PREPARED BY:MOHAMMAD YASIR IQBAL

KHAN KHAQAN AHMED KHAN

Takaful In Pakistan

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

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

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

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

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

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

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

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

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

Waqf Model used by Pakistan Takaful

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

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

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

Waqf Model used by Pak Kuwait Takaful

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

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

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

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

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