In Uganda, tapping into a peer-to-peer (P2P) model would help insurers improve their growth momentum, deliver profitability and takaful operators to improve their penetration strategy, says Mr Ndawula Yusuf Katerega, a lecturer with Makerere University Business School, financial economist and a consultant with IIU and Graviola Associates.
In an article in the online news site New Vision, he says that just like P2P insurance, Islamic insurance is built on the principle of joint guarantee (tabarru) under which subscribers help one another and willingly guarantee one another against losses by subscribing to a pool.
The writer notes that the insurance industry has embraced technological innovation, but the impact on the way it interacts with customers has been limited. P2P harnesses technology to connect the insurance experience with its roots in organised mutual solidarity.
Using a P2P model to introduce Islamic insurance in Uganda as an alternative to conventional insurance, will promote the insurance industry and serve those having reservations about conventional insurance.
Uganda has been slow in embracing takaful, while other countries like Kenya already have three operating takaful companies while Tanzania had three companies Azam, Zanzibar Insurance and Mo Assurance applying for takaful licences in March this year.
By nature insurance companies are moved by profits, any surplus is retained by the insurer not the policyholders. However, the P2P model connects affinity groups of customers and enables annual cashbacks in claims-free cases.