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| Line 1: |
Line 1: |
| − | Takaful
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| − | Opportunities & Challenges
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| − | for the Pakistani Market
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| − | Azeem Pirani
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| − | Head of Marketing & Alternate Distribution
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| − | Pak-Qatar Family Takaful
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| − | 11th August 2007 August 11th, 2007 – Avari Hotel, Lahore 1
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| − | Agenda
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| − | Takaful – A product and an ideology
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| − | Differences between Takaful & Insurance
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| − | The Pakistani Market
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| − | Overview
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| − | Challenges
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| − | Opportunities
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| − | Our responsibility
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| − | Conclusion
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| − | 11th August 2007 2
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| − |
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| − | Takaful- A product and an Ideology
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| − | Takaful comes from the Arabic root-word ‘kafala’-
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| − | guarantee
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| − | Takaful is not only a tool to mitigate loss or to make
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| − | halal profits. It is an ideology which promotes
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| − | Solidarity and joint guarantee
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| − | Self reliance and self sustainability for community
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| − | well being
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| − | Assistance to those that need it
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| − | Community pooling system
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| − | 11th August 2007 3
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| − |
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| − | Differences between
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| − | Takaful & Insurance
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| − | What is Insurance?
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| − | A tool for Risk Mitigation and Financial
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| − | Protection
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| − | A tool to enable people to save (Life Insurance)
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| − | Key differences between Takaful and Insurance are:
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| − | Risk Sharing Vs. Risk Transfer
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| − | Wakeel Vs. Guarantor
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| − | Ameen Vs. Owner
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| − | Different type of Contract
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| − | 11th August 2007 4
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| − |
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| − | Differences between
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| − | Takaful & Insurance (cont.)
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| − | Issue Conventional Takaful
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| − | Insurance
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| − | Basis Risk Transfer Co-operative risk sharing
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| − | Laws Secular/Regulations Shariah & Prudential
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| − | regulations
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| − | Ownership Shareholders Participants
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| − | Mgmt status Company Management Operator
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| − | Form of Contract Contract of Sale Cooperative, Wakala or
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| − | Mudarbah with Tabar’ru
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| − | (contributions)
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| − | Investments Interest based Shariah compliant
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| − | Surplus Shareholders’ account Participants’ account
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| − | The Pakistani Market –
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| − | An Overview
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| − | Pakistan - Overall
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| − | Population: 6th amongst global nations. 166 m.
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| − | Population in 2015: Still 6th . 193 m.
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| − | Urbanization: Presently at 33%
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| − | Urbanization by 2015: 39%
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| − | GDP Per Capita: $753
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| − | 11th August 2007 6
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| − |
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| − | The Pakistani Market –
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| − | An Overview (cont)
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| − | Pakistan – Insurance Market
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| − | Penetration of Insurance
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| − | Pakistan: 0.7% of GDP
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| − | India: more than 3% of GDP
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| − | Iran: approx. 1% of GDP
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| − | Family & General Companies
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| − | Few Innovative Products. Very recent change in
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| − | this area
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| − | 11th August 2007 7
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| − |
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| − | The Pakistani Market –
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| − | Challenges for Takaful
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| − | Resistance to Insurance, and its benefits, due to
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| − | different reasons
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| − | Conservative spending habits
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| − | Ignorance of its benefits
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| − | Products which do not meet buyers needs
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| − | Religious reasons
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| − | Tawakkul issue
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| − | “Tie your camel first, then put your trust in Allah (SWT)”.
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| − | <Tirmidhi>
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| − | “It is better for you to leave your heirs wealthy rather
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| − | than poor and asking others for their needs”.
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| − | Non-Shariah compliant elements
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| − | 11th August 2007 8
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| − |
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| − | The Pakistani Market –
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| − | Challenges for Takaful (cont.)
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| − | Government regulations untested
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| − | Human resources for the sector
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| − | Shortage of trained human resources in insurance
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| − | Negligible knowledge of Takaful present amongst
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| − | the public
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| − | Few training programs available for Takaful and
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| − | insurance
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| − | Insurance has generally never been the
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| − | occupation of first choice for new graduates
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| − | 11th August 2007 9
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| − |
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| − | The Pakistani Market –
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| − | Challenges for Takaful (cont.)
