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Takaful In Pakistan

Takaful In Pakistan. Prepared by: Mohammad yasir iqbal Khan khaqan ahmed khan. Acknowldegement. Mr. Muhammad Farid Habib, Head of Underwriting and Claims “Takaful Pakistan Limited” Mr. M. Iftekhar Ahmed, Chief Operating Officer “Pak Kuwait Takaful Company Limited”. Insurance vs Takaful.

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Takaful In Pakistan

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  1. Takaful In Pakistan Prepared by: Mohammad yasir iqbal Khan khaqan ahmed khan

  2. Acknowldegement • Mr. Muhammad Farid Habib, Head of Underwriting and Claims “Takaful Pakistan Limited” • Mr. M. Iftekhar Ahmed, Chief Operating Officer “Pak Kuwait Takaful Company Limited”

  3. Insurance vs Takaful • Insurance is not an unislamic concept • Few elements make conventional insurance haram • Interest • Gambling • Uncertainty • Takaful emphasizes social harmony, collaboration and mutual coverage of people’s losses • Tabarru • Loss sharing

  4. Takaful in Quran or Hadith • References available on risk management and mutuality in Quran • Takaful works on the secondary source of Islamic law called Ijtihad • System of ‘Aaqilah’ was a system of mutual help during times of Holy Prophet (p.b.u.h.) • ‘Aaqilah’ also worked in the case of blood money • Parts of Takaful contract • Protection • Savings

  5. Misconceptions • Takaful does not allow risk protection • Narrated by Anas bin Malik when an Arab Bedouin asked Prophet Muhmmad (PBUH), "Shall I leave my camel untied and seek Allah's protection on it, or should I tie it?" The Holy Prophet replied, "Tie your camel and then depend upon Allah (swt)." {as quoted by Sunan Al Tarmizi, 1981,} • Islam prohibits all sorts of insurance or Takaful because it involves elements of gambling • Pure risk • Speculative risk

  6. Takaful Overtime • Starting from the days of first constitution of Madina, Takaful has evolved till current days • First model was framed in 1970s • First Takaful company was launched in Sudan in 1979 • There are now 105+ Takaful companies in over 30 countries

  7. Takaful Models & Surplus Distribution • Mudarabah • Wakalah • Waqf • The Model being allowed to practice in Pakistan • Operates under two roles • Operator/Manager • Mudarib • Three ways of surplus distribution: • Portion kept as reserve to mitigate future losses • Portion distributed among the participants • Portion utilized for charity

  8. Pakistan Takaful • Incorporated in June 2006 • Expertise with overseas ReTakaful operators • Specialized risks and umbrella covers specifically for Islamic banking operations • Rating ‘A-’ by JCR-VIS • ShariahBoard • Prof. Dr. Anis Ahmed – Chairman • Mufti Mohammad Mohibul Haq – Member and nominee of Justice (R) Muhammad Taqi Usmani • Mufti Khalil Ahmed Aazami – Member • Launched BANCATAKAFUL in collaboration with banks • Facilitation Desk, Islamic Financial Supermarket, Discounted Contribution, Fast Turnaround Time, Attraction for Depositors, One-Stop for Clients, Synergy, Value Added Services

  9. Pakistan Takaful • Agent Training • Courses • Workshops • Products (Consumer) • Motor • Private Car Comprehensive • Motorcycle Comprehensive • Motorcycle third Party • Fire Takaful • Householder’s Comprehensive Takaful • Marine Takaful • Marine Cargo Policy • Burglary and Personal Accidents Takaful

  10. Pakistan Takaful • Products (Corporate) • Property Takaful • Fire and Allied Perils • Shopowners • Fire Consequential loss • All sides of engineering • Motor accident • Private Car Comprehensive • Private car third party • Commercial vehicle comprehensive • Commercial vehicle third party • Motorcycle comprehensive • Motorcycle third party • Marine Takaful • Health Takaful • MicroTakaful

  11. Waqf Model used by Pakistan Takaful

  12. Pakistan Takaful • Advertising and Human Resource • Does not have sufficient cash flows to advertise • Pyramid at Defence Karachi • Good human resource • They have pioneers of takaful in their team

  13. Pak Kuwait Takaful • It was incorporated Joint venture partnership between Pakistan, Kuwait, Malaysia, Saudia Arabia and Sri Lanka • Ratakaful arrangements are firmly in place • Aim at adopting a proactive appoach to fill gaps in the market • JCR-VIS assigned credit rating A- to Pak Kuwait Takaful • It was incorporated before September 2005 but was advised by SECP not to start operations until Takaful rules had been incorporated

  14. Pak Kuwait Takaful • Investments • Mainly in Sukok Bonds • IGI investment bank signed a BANCATAKAFUL with PKTCL • Agent Training • Invests heavliy in training employees • Shariah Board organizes Shariah courses for its agents

  15. Waqf Model used by Pak Kuwait Takaful

  16. Pak Kuwait Takaful • SECP has imposed a requirement of Rs 250mn paid up capital • This requirement was initially Rs 80mn • Management at Pak Kuwait Takaful aims at increasing its capital basesince it facilitates the business • Does not offer products in rural areas • Deals only on the Corporate side and ignores Consumer side

  17. Products offered by Pak Kuwait Takaful • Fire Takaful • Fire and Allied Peril Policy • Householder’s Comprehensive Policy • Shop Owner’s Policy • Marine takaful • Motor Takaful • Tractor Takaful • Engineering Takaful • Contractor’s All Risk Policy • Contractors plant and machinery Policy • Erection All risks Policy • Machinery Breakdown Policy • Electronic Equipments Policy • Boiler and Pressure Vessel Policy

  18. Products offered by Pak Kuwait Takaful • Miscellaneous Takaful • Accidental takaful Policy • Hajj & Umrah takaful Policy • Money Takaful Policy • Fidelity Guarantee Takaful Policy • Third Party Liability Takaful Policy • Workmen’s Compensation Takaful Policy • Product Liability takaful Policy • Plate Glass takaful Policy • All Risks (Contents) Takaful Policy

  19. Business at Pak Kuwait Takaful • Policyholders can be shareholder • PKTCL extends its cooperation to islamic businesses but many islamic banks still opt for conventional insurance • Not heavily effected by Global Financial Crisis • Intense competition since there are only three operators • The share of Takaful companies is very limited • Takaful operators have total 3% market share • 66% share is with Pak Kuwait Takaful • Most profitable products are Fire Takaful and Marine Takaful • Car Ijarah is going under stress

  20. Challenges & Competitive Edge for Pak Kuwait Takaful • Challenges • No support provided by the government • Conventional insurance companies are a big threat • Economic downturn • Efforts are made to have a represantative body • Competitive Edge for Pak Kuwait Takaful • Have built good relations with customers overtime • Human Reasource

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