 in this module and in the next eight modules, we would be focusing on insurance and the careful. Insurance is not a simple phenomenon as it may sound in the first instance. It may be a very complicated story, comprising a number of individuals, institutions and countries. When someone buys an insurance policy, they actually enter into a mechanism which allows them to shift risk from one party to another one, one party to another group, from one group to another company, from one company in a country to another country and so on. It has a full cycle in which risk is shifted from one segment of the society to another one. It is important for us to understand this full cycle before we start our discussion of the Ka'ful, which is Islamic alternative for conventional insurance. In this insurance cycle, there are many steps, institutions and countries involved. Let us explain this cycle rather briefly. The story I'm going to share with you is very interesting because it allows us to understand the role of a lot of companies, institutions and countries in providing protection to the individual, taking away the risk from the individual. And in this cycle which we are going to discuss, we actually find that the risk is shifted away from one individual and it is quite possible that at the end of the cycle, the risk may come back to the individual again if not the same individual, someone else in the society. Let us look at the way the process starts. We have this insurance company. It is based in Pakistan. It sells insurance policies to a number of individuals. Of course, it sells insurance policies to companies and institutions as well. So, it collects premium from these individuals and sells them insurance policies. These insurance policies are actually protection. They provide protection against any adverse situations these individuals may not be happy with. So, this insurance company, when it is selling insurance policies, it is actually accumulating risk. So, it gets risk from these individuals who are willing to pay for the service. So, this insurance company may have collected 100 billion worth of what is known as risk. It says, I am responsible for if something bad happens to you or something bad happens to him. In exchange for getting this risk, the company has actually received 10 billion worth of premiums. So, this company has got 10 billion rupees and it has got 100 billion worth of risk on or in its books. Of course, this company would not be happy with having that risk lying with it. The next step is this company would go to another bigger company, another bigger insurance company because that bigger insurance company deals with insurance companies only. It is called a re-insurance company. So, it goes to a re-insurance company and says that I have got 100 billion rupees worth of risk. I want to sell this risk to you. Re-insurance company asks, how much did you get for this risk? Of course, insurance company would say that I got this risk for 10 billion rupees. Now, re-insurance company would look into the composition of this risk and if they are happy to take this risk, they would negotiate a price. They would say, alright, we are willing to take this risk worth 100 billion if you pay us 5 billion. If there is an agreement on this one, then insurance company has shifted the risk to the re-insurance company by way of paying 5 billion rupees to the re-insurance company. In this process, the insurance company has got gross profits of 5 billion rupees. Story doesn't end here. This re-insurance company, it has got risk from so many other companies as well. Assume that it has collected 100 billion dollars worth of risk on its books. And it has paid 5 billion dollars if it has received 5 billion dollars for having this 100 billion dollars worth of risk on its books. Of course, like the insurance companies, this re-insurance company would not be happy to keep the risk on its books. Rather, this would go to Lloyds of London, which is an exchange for insurance companies and re-insurance companies, and it would identify a syndicate. There are so many syndicates in the Lloyds of London. So, it would try to negotiate with a syndicate if this syndicate wants to get this risk for a price. So, this syndicate would negotiate with the re-insurance company for a price. And of course, this negotiation would involve looking into the composition of the risk. This syndicate may ask the re-insurance company, where did this risk come from? For example, the company may say that this 100 billion worth of risk has got 40% exposure in the Middle East, 20% in the Far East, and we have got some risk from Pakistan and India. The syndicate may say that we don't want to have Indian risk. So, they can actually buy part of the risk as well. To keep the things simple, let us assume that syndicate is willing to take this risk of 100 billion dollars if re-insurance company pays it 3 billion dollars. If that happens, the insurance company has offloaded 100 billion worth of risk by way of paying 3 billion dollars to this syndicate. In this process, the re-insurance company has earned 2 billion dollars. Risk individuals say insurance companies, insurance companies say re-insurance companies or re-insurance companies say syndicate pichalag. And in this whole process, everyone is benefiting. Now, the story doesn't end here. The Lloyds of London, it has quite a number of syndicates. So, Lloyds of London, those syndicates may go to some other individuals as well. So, we have in this cycle, insurance companies. We have re-insurance companies. We have Lloyds of London. And by the way, this is only one example. There is another exchange in New York as well for this kind of activities and we have syndicates. The story doesn't end at syndicate. Actually, syndicates, they can go to, they comprise of individuals, families. Families are sitting there. They say, let's see what is the risk, what is its composition. According to that, it costs. Now, in modern times, these syndicates have started approaching individuals like me. What is the work of a syndicate? The members of the syndicate say, they are told to pledge whatever money is in your bank account. If we have a risk, if we have claims, more than our income, then we would approach you and get the money from you. If we don't approach you for money, then you would get certain amount of income, certain amount from for pledging your money to this whole process. These syndicates have started approaching people like me as well. They said, do you want to be part of this insurance game? If I say yes, then I would be taking part of the risk of someone in Gambia while sitting in London. If the syndicate has received 5 billion for certain amount of risk, they can offload that risk to individuals and families for 4 billion and in this process, they can earn 1 billion dollars.