank.
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Takaful Insurance
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Takaful means mutual guarantee
Conventional insurance is not permissible due to elements
of: Gharar (uncertainty) and riba (usury)
Solution:
 is to design contracts that are mutual in nature and
premiums collected are structured to be as a mutual or
voluntary benefit
 Premiums collected must also be invested shariah
compliant
 For muslims living in the west after mortgage payments
the next largest expenditure is car and home insurance
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Comparison between Models
Conventional Insurance
Companies
Takaful Companies
Based on mutual cooperation.
Based solely on commercial factors.
free from interest (Riba), gambling,
Insurance includes elements of interest,
(Maysir), and uncertainty (Gharar).
gambling, and uncertainty.
All or part of the contribution paid by the The premium is paid to conventional
Participant is a donation to the Takaful
insurance companies and is owned by
Fund, which helps other Participants by
them in exchange for bearing all
providing protection against potential risks. expected risks.
There is a full segregation between the
Premium paid by the Policy holder is
Participants Takaful Fund account and the considered as income to the company,
shareholders' accounts.
belonging to the shareholders.
The Plan Owners’ and shareholders’
The capital of the premium is invested
capital is invested in investment funds that in funds and investment channels that
are Shari’a compliant.
are not necessarily Shariah compliant.
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Takaful Insurance Definition
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Takaful is an Arabic word that means "guaranteeing each
other".
It is a system of Islamic insurance based on the principle of
Ta-Awun (mutual assistance) and Tabarru (Voluntarily)
where the risk is shared collectively by the group
Voluntarily.
This is a pact among a group of members or participants
who agree to jointly guarantee among themselves against
loss or damage to any of them as defined in the pact.
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Problems with Conventional Insurance
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The participant contributes a small amount of premium in a
hope/risk to gain a large sum is Khatar (similar to gambling)
The participant loses the money paid for the premium when
the insured event does not occur is Gharar (uncertainity)
The company will be in deficit if the claims are higher than
the amount contributed by the participants is Gharar.
The element of Riba (Interest) exists in lending or
borrowing funds/investments at fixed interest, and other
related practices in the investment activities.
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Objectives of Takaful
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What is Insurance?
A tool for Risk Mitigation and Financial Protection
A tool to enable people to save (Life Insurance)
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Takaful is not only a tool to mitigate loss or to make
halal profits. It is an ideology which promotes
1. Solidarity and joint guarantee
2. Self reliance and self sustainability for community well being
3. Assistance to those that need it
4. Community pooling system
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Education on Takaful
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Most markets launch with financing and investment products which
are then followed by Takaful products
Education is needed on the nature of Takaful
The Holy Quran describes how Prophet Yusuf (peace be upon him)
filled the grain store with the excess resulting from seven years of
good harvests to mitigate the effects of any future crop failure.
“Tie your camel first, then put your trust in Allah (SWT)”. <Tirmidhi>
“It is better for you to leave your heirs wealthy rather than poor and
asking others for their needs”. <Bukhari>
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Takaful Plans in Canada
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Insurance companies in Canada have been meeting our group for
the last few years to see how to launch Takaful insurance
All automobile and home owners are required by law to have
insurance
To launch a segregated product a market size of 50,000 clients are
needed
Goal will be to acquire these clients with our iFreedomplus
Mastercard and then launch Takaful products with these clients
With UM various Shariah compliant investments in Canada we can
now offer diversification for premiums collected. This can be in
Islamic mortgages, equity market and fixed income (sukuk), etc.
Some of the largest insurance companies are from Canada. Such as
Manulife and Sunlife. Both have launched Takaful insurance in
Indonesia.
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Thank you
For further information contact:
Omar Kalair
okalair@umgroup.ca
www.UMGroup.ca
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