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| − | Education and Awareness
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| − | Lack of knowledge about Takaful and insurance
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| − | amongst the masses
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| − | Ignorance of Takaful amongst the ulema
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| − | Significant budget required just to ensure that
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| − | knowledge permeates to all segments/levels of society
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| − | Marketing & Sales issues
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| − | Poor impression of insurance sales persons amongst
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| − | the public
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| − | Generally poor ethical standards amongst insurance
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| − | sales persons
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| − | General lack of faith on insurance companies meeting
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| − | their obligation in a efficient and polite manner
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| − | 11th August 2007 10
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| − |
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| − | The Pakistani Market –
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| − | Challenges for Takaful (cont.)
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| − | Operational Issues
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| − | Limited avenues for revenue at Takaful co. as
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| − | compared to insurance ones
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| − | To be competitive Takaful co. will need to use effective
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| − | IT systems – heavy investments
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| − | New Takaful co. will need to ensure that they do
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| − | prudent underwriting; thus eating into the possibility
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| − | of having a larger number of customers
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| − | 11th August 2007 11
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| − |
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| − | The Pakistani Market –
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| − | Opportunities for Takaful
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| − | Economic/Social conditions in Pakistan make
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| − | Takaful a NECESSITY
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| − | Lack of govt. social safety net
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| − | Negligible provision of reliable health care
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| − | by the govt.
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| − | Quality education is beyond the reach of the
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| − | average citizen and the institutions provided
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| − | by the govt. lack the required standards
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| − | 11th August 2007 12
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| − |
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| − | The Pakistani Market –
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| − | Opportunities for Takaful (cont.)
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| − | Strong growth in the Islamic financial sector
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| − | provides Takaful with a natural market
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| − | Islamic Banks and mutual funds will need Takaful to
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| − | package with their other products
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| − | Islamic Financial institutions presently have no
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| − | Family coverage for their staff
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| − | Massive untapped market in Pakistan for risk
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| − | mitigation tools
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| − | Given the necessity of these tools insurance has not
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| − | even touched the surface
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| − | Given the ‘plain vanilla’ menu provided to customers
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| − | there is a great opportunity for innovation
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| − | 11th August 2007 13
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| − |
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| − | The Pakistani Market –
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| − | Opportunities for Takaful (cont.)
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| − | Ethical and Shariah compliant model for risk
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| − | mitigation and financial protection
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| − | Large number of people who stay away from
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| − | insurance due to religious beliefs
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| − | Large number of our population can be
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| − | considered as ‘religious’ and so Takaful will be in
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| − | line with their beliefs
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| − | Educated citizens, although not religious would
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| − | prefer to use an ethical model than one which is
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| − | built on making profits by trying to avoid having
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| − | to pay claims
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| − | 11th August 2007 14
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| − |
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| − | Takaful –
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| − | What should you do about it?
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| − | As educated professionals WE have a responsibility
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| − | to our fellow citizens to guide them to what is good
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| − | for them. This is especially important when the
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| − | people are living at a level where income equals
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| − | expenses
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| − | Convey the critical nature of financial protection to
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| − | others
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| − | Explain the benefits of getting financial protection
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| − | Introduce the new concept which is not only ethical
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| − | but also Shariah compliant
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| − | Just start from those around you….
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| − | 11th August 2007 15
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| − |
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| − | Conclusion
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| − | Takaful is not only here to stay; it’s going to GROW!
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| − | It’s ethical and Shariah compliant nature allows
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| − | Takaful to overcome the inherent problems with
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| − | Insurance
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| − | The Pakistani market has challenges but also has a
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| − | lot of opportunities
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| − | There are a lot of opportunities for Takaful operators
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| − | to make healthy profits in Pakistan
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| − | Although Insurance coverage is not the norm in
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| − | Pakistan we need to work to make Takaful
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| − | something everybody uses
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| − | 11th August 2007 16
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| − | Conclusion (cont.)
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| − | 11th August 2007 17
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| − | Jazak-Allah khair
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| − | For further information contact:
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| − | (021) 438-0357 to 61
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| − | info@pakqatar.com.pk
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| − | www.pakqatar.com.pk (launching soon!)
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| − | 11th August 2007 18
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