Takaful Opperunities and Challenges By Azeem Pirani - Revision history

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Takaful

Opportunities & Challenges

for the Pakistani Market

Azeem Pirani

Head of Marketing & Alternate Distribution

Pak-Qatar Family Takaful

11th August 2007 August 11th, 2007 – Avari Hotel, Lahore 1

Agenda

Takaful – A product and an ideology

Differences between Takaful & Insurance

The Pakistani Market

Overview

Challenges

Opportunities

Our responsibility

Conclusion

11th August 2007 2

Takaful- A product and an Ideology

Takaful comes from the Arabic root-word ‘kafala’-

guarantee

Takaful is not only a tool to mitigate loss or to make

halal profits. It is an ideology which promotes

Solidarity and joint guarantee

Self reliance and self sustainability for community

well being

Assistance to those that need it

Community pooling system

11th August 2007 3

Differences between

Takaful & Insurance

What is Insurance?

A tool for Risk Mitigation and Financial

Protection

A tool to enable people to save (Life Insurance)

Key differences between Takaful and Insurance are:

Risk Sharing Vs. Risk Transfer

Wakeel Vs. Guarantor

Ameen Vs. Owner

Different type of Contract

11th August 2007 4

Differences between

Takaful & Insurance (cont.)

Issue Conventional Takaful

Insurance

Basis Risk Transfer Co-operative risk sharing

Laws Secular/Regulations Shariah & Prudential

regulations

Ownership Shareholders Participants

Mgmt status Company Management Operator

Form of Contract Contract of Sale Cooperative, Wakala or

Mudarbah with Tabar’ru

(contributions)

Investments Interest based Shariah compliant

Surplus Shareholders’ account Participants’ account

The Pakistani Market –

An Overview

Pakistan - Overall

Population: 6th amongst global nations. 166 m.

Population in 2015: Still 6th . 193 m.

Urbanization: Presently at 33%

Urbanization by 2015: 39%

GDP Per Capita: $753

11th August 2007 6

The Pakistani Market –

An Overview (cont)

Pakistan – Insurance Market

Penetration of Insurance

Pakistan: 0.7% of GDP

India: more than 3% of GDP

Iran: approx. 1% of GDP

Family & General Companies

Few Innovative Products. Very recent change in

this area

11th August 2007 7

The Pakistani Market –

Challenges for Takaful

Resistance to Insurance, and its benefits, due to

different reasons

Conservative spending habits

Ignorance of its benefits

Products which do not meet buyers needs

Religious reasons

Tawakkul issue

“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”.

Non-Shariah compliant elements

11th August 2007 8

The Pakistani Market –

Challenges for Takaful (cont.)

Government regulations untested

Human resources for the sector

Shortage of trained human resources in insurance

Negligible knowledge of Takaful present amongst

the public

Few training programs available for Takaful and

insurance

Insurance has generally never been the

occupation of first choice for new graduates

11th August 2007 9

The Pakistani Market –

Challenges for Takaful (cont.)

Education and Awareness

Lack of knowledge about Takaful and insurance

amongst the masses

Ignorance of Takaful amongst the ulema

Significant budget required just to ensure that

knowledge permeates to all segments/levels of society

Marketing & Sales issues

Poor impression of insurance sales persons amongst

the public

Generally poor ethical standards amongst insurance

sales persons

General lack of faith on insurance companies meeting

their obligation in a efficient and polite manner

11th August 2007 10

The Pakistani Market –

Challenges for Takaful (cont.)

Operational Issues

Limited avenues for revenue at Takaful co. as

compared to insurance ones

To be competitive Takaful co. will need to use effective

IT systems – heavy investments

New Takaful co. will need to ensure that they do

prudent underwriting; thus eating into the possibility

of having a larger number of customers

11th August 2007 11

The Pakistani Market –

Opportunities for Takaful

Economic/Social conditions in Pakistan make

Takaful a NECESSITY

Lack of govt. social safety net

Negligible provision of reliable health care

by the govt.

