Sharia-Compliant Insurance (Takaful) in Nigeria: Professional Regulatory Framework Assessment

Takaful (Islamic insurance) is a Sharia-compliant alternative to conventional insurance based on the principles of mutual contribution, shared risk, and charitable donation rather than profit-driven risk transfer. In Nigeria, Takaful products are offered by a small number of licensed operators under National Insurance Commission regulation, but the adequacy of the regulatory framework for ensuring genuine Sharia compliance and consumer protection requires professional assessment. This study conducts a professional regulatory review of the Nigerian Takaful framework. A professional regulatory analysis methodology is applied, reviewing NAICOM's Guidelines on Takaful Insurance Operations 2013 and proposed amendments, selected Takaful operator product documentation, AAOIFI Takaful Standards, and structured interviews with twelve Takaful operators, eight NAICOM officials, and six Islamic finance scholars. The study evaluates the Sharia supervisory board requirements, surplus distribution models (Wakala, Mudaraba), reinsurance compliance, and consumer protection provisions in the existing framework. Available professional Islamic finance literature from Nigeria identifies the absence of mandatory Sharia governance standards and inadequate investment of Takaful funds as the primary compliance concerns. The IFSB and AAOIFI Takaful governance standards provide the professional regulatory benchmark. Findings are expected to reveal significant regulatory gaps relative to international Islamic insurance standards. Recommendations address mandatory Sharia Supervisory Board governance regulations, standardised surplus distribution disclosure requirements, and a Takaful consumer protection framework under NAICOM oversight. Keywords: Takaful, Islamic insurance, regulatory framework, Nigeria, NAICOM.