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| − | RETAKAFUL
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| − | Opportunities & Constraint
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| − | A Pre
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| − | Roh
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| − | Outline of Presentation
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| − | • Introduction
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| − | • ReTakaful worldwide
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| − | • Industry Statistics
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| − | • Recent Development
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| − | • ReTakaful Prospects in Pakistan
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| − | • Issues
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| − | • The way forward
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| − | • Takaful Windows
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| − |
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| − | Introduction
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| − | • Preferred type is proportional
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| − | share or surplus).
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| − | • Non proportional permissible.
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| − | • If ReTakaful is unavailable, the
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| − | permissible to use a conve
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| − | reinsurer.
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| − |
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| − | ReTakaful Worldwide
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| − | • Sudan (1979) National Reinsurance.
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| − | • Sudan (1983) Sheikhan Takaful Compan
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| − | • Bahamas (1983) Saudi Islamic Takaful a
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| − | ReTakaful Company.
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| − | • Bahrain/Saudi Arabia (1985) Islamic Ins
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| − | and Reinsurance Company.
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| − | • Tunisia (1985) B.E.S.T. Re
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| − | • Malaysia (1997) ASEAN ReTakaful
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| − | International.
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| − | • Dubai (2005) TakafulRe.
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| − |
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| − | ReTakaful World
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| − | • Some conventional reinsurance compa
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| − | recognizing the active demand for cap
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| − | from Takaful companies have formed
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| − | ReTakaful Pools/Arms/Divisions. Som
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| − | these are:
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| − | • Swiss Re
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| − | • Mitsui Sumitomo
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| − | • Hannover Re
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| − | • Kuwait Re
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| − | • Trust Re
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| − | • Labuan Re
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| − |
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| − | Industry Statistics
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| − | S. No. Name of Company Paid-up Established in Count
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| − | Capital
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| − | 1 Takaful Re USD 2005 Duba
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| − | 125
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| − | million
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| − | 2 B.E.S.T. Re USD 55 1985 Tunis
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| − | million
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| − | 3 ASEAN ReTakaful USD 14 1997 Malay
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| − | International million
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| − | Note : Data of other ReTakaful companies is not available
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| − |
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| − | Recent Developments
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| − | • Salama has established a Re
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| − | Syndicate with Creechurch at Lloy
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| − | is expected to start operations in 20
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| − | • Tokio Marine ReTakaful also t
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| − | writing business in 2007.
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| − | • The above are expected to have ‘A’
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| − |
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| − | ReTakaful Prospects in Pak
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| − | • Proliferation of Takaful companies.
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| − | • Strategic location.
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| − | • Professional expertise.
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| − | • PRCL – ReTakaful Pool.
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| − |
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| − | Issues
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| − | • Only few globally active companies
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| − | • Capacity constraints.
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| − | • Large initial capital required.
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| − | • Need for strong and committed spo
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| − | Meetak Re failure a major blow.
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| − | • Reliance on Retrocession.
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| − | • Different Models.
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| − |
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| − | The way forward
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| − | • IPOs.
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| − | • Retrocession Pools.
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| − | • Securitization/ART.
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| − | • Reconciliation of Different Models.
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| − | • Collaboration with Takaful Assoc
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| − | ICMIF/Asian Takaful Group.
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| − |
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| − | Takaful Windows
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| − | • Background.
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| − | • Malaysian Example.
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| − | • Conflict of Concept.
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| − | • Low Paid‐up Capital.
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| − | • Dearth of Experienced Professional
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| − | • Regulatory issues.
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| − | • Transparency.
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| − | • Foreign Investment.
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| − |
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| − | Takaful Windows
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| − | •Background.
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| − | Takaful Rules 2005 were notified last year after protracted deli
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| − | the issue of allowing window operations to the conventio
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| − | Despite considerable pressure from certain vested interests, co
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| − | logical arguments against window operations prevailed and
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| − | Ministry of Commerce notified the said rules specifically
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| − | window operations. Of late, however, the issue of allowi
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| − | operations is being raised again on the pretext that it will ‘give
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| − | to the Takaful industry. This, apart from being to the co
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| − | seriously undermine the Takaful concept in the country and
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| − | public will be misled and confused.
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| − |
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| − | Takaful Windows
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| − | •Malaysian Example.
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| − | Malaysia, being the market leader, is looked upon as the ro
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| − | Islamic Banking and Takaful. Their regulators are on re
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| − | admitted their ‘mistake’ in allowing window Islamic Bankin
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| − | some 15 years back. They subsequently rectified the situation
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| − | issued directive to all banks to convert their Islamic windows i
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| − | subsidiary companies/banks. Even when the allowed Islamic
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| − | banks, they still did not allow Takaful windows to conventiona
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| − | they strongly felt, and still do, that it would be detrimental to
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| − | Takaful itself.