Quality education is beyond the reach of the

average citizen and the institutions provided

by the govt. lack the required standards

11th August 2007 12

The Pakistani Market –

Opportunities for Takaful (cont.)

Strong growth in the Islamic financial sector

provides Takaful with a natural market

Islamic Banks and mutual funds will need Takaful to

package with their other products

Islamic Financial institutions presently have no

Family coverage for their staff

Massive untapped market in Pakistan for risk

mitigation tools

Given the necessity of these tools insurance has not

even touched the surface

Given the ‘plain vanilla’ menu provided to customers

there is a great opportunity for innovation

11th August 2007 13

The Pakistani Market –

Opportunities for Takaful (cont.)

Ethical and Shariah compliant model for risk

mitigation and financial protection

Large number of people who stay away from

insurance due to religious beliefs

Large number of our population can be

considered as ‘religious’ and so Takaful will be in

line with their beliefs

Educated citizens, although not religious would

prefer to use an ethical model than one which is

built on making profits by trying to avoid having

to pay claims

11th August 2007 14

Takaful –

What should you do about it?

As educated professionals WE have a responsibility

to our fellow citizens to guide them to what is good

for them. This is especially important when the

people are living at a level where income equals

expenses

Convey the critical nature of financial protection to

others

Explain the benefits of getting financial protection

Introduce the new concept which is not only ethical

but also Shariah compliant

Just start from those around you….

11th August 2007 15

Conclusion

Takaful is not only here to stay; it’s going to GROW!

It’s ethical and Shariah compliant nature allows

Takaful to overcome the inherent problems with

Insurance

The Pakistani market has challenges but also has a

lot of opportunities

There are a lot of opportunities for Takaful operators

to make healthy profits in Pakistan

Although Insurance coverage is not the norm in

Pakistan we need to work to make Takaful

something everybody uses

11th August 2007 16

Conclusion (cont.)

11th August 2007 17

Jazak-Allah khair

For further information contact:

(021) 438-0357 to 61

info@pakqatar.com.pk

www.pakqatar.com.pk (launching soon!)