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| − |
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| − | Takaful Windows
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| − | •Conflict of Concept.
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| − | Unlike banks, there is a clear conflict in the concept of
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| − | insurance viz‐a‐viz the Takaful insurance. Conventional insura
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| − | transfer mechanism. This means, that the risk is transferr
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| − | individual/policy holder to the insurance company. This, acco
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| − | Shariah scholars, is not permissible in Islam. Takaful, on the o
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| − | risk sharing mechanism, which is in conformity with the S
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| − | these two conflicting concepts cannot be reconciled within th
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| − | single company.
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| − |
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| − | Takaful Windows
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| − | •Low Paid‐up Capital.
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| − | Whereas the minimum paid‐up‐capital required for setting‐up
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| − | has already been enhanced to Rs.6 billion, the capital required
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| − | up a new Takaful/Insurance company is far too low i.e. Rs.8
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| − | general and Rs.150 million for Life/Family business. Although,
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| − | considering to increase these figures progressively to Rs.500 m
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| − | year 2011, it still very low compared to the banks. Hence, e
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| − | stand justified to be allowed window operations instead
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| − | subsidiaries, the same cannot be held as justifiable for Takaful o
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| − | Takaful Windows
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| − | •Dearth of Experienced Professionals?
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| − | This excuse put forward by the conventional insurance co
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| − | myth. There are a large number of young, competent a
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| − | professionals within the insurance industry who are not ge
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| − | exposure and respectable salaries. In fact, there is an enormo
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| − | between the salaries and perks enjoyed by the top‐most hier
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| − | insurance companies and those of their junior and middle
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| − | level employees. Due to such tendency of exploitation, a signifi
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| − | of such insurance professionals have moved to the Middle Ea
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| − | right incentives, they shall return and will be a valuable a
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| − | emerging Takaful companies due to their enriched experience.
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| − | in this area can be drawn from the banks which faced a similar
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| − | over the last ten years several Pakistani banking profess
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| − | returned from abroad and are currently serving in Pakistan.
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| − | Takaful Windows
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| − | •Regulatory issues.
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| − | In contrast with the banks in Pakistan which are very well re
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| − | monitored by the State Bank of Pakistan that itself incorporate
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| − | professionals to ensure that their stringent requirements are fu
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| − | with, the insurance regulatory regime has undergone several ch
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| − | recent past. First, the role of regulator was switched from the
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| − | office under the Ministry of Commerce to the Insurance Div
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| − | SECP just a few years back. Then in the year 2000 the age old I
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| − | 1938 was repealed and replaced by the Insurance Ordinance 2
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| − | areas thereof still need correct interpretation and clarificatio
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| − | there are several loopholes that are being exploited by the
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| − | insurance industry. Several malpractices have also cropped
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| − | years within the conventional insurance circles who have co
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| − | these as ‘marketing techniques’ rather than malpractices. If su
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| − | are allowed to open up Islamic windows with the same minds
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| − | malpractices will be introduced in Takaful as well.
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| − |
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| − | Takaful Windows
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| − | •Transparency.
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| − | It is argued that by the very reason of Life Assurance m
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| − | separate Policy Holders’ Fund, it stands to qualify to o
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| − | windows. If this argument is taken, then their next logical step
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| − | ask for Takaful windows in General Insurance on the plea of
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| − | separate Takaful Fund. Since the intentions would only be not
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| − | clientele who would prefer to switch over to Takaful, they
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| − | setting‐up a separate fund would be able to hoodwink the
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| − | introduce malpractices in Takaful as well. Furthermore, it
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| − | possible to clearly segregate the expense allocation between
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| − | and Takaful operations within the same company as just
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| − | percentage allocation of expense is not an ideal solution. Thus
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| − | an inevitable mix between the ‘right’ and the ‘wrong’ which
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| − | even to the Quranic injunction: “And mix not, the Right with
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| − | and hide not the Truth when you know it” (Al Baqara, verse 42).
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| − |
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| − | Takaful Windows
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| − | •Foreign Investment.
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| − | There are currently a number of foreign investment groups
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| − | companies who are actively contemplating and are in touch
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| − | local groups in Pakistan to jointly set up new Takaful c
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| − | windows are allowed to the local insurance companies, s
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| − | investors shall be discouraged.
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| − |
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| − | End of Presentation
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| − | Jazakalllah al khair
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