11th August 2007 18

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← Older revision	Revision as of 02:32, 21 September 2016
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	+
	+
	+	== Top 20 FREQUENT WORDS ==
	+	takaful 41
	+	business 15
	+	insurance 13
	+	islamic 11
	+	companies 8
	+	mudarabah 7
	+	pakistan 7
	+	countries 6
	+	losses 6
	+	participants 6
	+	policyholders 6
	+	based 5
	+	contract 5
	+	funds 5
	+	investment 5
	+	loss 5
	+	model 5
	+	shariah 5
	+	banking 4
	+	basis 4
	+	concept 4
	+	contributions 4
	+	conventional 4
	+	expenses 4
	+	fee 4
	+	financial 4
	+	models 4
	+	principle 4
	+	profit 4
	+	wakalah 4
	+
	+
	+
	+	== DOCUMENT KEY POINTS ==
	+	*the contemporary jurists acknowledge that the foundation of shared responsibility or takaful was laid down in the system of a aaqilah which was an arrangement of mutual help or indemnification customary in some tribes at the time of the holy prophet pbuh
	+	*notwithstanding the belief of all muslims in qadha o qadr islam provides that one must find ways and means to avoid such catastrophes and disasters wherever possible and to minimize his or his family s financial losses should such events occur
	+
	+	*the legal framework in other islamic countries normally does not allow this arrangement and takaful companies work as separate entities on the basis of mudarabah as in malaysia and on the basis of wakalah as in the middle east region
	+	*how much of the contribution is meant for mortality liability and how much for investment account is based on a sound technical basis of mortality tables and other actuarial requirements
	+
	+	*as reported in the press pak kuwait investment corporation has recently been allowed by the sec to establish a takaful company in pakistan under the name of first takaful insurance company limited with authorized capital of rs million
	+	*takaful products are available to meet the needs of all sectors of the economy both at individual as well as corporate levels to cater for short and long term financial needs of various groups of the society
	+
	+
	+	''Please note, This is an auto generated summary based on sentances position in the document and other factors''
	+	== DOCUMENT WORD ANALYSIS ==
	+	=== Main Category ===
	+	: AlHuda Material\takaful
	+
	+
	+	=== KeyWords ===
	+	taka islam insur malaysia productdeferred shariah countries muslim financial retakaful model growth custom partner developed service mutual bankable provided scheme
	+
	+
	+
	+	== RELATED DOCUMENTS ==
	+	:[[A Review of Takaful by Prof. Khawaja Ahmed Saeed]]
	+	:[[Agency Management,Training and Incentive Programme]]
	+	:[[Audit Issue of Islamic Banking]]
	+	:[[Banca Takaful by Faisal Shahzad Abbassi]]
	+	:[[Best Practices from e- Insurance to e-Takaful by Sami Guello]]
	+	:[[Calculated Risks, Measurable Results]]
	+	:[[Challenges & Issues Faced by Takaful Industry by Mr. Imtiaz ]]
	+	:[[Co-Operative Insurance and Takaful]]
	+	:[[Current Achievements of Takaful by Dr. S. J Malaikah]]
	+	:[[International Cooperative & Mutual Insurance Federation]]
	+	:[[Islamic Banking And Finance Malaysia’s Experience And Achiev]]
	+	:[[Islamic Finance & Investment Symposium by Sohail Jaffar]]
	+	:[[Islamic Insurance in 21st Century by Ahmad Feizal]]
	+	:[[Islamic Insurance Opertunities and Challenges]]
	+	:[[Issues and Challenges in Retakaful by Azman Ismail]]
	+	:[[Leveraging BancaTakaful as a Key Growth Channel by Mr. Rohai]]
	+	:[[Life Family Takaful by Mr. P Ahmed]]
	+	:[[Micro Insurance Co-Operative and Takaful]]
	+	:[[Micro Takaful by Shabir Patal]]
	+	:[[Microinsurance and Takaful]]
	+	:[[Microinsurance, cooperatives and Takaful]]
	+	:[[MicroTakaful – the way forward by Capt. M. Jamil Akhtar]]
	+	:[[Opertunities in Islamic Insurance]]
	+	:[[Present Scenario and Future Potentials of Takaful by Kazi Md]]
	+	:[[ReTakaful by Rohail Ali Khan]]
	+	:[[Syariah Compliant General Takaful Products by Sami Guellouz]]
	+	:[[Takaful and Mutuality by Mohd. Masua Billah]]
	+	:[[Takaful by Abdul Rahim]]
	+	:[[Takaful for Microfinance]]
	+	:[[Takaful Opperunities and Challenges By Azeem Pirani]]
	+	:[[Takaful Products Family Takaful Linked Investment Plans by S]]
	+	:[[Takaful World Prospective Middle East & North Africa]]
	+	:[[Takaful]]
	+	:[[Takful - Zubair Mughal]]
	+	:[[Takful Report]]
	+	:[[The Islamic Vision Presentation]]
	+	:[[The Success of Retakaful by Farid Benbouzid]]
	+
	+
	+
	+	== DOCUMENT REFERENCES ==
	+
	+
	+	=== Number of Pages ===
	+	3
	+
	+
	+	=== Published Date ===
	+	2003-12-10 13:22:03
	+
	+
	+	== Full Document ==
	+
	+
	+	[http://45.40.136.134/~hodhood/HodHoodDocuments/IslamicFinance/Takaful/Takaful%20Muhammad%20Ayub.pdf Read the Full Document]
	+
	+
	+	[[Category:Islamic Finance]]
	+
	+	[[Category: Takaful]]